Procurement Analytics in 2025: Types, Processes and Use Cases

The ever-changing business landscape has forced organizations to find ways to optimize their operations continuously. One area that is ripe for optimization is procurement, and this is where procurement analytics has the potential to play a very important role.

In the past, many organizations have relied on manual and time-consuming processes to manage their purchasing and procurement processes. However, with the advent of big data and advanced analytics, organizations can now more easily implement a procurement analytics process to streamline their operations. 

Information is powerful in this digital age, especially when managing business growth and spending. To grow and succeed, businesses must effectively utilize information to help inform their decisions, whether for better spending on various goods and services or budgeting for future projects. 

So, if you want to spare yourself the headache of spending long hours decoding what your data and information say about your business, then a procurement analytics solution is your answer. 

What is Procurement Analytics?

Procurement analytics is the process of deriving insights from historical organizational data. These insights can influence decision-making, strategy, money-making, and cost-reduction practices to improve profitability and cash flow.

Procurement analytics is one of the many ways to help ease the overwhelming process of spending for a business. It provides a better visual of the business and its activities more coherently and comprehensibly, using analytics tools rather than just being a perplexing list of figures and data.

Common Examples of Procurement Analytics

Common examples of procurement analytics include:

• Spend management analysis for cost reduction initiatives
• Supplier pricing comparisons as benchmarking
• Purchase volumes
• Contract negotiation and compliance by suppliers
• Contract coverage for maverick spend analysis
• Supplier performance metrics
• Supplier risk management 
• Demand forecasting

Purchase volume analytics can be used to negotiate volume discounts on purchases and analyze the levels of procurement operations activities. 

Why is Data Analysis Important in Procurement?

In the current business landscape, data analysis has become increasingly important for all types of organizations to make well-informed decisions and implement new initiatives as part of their procurement strategy. The same can be said for procurement management, where data analytics can be critical in optimizing an organization’s spending.

Organizations that use procurement analytics typically have access to large amounts of data. This data can be analyzed to help organizations make better decisions about the processes involved in procurement and reduce bottlenecks to increase efficiency for savings opportunities. 

Businesses typically see improved performance. They can save money, improve supplier relationships, and make better decisions about their supply chain and procurement processes.

Different Types of Analysis in Procurement

There are several different ways to analyze procurement data. Organizations can use basic statistical analysis, data mining, and machine learning techniques to improve their understanding of the data. 

Basic statistical analysis can be used to understand spending patterns and identify opportunities for cost savings. Data mining can be used to find relationships between different data types, while machine learning (an application of artificial intelligence in procurement) can be used to predict future trends and behaviors. 

How Analytics Can Be Used in Procurement

Procurement is the process of acquiring goods or services at the best possible price, in the right quantity, and of good quality. It is a strategic process that should align with the organization’s business strategy. 

The procurement function is critical to any organization’s success, yet it can be fraught with inefficiencies and challenges. From maintaining accurate records to managing supplier relationships, the procurement process has many moving parts.

One of the biggest challenges organizations face is understanding and analyzing their data. Without insights from data, it can be difficult to make informed decisions about the processes involved in procurement. This is where analytics comes in.

Analytics uses data to improve the process. By understanding the data related to their process, organizations can identify inefficiencies and areas for improvement in procurement, including supplier and vendor risk management.

Many different types of data can be used for procurement analytics. Common data sources include internal data like purchase order, supplier performance, and contract management data. Businesses incorporate external data in demand forecasting, such as metrics for economic fluctuations, which have implications for procurement.

Stages of the procurement process and how analytics fit in

Procurement analytics can be used at all process stages to improve efficiency and effectiveness. Using data and analytics, organizations can strive for excellence by making better decisions about where to spend their money and how to manage contracts, select and manage their suppliers, and avoid business disruptions.

The process makes significant use of analytics in the following stages:

1. Planning and sourcing

Planning, part of procurement strategy, is the stage in which an organization determines what products or services it will procure and when it will need them. This planning process can be formal or informal but must result in a procurement plan outlining the organization’s needs. 

This plan will guide the buying process and help ensure that the right products or services are procured at the right time.

The next procurement stage is sourcing, which is the process of identifying and evaluating suppliers. To do this effectively, procurement analysts use data analytics to understand trends in supplier pricing, quality, and delivery time. This information helps them determine which suppliers are the best fit for your company’s needs.

2. Contract award and management

Contract award and management is the process of awarding a contract to a supplier and then managing it over its term. This includes ensuring that the supplier meets their contractual obligations, monitoring spending against the contract, and renewing or terminating the contract as appropriate.

