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ReThink Spend Intelligence: Key questions for transformation
How much visibility do you have into past, current and upcoming spend? Unless you can see the full picture, you'll struggle to become a leaner, faster and smarter organisation. But how can you get the insights you need?
Actionable insights pay dividends
Without a clear picture of the goods and services being purchased every day by your organisation — from whom, by whom, in what way and in what volume — important procurement decisions can rely more on luck than informed judgement.
However, being able to see where every pound, Euro or dollar is spent allows you to drive key functions like budget management, strategic sourcing and risk mitigation. Opportunities to do better deals will become evident, poor practice among buyers will stand out, and scope for greater savings will become apparent.
Put simply, spend intelligence gives you the actionable insights to make the decisions that will impact your bottom-line. Smart decisions are driven by facts — and the 'devil' is often in the detail. Everyone needs the detail.
How much can you see today?
Often, organisations only get a partial picture of day-to-day spend. Some categories are easy to track but plenty more may prove elusive. Some significant spend may only 'appear' when an invoice arrives unexpectedly into Accounts Payable. Teams may always be playing catch-up with no accurate picture of where spending and budgets stand at any moment. This unstable position can lead to reckless over-spend at one extreme, and an over-cautious spend paralysis at the other.
This scenario of 'ad-hoc' processes represents the least mature model of spend intelligence. Some organisations may be further along the maturity roadmap — with POs/invoices from various systems building up a fuller picture.
However, it's only by integrating POs, invoices, contract information and supplier information from all purchasing and payment systems that spend intelligence really comes into its own. Ultimately, you're able to view and control up to 100% of your spend, rather than perhaps the top 40-50% with the rest lurking out of sight.
Surprisingly few organisations have a high level of visibility today. But it's essential in the digital economy, where a relentless focus on efficiency is required.
The good, the bad and the ugly
The questions is: How deeply do you want to look within your spend? As you move towards an integrated approach that delivers full spend intelligence, you'll be able to drill down into the detail.
You'll see the good, the bad and the ugly when it comes to purchasing decisions and supplier performance. Patterns, trends and obvious opportunities for change will emerge. Here are five areas for improvement that may become clear very quickly when you see your spend in its entirety:
Specific instances of poor spend control and budget management.
Unrecognised opportunities for savings, such as consolidation for volume discounts.
Non-compliance instances, including consistent off-contract buying.
Unrecognised risks, such as a single source supplier running into difficulties.
Undetected process efficiency problems, such as approvals taking too long.
Individually, problems in these areas can have an energy-sapping effect on any organisation and can lead to serious fall-out. Together, such issues can have a profound impact on the culture of a company, employee morale, supplier relationships and the bottom-line.
Quality data without the grind
Fortunately, with an integrated approach to spend intelligence, you can spot challenges and opportunities early — and make smarter decisions, often ahead of time.
What's more, the best spend intelligence framework will not eat up hours of employee time. There's no need to spend hours inputting numbers, collating reports and chasing down data from across your business. Instead, the right technology will let you effectively automate your spend intelligence process, pulling everything together and seeing the results on-demand, in near-real time and on any device.
How close are you?
Find out where you stand today. It's quick and easy. Simply assess your current situation by using our guide
ReThink your Spend Intelligence Capabilities
. Just follow the five practical steps and a valuable picture may start to become clear very quickly.
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