How smart taxonomy suggestions can help procurement

Having a clear understanding of spend structure is vital for any procurement team, but how can smart taxonomy suggestions improve your spending visibility?

Implementing a fit-for-purpose spend structure and accurate visibility is foundational forthe success of any procurement team and a key root cause of blurred visibility lies in taxonomy structures. 

Taxonomy in procurement involves grouping similar items together based on their attributes, characteristics, or specific criteria. The main purpose of creating a procurement taxonomy is to streamline and standardise the purchasing process.

How do procurement teams structure their taxonomy?

Many SAP Ariba users set up their taxonomy according to UNSPSC with potentially some custom taxonomy fields. This can mean that when procurement teams look at different spend taxonomies, where complexity gets greater, the data quality can get worse.  

Spend taxonomy is the DNA of any procurement team but it will go through changes together with the organisation as acquisitions are added, new products are launched and the market changes around a business.   This requires a capability to take all feedback  into account, simulate and adjust as needed while being that single source of truth for procurement, supply chain, finance and other stakeholders within a business.

What is a taxonomy suggestor?

An option to improve the quality of data, and the visibility a procurement team has with their taxonomy arrangements is to implement a taxonomy suggestor.  

Mithra-Ai are one tech solutions provider who have launched a smart procurement add-on, Taxonomy Suggestor, to solve a problem that most companies face when using SAP ARIBA, or any other procurement platform. 

Taxonomy Suggestor offers an additional layer for procurement teams to not only improve their taxonomy but also allow category owners to customise and communicate it while running scenarios without modification in ERP’s. Once all modifications are completed and aligned then the final outcome can be pushed into SAP ARIBA and all stakeholders could make best use of the analytics and reporting modules.

“Taxonomy optimisation is the most underestimated asset to generate relevant and holistic insights for any category owner. With the Taxonomy Suggestor we are closing that gap and adding structural value to procurement,” said Christophe Frère, Co-founder and CRO Mithra-Ai Solutions.

“The ultimate state of our Taxonomy Builder creates and maintains a unified and optimised taxonomy across the businesses involved with low to no subject matter intervention.”

Read more about understanding indirect category management spend inside your business. 

Christophe Frère, Co-founder and CRO Mithra-Ai Solutions.

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Other magazines that may be of interest - Supply Chain Magazine | Sustainability Magazine

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