Implementing a fit-for-purpose spend structure and accurate visibility is foundational for the success of any procurement team and a key root cause of blurred visibility lies in taxonomy structures. Taxonomy in procurement involves grouping similar items based on their attributes, characteristics, or specific criteria. The main purpose of creating a procurement taxonomy is to streamline and standardize the purchasing process.
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 organization 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.
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. It offers an additional layer for procurement teams to not only improve their taxonomy but also allow category owners to customize and communicate it while running scenarios without modification in ERP’s. Taxonomy optimization is the most underestimated asset to generate relevant and holistic insights for any category owner. The Taxonomy Suggestor is aimed at closing that gap and adding structural value to procurement.
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