Tag: spend management

spend management

Successful Strategies to Improve Indirect Spend Management

Most companies lack visibility into their indirect spend categories and fail to apply cash to the business when required. Such categories account up to 50% of the total spend and include purchases such as professional services, travel, IT, marketing services, HR, facilities, utilities, janitorial services, maintenance, repairs, and office supplies. Organizations usually document their direct spend but underestimate indirect expenditures, thereby leading to poor indirect spend management.  They overlook the fact that small expenditures can impact the company’s bottom line.  This article will help you understand the methods for efficient indirect spend management.

Is poor indirect spend management undermining your profitability? Request a free proposal to access our indirect spend management solution portfolio now!

Ways to Improve Indirect Spend Management 

Establish a set of metrics

Put an evaluation method for tracking your indirect suppliers in a way similar to direct suppliers. Create a simple set of KPIs that can measure contract compliance, quality, and cost competitiveness. Keep this data in a central location, so that all departments and stakeholders can access the information and make spend strategies based on that. This will help you to get valuable information for timely decision making.

Consolidate indirect spend into specific categories

Often companies do not involve employees while developing a category policy. Employees order supplies without any oversight or regard for potential savings. Make employees aware of indirect spend management and seek improvement opportunities across all departments. Involve them in devising purchasing strategies and category spend policies. Consolidate purchases such as office supplies company-wide orders and implement company-wide contracts that can provide the scope for benefits such as volume discounts, attentive suppliers, and favorable contract terms.

Wondering how your company can consolidate indirect spend into specific categories and gain volume discounts?

Contact us, to leverage our indirect spend management solutions.  

Improve spend visibility

Companies can’t really fix problems if they are unaware of them. Poor visibility into spend results in missed opportunities for savings and increases risks of fraud. If you’re still tracking expenses with spreadsheets and reports, it’s time to leverage technologies to gain real-time visibility into all transactions. Monitor company-wide activity and track everything from invoices to the performance of suppliers. This data obtained will enable all suppliers and departments to make informed business decisions.   

Be Proactive

Bringing spend data into a centralized platform doesn’t mean the work is done and you become complacent. Once you have identified issues that are leading to increased business operation costs, monitor supplier’s performance, pricing and services to identify areas of continuous improvement. It may happen that suppliers start feeling overconfident due to continued business and focus on getting new business. Check their performance at regular intervals to ensure optimal services. Obtain detailed insights into the current market conditions and suppliers’ position in the market, manage inventory data, avoid under and overstocking, and consolidate purchasing to improve indirect spend management. 

Inability to monitor suppliers’ performance can impact the efficiency of organizations and increase operational costs. Stay a step ahead by requesting a free demo of our procurement platform and gain exclusive market insights to improve indirect spend management in procurement.

How SpendEdge Can Help you Improve Indirect Spend Management?

SpendEdge’s indirect spend management experts can provide you with the insights to perform spend analysis and identify pinpoint expenses impacting the cash flow, thereby enabling executives to promote change and improve the process. They can help you select the right vendors and gain valuable leverage on pricing by developing effective negotiation strategies.

Inaccurate insights into the actual spend, cash flow, and working capital status can result in overspending. Request more information from our experts to improve your indirect spend management process. 

spend management

How Smart Procurement Can Help Companies Unlock ROI from Marketing and Improve Spend Management?

With evolving technologies, changing customer demands, and proliferating marketing channels, it has become difficult for CMOs to keep pace with market needs and improve marketing spend management. Companies are focusing on market penetration strategies to increase revenues and strengthen market presence. However, this is an arduous task. Rising competition, increased reliance on suppliers and stakeholders, and the need for a consistent brand presence require CMOs to maximize value from every dollar.

Multiple buyers existing within a marketing organization deal with numerous suppliers and agencies over a period of time. With so many services providers and suppliers, it becomes difficult to maintain transparency in spend management. Most companies do not possess documented performance standards for their suppliers and lag in conducting regular audits of media. Firms turn to procurement experts to improve cost efficiency when the financial global crisis hits. This leads to poor quality work, ineffective negotiation strategies, and delayed business decisions, thus questioning the role of procurement in marketing. By working together, CMOs and CFOs can improve marketing spend management and be responsive to changing customer and market demands.

Want to know about marketing spend management strategies adopted by best-in-class organizations? Request a free proposal and we will get back to you in 48 hours with marketing spend management best practices.