3. Supplier performance

Supplier performance management is the process of monitoring and managing supplier performance to ensure that it continues to meet the organization’s needs. This includes setting performance targets, measuring progress against those targets, and taking action to improve performance as needed.

4. Spend analysis

Procurement spend analytics is the process of understanding how an organization spends its money.  Spend management analysis includes identifying spending patterns, understanding what drives spending, and finding ways to reduce or optimize spending. 

Why is Procurement Analytics Helpful for Businesses?

It is hard for growing companies to operate blindly without any sense of direction on how they can improve further. Procurement analytics solves this by using data extraction and categorization to provide a baseline and identify growth opportunities.

Many data types can be used for procurement analytics, including procurement and financial data, invoices, and delivery data. This data can be analyzed to identify trends and patterns that can help improve efficiency and effectiveness, particularly in the following areas:

• Contracting

Contract negotiation can be improved with the use of analytics. Analytics can be used to understand what types of contracts are offered by different suppliers, identify areas where there is room for negotiation, and understand the terms and conditions of different contracts.

• Pricing

Pricing is another area where analytics can be used to improve procurement decisions. Analytics can be used to understand the prices of different suppliers, identify trends, and compare prices across different products.

• Supplier relationships

In addition to improving procurement decisions, procurement leaders can use procurement analytics to improve supplier relationships. By understanding spending patterns and trends through spend analytics in procurement, businesses can work with suppliers to improve delivery times, quality, and other related aspects.

• Reduction of business risk

Finally, procurement analytics can also help businesses reduce risk. Businesses can identify potential risks like business interruptions from late deliveries and quality problems, then develop strategies for mitigating them by analyzing data on past purchases.

What Are the Key Activities in Procurement Analytics?

With the ever-changing procurement landscape, staying ahead of the curve is essential to success. One way to do this is by utilizing procurement analytics. There are several different ways that procurement analytics can be used to improve decision-making, but it generally includes two key activities:

1. Analysis of Past Activities

Analysis of past activities involves using past procurement data to identify trends, patterns, and relationships that can be used to make better decisions in the future.

For example, analysts can use historical spending data to identify areas where an organization is overspending or underutilizing its contracts. They can also use data to benchmark prices and compare them across different suppliers.

2. Predictive Analytics

Another way that procurement analytics can be used is to predict future trends. This uses predictive analytics techniques to forecast future demand, prices, and other key variables to optimize procurement strategies. 

For example, analysts can use data from past years to predict how prices for certain commodities might fluctuate in the future. This information can help organizations make more strategic decisions about their procurements.

Both predictive analytics and analysis of past activities can be supported by visualizations, dashboards, and other tools that help users make sense of the data and identify opportunities for improvement through actionable insights.

Procurement Analytics Use Cases

Procurement analytics use cases include spend analysis for cost reduction, contract management (including pricing and volume discount negotiation, contract coverage vs. maverick spending, and contract compliance by suppliers), supplier performance statistics, procurement operations analysis, supplier risk management, and demand forecasting. 

Applying Procurement Analytics in Business Operations

When it comes to utilizing procurement analytics, there is no one-size-fits-all solution. The type of data you analyze and how you use procurement analytics will vary depending on your organization’s specific needs.

Some of the most general applications of procurement analytics include the following:

Spend analysis

Spend data analysis is one of the most common and important types of procurement analytics. This analysis looks at an organization’s spending patterns to identify areas of waste and potential savings.

Moreover, the procurement analysis can help segment spending data by supplier with category management, or other factors to further understand where an organization is overspending.

Through data analytics such as contract coverage, procurement departments and finance should also monitor the percentage of maverick spend (purchases by employees not requiring a purchase order or procurement operation workflows). Ensure that maverick spend is at a reasonable level and has some type of controls, such as using pre-vetted suppliers or employee-controlled corporate spending cards. 

Contract management

Another important type of procurement analytics is contract management. This involves analyzing contract data to improve the negotiation process, identify errors or discrepancies, and ensure that the contract terms are met. This, in return, can help an organization save money and time by avoiding costly mistakes.

Supplier performance analysis

Supplier performance analysis is another common application of procurement analytics. This allows you to track the performance of suppliers over time and identify any issues that may arise.

This type of analysis looks at data from supplier invoices, orders, and deliveries to identify areas of improvement for the supplier relationship. Furthermore, this analysis can also identify new supplier opportunities that may benefit the company.

What Does a Procurement Data Analyst Do?

Procurement analytics is a relatively new field, but it is growing in importance as organizations increasingly rely on data to make decisions. As such, procurement analysts must have strong analytical skills and communicate their findings to stakeholders effectively. 

