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3 Ways to Outdo Yourself in Spend Management

Sourcing | Supplier Management

Spend management professionals have become victims of their own early successes. Driving down costs in double-digit increments over multiple years through the application of technology and best practices has resulted in an expectation from the CFO and others that the party will continue.

In addition, each new spend management solution uncovers new internal process challenges. Add to that the growth in external threats like regulatory compliance and supply chain risk , and there are many calls across the organization for spend management process and solution enhancements that would turn these threats into opportunities.

What are three of the ways spend management professionals can continue to deliver dramatic value?

Look first at strategic supplier management and sourcing.

1. Supplier Risk & Compliance

Spend management professionals are finding themselves tasked with not only evaluating a supplier’s financial health but with identifying and tracking a variety of other factors from ethical and social responsibility concerns to geopolitical and climate impacts on the supply chain.

Traditional transaction-based solutions are not well suited to collecting and managing these types of data, nor can they easily deliver new tools such as predictive analytics which helps identify potential problems and turn them into opportunities. New supplier management and sourcing tools must be considered.

2. Supplier collaboration

An outgrowth of demand for more accurate, timely and complete supplier information is the need for true collaboration in supplier relationships. What were once largely one-way demands from buyers to suppliers, followed by exchanges of transaction information like POs and invoices, must now become bi-directional conversations for the joint management of business processes and documents. Visibility into second-tier suppliers demands a new level of collaboration and the tools to support it.

3. Integration

The new spend management world demands not only cross-functional integration of process elements like risk management and working capital planning but also a single repository of the required information.

No longer can the AP system have a loosely-coupled supplier master, while procurement has a vendor master and the compliance system has a 3rd party master. All of these systems rely on overlapping subsets of the same data and if there is not a central repository with the structures in place to manage the needed integration, errors and impaired decision-making will grow exponentially. Only supplier management technology is uniquely positioned to provide a single integrated source of supplier information across the enterprise.

Of course there are more, but these are a great place to start your supplier management value drive and to continue refining your spend management process.

Additional Resources

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