Other parts of this series:
- Continued evolution in procurement means even greater benefits for insurers
- Identifying key suppliers, razing silo walls critical to reshaping insurers’ procurement function
- Digital technology investments needed by insurers to reshape their procurement function
- Advanced analytics can be the foundation of insurers’ efforts to reshape procurement
Throughout this series on the future of insurers’ procurement function, we have examined the potential of the virtual integrated enterprise, the organization of the one and several exciting advancements in digital technologies. Each will be dependent on the use of advanced analytics, which raises a concern about the present-day procurement function.
Accenture research, covered in our report, Procurement’s Next Frontier, shows that procurement is the least likely corporate function to use advanced analytics. In order, procurement ranks seventh behind finance, customer service, production/operations, sales, telecommunications and human resources. But five procurement areas, in particular, look set to benefit the most from the expanded use of advanced procurement analytics:
- Procurement planning and supplier collaboration.
- Commodity pricing and risk management.
- Product cost management.
- Quality and reliability.
To build a robust analytics capability within the procurement function, insurers should make two investments.
One is what we call the mechanical dimension. Insurers should invest in a center of excellence (CoE) that brings together the right combination of skills from functional experts, statisticians and IT people.
The other investment will be the interpretation dimension. Insurers should put key insights in the hands of the right people if the analytics is going to improve business performance. Insurers should invest in people with deep market and industry knowledge who can translate and aptly apply the output of analytics.
It’s not too soon to begin using analytics to address strategic business issues.