Here are some of the more specific roles of data analysts: 

Help identify trends and areas for improvement

An analyst is responsible for analyzing and providing insights from data to support the decision-making process of a procurement team which involves evaluating supplier performance, negotiating contracts, and developing strategies to improve the efficiency of the process of procurement. 

A typical day in the life of a procurement data analyst may involve tasks such as reviewing spend data and conducting market analysis. Essentially, an analyst’s job will be to help identify trends and areas of improvement within the process. 

Analyze and communicate insights from data

Procurement data analysts will also analyze data to support the organization in making informed decisions on where to source, negotiate, and employ strategies. Analysts should also be able to communicate their findings clearly and effectively as actionable insights.

Analysts will work with large amounts of data from various sources, including spend analytics, contract management, e-sourcing, and supplier performance. This requires analysts to have excellent analytical skills and experience working with spreadsheets, databases, data analysis languages (such as Python), generative AI, and software systems.

In fact, one of the most important roles of a procurement analyst includes developing KPIs (Key Performance Indicators) for the procurement department. These KPIs will help measure the department’s success and identify areas for improvement.

Importance of Analysts in Your Business

The role of a procurement data analyst has become increasingly important in recent years as organizations have realized the value of their data assets. This is mainly because procurement teams need access to accurate and up-to-date data to make informed decisions. 

These procurement teams consist of professionals responsible for strategic sourcing and procurement of goods and services. They help the organization get the best value for its money when purchasing products and services guided by their data.

Procurement professionals thus ensure that this data is available and easy to understand for a more efficient and effective procurement team. This makes a career in procurement analytics very rewarding financially and professionally. 

Procurement teams play a vital role in organizations, and a procurement data analyst’s work can directly impact the bottom line.

The shift to the machine

While the term “procurement analytics” may bring up images of analysts hunched over spreadsheets, the reality is that procurement analytics is also becoming increasingly automated and data-driven. 

Businesses of all sizes can access various software dedicated to collecting and analyzing data, identifying trends, and predicting future needs.

Thus, many different procurement analytics software programs and tools are available to help with business operations. Much of this procurement analytics software is designed for people with little to no experience in analysis. This makes them ideal for organizations that do not have the resources or manpower to employ a full-time analyst.

Investing in Procurement Analytics for Success

Procurement analytics helps companies become more grounded and aware of how they are doing. This is important, especially for successful and growing businesses, as procurement analytics prevents them from being complacent with their success. It allows them to better understand their spending and save money. 

Nowadays, companies need to be as cost-effective as possible, and procurement analytics is one way to achieve this goal. Hence, it is evident that procurement analytics is a tool that companies should invest in to become more successful. It helps businesses grow and ensures that this growth is more sustainable.

Get the Most Out of Procurement Analytics with Automation

Consider ERP integrations of different software products to obtain procurement analytics for the entire source-to-pay cycle relating to procurement and accounts payable. 

For example, Tipalti’s unified platform of finance automation software, with ERP integration,  focuses on the intake-to-procure and procure-to-pay cycles. It incorporates AI/machine learning technologies to improve analytics and streamline workflows. Tipalti Procurement and AP automation software products offer real-time spend analytics and insights in addition to streamlining workflows. 

Tipalti Procurement

With Tipalti Procurement, your business can access real-time dashboards for categorized spend management analysis. Your professionals and teams can analyze spending for cost-reduction opportunities and reduce approval bottlenecks. Tipalti data consolidates spend data from purchases, receipts, suppliers, and contracts. The Tipalti procurement software lets you filter data and custom fields to obtain a customized spend report. 

Tipalti AP Automation

Tipalti AP automation software performs digital invoice processing from self-service supplier onboarding through invoice processing from:

• Digital invoice capture
• Supplier validation to prevent vendor fraud 
• Invoice verification with 26,000+ payment rules and 3-way matching 
• Global regulatory compliance and tax compliance features 
• Automated invoice approval routing 
• Automated payment status for suppliers
• Global payments with a choice of 50+ payment methods in 196 countries and 120 currencies
• Real-time automated payment reconciliation. 

In Tipalti AP automation, your business can view its spending data by vendor and category. With multi-entity ERP or accounting software, stakeholders can view spend data by entity and combined. Tipalti Finance AI enables generative AI queries to enhance spend analysis for business intelligence and informed decision-making. 

Next Step to Improve Procurement Analytics and Processes 

In this recorded webinar, learn more about best practices for implementing a technology-enabled procurement process that includes procurement analytics.