The Procurement Glossary » Predictive Analytics

Predictive Analytics

Technology & Systems

Definition

The use of historical data and statistical models to forecast future outcomes.

Explanation

In procurement, predictive analytics forecasts demand, prices, lead times and supplier risk, letting teams act before problems arise. Predictions carry uncertainty and depend on data quality, so they inform judgement rather than replace it.

Example

Predictive analytics warns that a key raw-material price is likely to rise, prompting an early forward buy.

Related terms

• Machine Learning — A branch of AI in which systems learn patterns from data to make predictions or classifications without explicit rules.
• Demand Forecasting — Predicting future demand for goods to guide purchasing, inventory and production planning.
• Procurement Analytics — The analysis of procurement data to generate insight into spend, performance, savings and risk.
• Supply Risk — The risk that supply of a good or service is disrupted, constrained or made more costly.

Related concepts

• Spend Analytics — Turning raw procurement transaction data into a clear, categorised picture of what an organisation buys, from whom, and where the savings are.

Frequently Asked Questions

What is Predictive Analytics?

The use of historical data and statistical models to forecast future outcomes. In procurement, predictive analytics forecasts demand, prices, lead times and supplier risk, letting teams act before problems arise. Predictions carry uncertainty and depend on data quality, so they inform judgement rather than replace it.

Can you give an example of Predictive Analytics?

Predictive analytics warns that a key raw-material price is likely to rise, prompting an early forward buy.

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