How to Be the “Best in Your Business” Through Spend Analysis and Strategic Sourcing (Part 1)
“You don’t know what you don’t know.” It’s an old adage, yet so many of us in procurement and sourcing don’t stop to ask the question and investigate – where are we spending our money?
As Ardent Partners’ The State of Strategic Sourcing 2015 report states: “The vast majority of sourcing professionals know that having a clear and detailed view into a category of spend makes sourcing that category significantly easier and positively impacts results. Despite this, the current adoption rates of automated spend analysis solutions hover around 37%, with another 39% of respondents indicating plans to deploy the solution in the next two years. Such low numbers account for relatively poor levels of visibility and the large performance gap between Best-in-Class sourcing organizations that are more likely to have spend visibility and the others in the market who do not.”
While there is always a goal to be “Best-in-Class,” this distinction isn’t always feasible for companies without the manpower to manage it. However, any organization can be the “Best in Your Business,” and it starts with spend analysis. Implementing a spend analysis solution provides organizations with insight into their past and current spend. This will help identify trends and maverick spend, areas that need additional budget and even ensures external vendor consistency and compliance.
Spend analysis software such as Spend Radar can improve your business model and increase company-wide efficiency, elevating an organization to be the “Best in Your Business.”
Spend analysis provides the data that supports:
- Increased cost savings
- Improved compliance
- Significant insight into suppliers
- High-quality price analysis and trends
- Cost avoidance
- Process improvement
- Consistent terms and conditions
- Increased internal and external customer satisfaction
Using spend analysis data doesn’t have to stop once you answer the question: “where are we spending our money?” The spend data can be used throughout the entire business process. From setting more accurate budgets at the start of projects and highlighting where you can leverage savings, to ensuring terms and conditions match with original agreements and a final financial data analysis at the conclusion of projects, spend analysis can support the entire project lifecycle.
Once you have your data, share the information. It is important to get the word out throughout the organization in order to affect the entire business. Start by spreading the good news within your department and then expand throughout the company. Highlight examples of success and demonstrate how spend analysis can apply to other departments. Find a champion in each department to help show the value of making these changes and how they can help move the needle within the entire organization.
Even if you don’t reach “Best-in-Class” status, you can always be “Best in Your Business.”
For more ways to optimize your sourcing processes, download the Ardent Partners State of Strategic Sourcing 2015 Report and watch the Herding Cats is not a Strategy: Move Beyond Tactics to Align for Success webinar, which discusses best practices and coming trends for putting practical strategies in place.