The Importance of Cleaning ‘Dirty' Procurement Data: Interview with Susan Walsh

Susan Walsh, AKA the The Classification Guru about her advice on how to improve, classify and normalise ‘data data’ and why it’s so important.

“Data is the foundation of everything that you do in procurement, whether that is reviewing contracts, negotiating with supplier or looking for fraud.”

In this episode she discusses her C.O.A.T. framework for better quality procurement data, including the importance of normalisation and classification is so important for actionable procurement insights.

Normalisation vs Classification

Normalisation and classification are both important to extract usable insights from your data.

“If you don’t normalise your suppliers, you’re going to end up with10 versions of PwC, IBM or Dell. As a procurement professional, you just need to know ‘how much did I spend with Dell’ you don’t need to know the financial and financial or legal entity. “

“Normalising data means is when you go to those companies, whether that be on a global or a regional level, you have more accurate data and potentially more bargaining and leverage to get better prices, better contracts with these suppliers, because you have the right information.

If you don’t do that you could be missing out on on really good opportunities. You might think you’ve got a great deal. But your supplier on the other side is laughing because they’ve got the correct data and they know that you don’t have the right data.

It’s also important to be able to searching for company information such as ESG or Diversity, to make sure that the companies in your supply chain are ethical responsible. If you haven’t normalised you might miss out on a company, that’s actually a subsidiary of something else.

It can be quite tricky, because there’s companies like Microsoft, that also own LinkedIn. We would always normalise LinkedIn to LinkedIn, not Microsoft because otherwise inevitably ends up getting classified as software. “

Classification

The next area is to arrive at correctly classified data.

“Classification can tell you things like the number of suppliers you have per category per country per business unit. It can tell you how much you’re spending with them. For example, if you’ve got suppliers you’ve spent $50 with, do you need them on your systems at all? Or are they diverse suppliers and you need them there for a reason?

The only way you’ll know that is if you have the suppliers classification as detailed as possible. You need to have a good taxonomy”