Strategies to Improve Marketing Spend Management 

Put marketing and procurement on the same scale

Procurement plays a key role in balancing the sourcing requirements of the marketing team. They serve as a middle ground between agencies and brands. Despite sharing such strong affiliation, there have been many views that consider that procurement techniques can hamper the relationship of marketers with their agencies, thereby affecting the performance. In such a scenario, procurement teams’ can apply their core techniques such as supplier relationship management and strategic sourcing. Procurement can empower the marketing team by providing marketing spend management solutions while measuring the value and the creative side at the same time. Bridging the gap between marketing and procurement functions can help companies to

  • Analyze the potential of new service providers and channels.
  • Quantify how effectively marketing spend can be utilized.
  • Conduct targeted fact-based data analysis and cash in on new sources of values.

Wondering how your company can bridge the gap between marketing and procurement and improve spend management process?

Contact us, to know more about our spend management services.  

Evaluate external marketing resources 

We agree that decisions such as selecting partner agencies and campaign designs should be taken by the marketing teams. But agency or supplier performance should be the primary metric in evaluating outside marketing resources. Procurement teams should be leveraged to develop links of collaboration and help marketing teams to improve spend management.

They can build closer working relationships, identify potential suppliers, find the right capabilities and help businesses drive value and innovation by curtailing media spend and fees. Nurturing long-standing relationships with several media agencies can consolidate purchasing and ensure the best prices and capabilities for the company’s media budget. Forging collaborative relationships between both functions can help firms to

  • Identify the right agency with the best cultural fit.
  • Curb excess media spend and fees.
  • Consolidate purchasing and ensure the best prices for the media budget.

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US Metal Enclosures Market

US Metal Enclosures Market: Are Your Spend Management Goals Attuned to the Current Market Trends?

In the backdrop of a tumultuous US healthcare industry, the medical devices sector in the US is raging towards a double-digit consumer spend mark. Such a rapid increase in the spend is paving the way for the advent and sustenance of markets such as the US metal enclosures market, which is now making its mark in the business landscape in the US. Currently, the US metal enclosures market is set to achieve a spend growth rate of more than 4%. However, a key question that comes to mind is whether this spend growth rate translates into a favorable procurement scenario for buyers looking to procure such products? Inferences drawn from SpendEdge’s recent US metal enclosures spend analysis clearly says NO!

# US Metal Enclosures Spend Analysis Insights 1

Buyers in the US metal enclosures market are one of the casualties of the ongoing US-China trade war. This statement is reinstated by the fact that the severe supply crunch of steel owing to the increase in tariffs that are imposed on Chinese steel/iron ore imports will have an inflationary impact on the supplier’s production cost of metal enclosures. The US metal enclosures spend analysis hints at an incremental procurement cost incurred by buyers as suppliers are compensating for their recurring production expenditure by increasing the price of the product.

Gain complimentary access to our procurement platform to know more about the procurement best practices and key challenges facing buyers in the heavy metals category. 

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Know how real-time insights into price dynamism can help you in devising effective and informed procurement strategies.

# US Metal Enclosures Spend Analysis Insights 2 

Lack of spend visibility, owing to an uncategorized supply base, is a perennial source of procurement challenge for companies operating in the US metal enclosures market. A majority of buyers are failing to maintain proper co-ordination with the regional supplier base as well as with suppliers from LCCs. A lion’s share of the increasing procurement spend, as predicted by the US metal enclosures spend analysis, can be attributed to this factor.

Discover how real-time US market spend analysis insights can help you to identify newer and better areas to optimize your procurement spend, request more information.

How to Achieve Spend Management Goals in the US Metal Enclosures Market?

Strategy 1: Strategic selection of suppliers will play a prominent role in helping buyers optimize their recurring procurement spend. It is also recommended that buyers partner with distributors who procure metal enclosures sourced from suppliers based in LCCs in APAC, such as South Korea and India. Distributors offer customization services by engaging manufacturers that are located in low-cost manufacturing countries. This allows buyers to reduce their overall procurement expenditure in the US metal enclosures market. However, buyers must ensure that the goods availability and shipment time align with their delivery requirements.

Strategy 2: By leveraging centralized supplier management systems, buyers can attain better communication among their supplier segments. In the long term, it fosters better spend visibility, enabling the buyers to identify areas to optimize their recurring spend in the US metal enclosures market. The adoption of supplier integration technologies will further help buyers to achieve significant cost savings associated with the management of inventories.

