Procurement planning in the digital age – The future of procurement.
Today, in terms of procurement planning, organizations are under tremendous pressure from every possible side. Although they are seeing improvement, Chief Procurement Officers (CPOs) continue to struggle with issues such as controlling and categorizing unmanaged tail spend, eliminating fraud, predicting future spend, and tracking supplier performance. However, procurement experts now also must stay abreast of an uncertain economic, political, and regulatory environment. Although rapidly evolving technologies and digital transformation help address several of these concerns, CPOs are still finding it challenging to assimilate the accelerating pace of change without detailed procurement planning.
With increasing pressure on businesses to maintain growth, cut costs, and beat the competition, establishments are increasingly aligning their goals with the overall procurement planning. In most cases, the CPOs are working directly with CFOs, helping them articulate business strategies. Moreover, procurement is no longer a siloed “purchasing” function today. As a result, the procurement role is becoming even more imperative with the compelling need for an extensive procurement planning process.
Creating an effective procurement planning and strategy is essential for business to gain traction over competitors in the industry. Request for a FREE proposal to discover how you can conceptualize the spend analysis best practices and stay ahead from the competition.
Most organizations today rely on spend analysis best practices to reduce purchasing spend, unaware of the fact that accurate spend analysis eventually depends on the reliability and quality of the underlying supplier and product data across all relevant systems within the firm. When done correctly, spend analysis assists organizations in identifying essential opportunities to leverage buying power, improve operational performance, reduce procurement costs, and improve relationships with stakeholders. Several leading organizations who have adopted spend analysis best practices are reaping big rewards in the form of savings. However, the full benefits of spend analysis can only be realized by studying and tracking the spending patterns on an ongoing basis. In this whitepaper, we help you identify the five spend analysis best practices, adopting which may help your firm to achieve maximum benefits in the long run.
Here we outline the five spend analysis best practices that will help you transform your business objectives:
Audit existing spend data management capabilities: It is essential to conduct a review of the spend management infrastructure and competencies of your organization. This helps in analysing the quality and completeness of spend data in addition to identifying the data elements required to generate a detailed spend record. Organizations may also consider hiring consultants to conduct a baseline spend analysis during the initial audit. This way, they can also identify the areas that require immediate improvements.
Cleanse, group, and categorize the spend data: The extracted data must be cleansed to avoid any duplications and errors before being categorized. It is important to adopt an industry standard classification scheme or an internal taxonomy for grouping and classifying the spend data. The higher-level classification of spend at a category level forms the first step in categorizing spend data.
Employ vital business intelligence to enhance spend data: Use external sources that offer information on raw material, packaging, logistics, and economic activity to improve the quality of spend data. The most basic form of enhancement includes assessing the parent-child relationship, to ensure full spend leverage and aid the balance of trade decisions. Moreover, the use of external market intelligence and supplier information helps in developing optimal product sourcing and inventory strategies that can be executed in the real world.
Increase the frequency of spend analysis: Supply market dynamics are constantly in flux owing to the dynamic business environment and sales fluctuations. Many such factors make it obligatory for organizations to make supply trade-offs between the primary and secondary suppliers regularly. In many cases, it also induces them to identify new sources of supply.
Create a repeatable process through automation: Lastly, organizations must focus on implementing a repeatable process. They may either opt for a licensed data cleansing and classification software or engage with service providers that help them leverage the use of such solutions to deliver a turnkey spend data management service.
Developing a competitive procurement planning process is crucial for companies to stay ahead in the market space. Connect with our experts by requesting service on our procurement platform to gain the latest insights into the importance of spend analysis best practices.
SpendEdge shares your passion for driving sourcing and procurement excellence. We act as a global strategic partner for leading Fortune 500 firms and other leading companies across industries. Our strength lies in delivering robust, real-time procurement market intelligence solutions that helps sourcing and procurement professionals make informed decisions. Our innovative procurement solutions also help enterprises transform structural capabilities, improve execution efficiency, and fast-track time to savings.
Every business needs smart procurement intelligence to stay at the top of their game; we provide actionable insights utilizing lean methodology to help enterprises make better purchasing decisions. We provide businesses with the precise combination of resources, tools, and techniques to help them redefine sourcing and procurement capabilities. We cover a wide spectrum of industries starting from pharmaceutical and life sciences to transportation with expertise in supply market intelligence, spend analysis and benchmarking, supply chain risk assessment, and category management.