7 Ways to Take Control of Your Costs Through Spend Analytics
Key spend analytics insights afford higher education procurement teams more strategic decision-making, higher visibility into suppliers, and consolidation of resources for a competitive advantage.
In a time when education costs have skyrocketed to astronomical proportions, CPOs have a unique opportunity to contribute strategically to optimizing and streamlining operational costs for their universities and colleges. And while many CPOs may feel they are already doing a good job containing costs and innovating in the management of supply chains, my guess is that there is more work to be done here—especially around how to use spend analytics to your strategic advantage.
While many academic institutions have technology to manage purchasing, contracts and suppliers, many of these systems are fragmented and don’t offer visibility across campuses and departments to the supply chain. This blindness could be what’s holding you back from making a real difference to your institution’s bottom line.
To help you understand the power of spend analytics, here are seven ways you can use this powerful data to not only control costs but better understand how spend affects your organization’s performance.
- Identify Savings Opportunities: When you identify the specific areas of spend, you can further segment this spend by supplier to understand which source provides the best opportunity for savings. This data can be used to negotiate with suppliers for greater discounts, consolidate purchases to suppliers who offer the best pricing or terms.
- Understand Aggregate Spend. Spend analytics data allows you to practice foresight and strategic planning to your advantage. When you are able to see spend data as a big picture, you can better understand its impact on overall performance. What does your institution buy? Who buys it? How is it bought? This visibility into spending allows you to fix processes and streamline procedures to enhance operations.
- Assess Supplier Performance. Spend analytics data allows you to examine your supply chain to identify over-dependencies, quality issues, potential risks and more. You can assign and rank key performance indicators that are most important to your institution and then use this as a yardstick against your supply chain.
- Drive Contract Compliance. Awarded contracts need to be continually examined and negotiated to ensure you’re achieving the best value. Spend analytics provides a window into contract compliance by ensuring that only preferred vendors are being sourced, contract prices are being adhered to and discounts are being applied. There are a lot of complexities to contract compliance and a lot of opportunity for waste, if it’s not properly examined.
- Provide Analysis for Forecasting and Planning. If you know where you’ve been, you’re more likely to get to where you need to be. With visibility into spend trends you are better able to make more informed decisions about supplier relationships so that you can improve processes.
- Benchmarking Against Market Spend. Baselining, goal setting and improvement tracking are mission critical and benchmarking is the basic yardstick in this self-evaluation activity. Spend analysis tools can help you create internal benchmarks so that you can monitor performance and make modifications for continuous improvement so that you can remain competitive.
- Gain Greater Departmental Efficiency. Sharing meaningful information across campuses and departments increases savings. Spend analytics allows you to change the buying behavior of the entire institution by allowing departments visibility to contract terms, preferred suppliers and tools to better manage their spend and more effectively.
Where to Start
Leveraging spend analytics demands a shift from a tactical approach to controlling costs to a more strategic model, where spend procurement is seen as a major contributor to enhanced organizational performance. When CPOs know who their suppliers are, what they are spending and how those relationships tie into the university mission, there is power in truly creating an impact through procurement. With the constant challenge to do more with less, spend analytics is the first step to using data to your advantage to develop strategies that will move your institution to the top of the ranks.
For more information, read our new “How Spend Analytics Clears a Path to Higher Ed Savings” whitepaper.