Point of View
Decision making in a sea of data
Data-driven decision making can be defined as the process of making organizational decisions based on actual data rather than on intuition or observation alone. Nowadays, most organizations and industries tend to be data driven. However, recent survey studies have shown that a variety of decisions are still taken based on ‘gut feeling’ or intuition. How do we ensure that decisions are not based wholly on ‘gut feeling’ or intuition and how do we welcome data in our decision making process?
- Know your mission
Creating an understanding about the key challenges the procurement function has to overcome will help you make better inferences from the data set later on.
- Identify data sources
You might need to put together data from different sources and to coordinate them in order to find common variables among each data set.
- Collect data
Since purchase orders capture key information, fast and efficient placement of purchase orders cannot be the sole objective of procurement. Collecting mandatory and relevant information via the purchase order is absolute key.
- Cleanse and organize data
Data insights and analysis are only as good as the data you are looking at. Therefore, after you collect the data, data cleansing is one of the most important activities in your company if you plan on creating a culture of data driven decisions. After this, you must organize your data into a standardized format in which all data sources can be merged.
- Perform analysis
Clean data increases overall significance and makes the highest quality of information available for decision-making processes. Once you have valid, accurate, complete, unique and consistent data on hand, it is time to run in profound analysis and try to answer basic questions about the state of the company.
- Make decision based on data
A decision has a clear systemic sequence of steps that must be followed. These steps do not define the decision itself, but unless these elements are the cornerstones of the decision process, effective and profound decisions might not be taken.