Download the free sample copy of the US metal enclosures spend analysis below and know more about our report’s scope and key geographies under focus.

spend management

Boosting Process Efficiency and Improving Spend Management for an Electronics Company

The Business Problem

The client – a global electronics manufacturer with operations spread across different Asia-Pacific regions was witnessing profit decline amid mounting macro uncertainties. The slower revenue growth in the emerging markets and the rising US-China trade tensions were compelling the client to improve spend management and mitigate challenges impacting the cost of finished products. The need to gain visibility into the spend and drive organizational value forced the client to engage with SpendEdge. The objectives they were looking to achieve through this engagement were:

  • Centralize legal entities into one procurement function and unify processes to deliver bottom-line savings.
  • Reduce capital expenditure to avoid excess inventory and quality issues impacting the spend and the cost of finished products.

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tail spend

Tail Spend Management: How is it Helping Companies to Achieve Significant Cost Savings?

Until recently, not many companies considered it an intelligent idea to extract savings from the low-volume purchases in “tail spend”. They didn’t even consider optimizing tail spend to be worth the efforts.  However, the equation is changing nowadays, especially for companies who haven’t handled tail spend earlier, there is a scope of leveraging of 5-15% savings in this spend category.

But unfortunately, companies don’t manage tail spend with the same diligence as they manage their core spend. Many times, they neither watch sourcing market trends nor do they try renegotiating with suppliers for better pricing. Thus, leaving their hard-earned money on the table and missing out a substantial amount of savings.

At SpendEdge, we understand the importance of a tail spend management process in achieving substantial cost savings. Therefore, in this blog, we are compiling the key benefits that companies should look to achieve while managing the spend.

Improving tail spend management can result in substantial cost savings. Request a free demo and know how our experts can guide you with their tailor-made solutions.

Benefits of managing tail spend

Reduces prices

The most visible benefit of managing tail spend is price reduction. As companies increase their strategically managed spend, they can achieve a one-time savings of approximately 10-15% when addressing this spend the first time and  2-5% per year in savings thereafter.  Therefore, it is advisable for companies to strategically manage atleast 80 percent of their total spend.

Increases efficiency

Consolidated supplier base decreases the number of suppliers to be dealt with and enables procurement experts to focus on contracts that add more value to the business. Increased catalogue coverage and self-service procurement are a few other ways of enabling procurement experts to invest their time in value-added activities. This improves visibility into the procurement process that can be achieved through tail spend management and results in productivity gains for procurement functions, considerably.

Wondering how tail spend management can impact the efficiency and cost savings of your organization?

Request a free proposal now!

Improves compliance

Tail spend management improves visibility to drive compliance on multiple fronts. Built-in controls ensure that the suppliers onboard undergo on- and off-boarding procedures, thus enforcing all HR and security policies. Supplier payments are managed to according to the contracted norms and for every phase of the project, enforcing all rates, performance metrics, and process approvals. Tail spend management process further helps to reduce risk, while a more transparent procurement process helps with fraud prevention and detection.

How we can manage tail spend?

Since the lack of data of visibility happening due to reasons such as siloed subgroups within the same organization, decentralized policies, and high numbers of vendors makes it difficult for organizations to manage their tail spend, we have broken down the process into three easy steps:

Identifying spend:  As tail spend includes everything from maverick spend to small purchases, it’s crucial to define the spend happening within the organization.

Streamlining process: Having a centralized process that can maintain the flow of data and money, enable companies to make better payment terms with suppliers and identify strategic buyers.

Utilizing data: Organizing, classifying and analyzing spend data allows companies to gain greater spend awareness, informed purchases and decisions.

Managing tail spend can be a herculean task for companies. Get in touch with our experts and know how we can assist you in managing the same.

solar energy

Tail Spend Management Helped a Global Consumer Goods Company to Increase Productivity of their Procurement Functions

The Business Challenge

The client, a global consumer goods company, was consistently facing challenges in managing low-value and high-volume orders. Their poor supplier onboarding processes, decentralized procurement models, and ineffective internal stakeholder relationships were increasing complexities and resulting in excess spend. This compelled the client to collaborate with SpendEdge to enhance procurement efficiency and spend visibility to capture incremental savings quickly. The key objectives they were looking to achieve through better tail spend management were:

  • Improve visibility into purchases.
  • Consolidate the number of suppliers.
  • Analyze and address the prime reasons of tail spend.

 

Formulating tail spend management strategies can help companies to reduce the cost of the procurement process? Request a free proposal and access our complete portfolio of tail spend management solutions.

Solutions Offered

The experts at SpendEdge assessed various dimensions of tail spend such as category, transactional, suppliers, geography, and business units to identify potential cost saving opportunities for the client. They also identified business needs, implemented tested tail spend management methodologies, and devised effective strategies to recognize savings in their tail spend.

The tail spend management framework devised by professionals, standardized the disparate procurement process by establishing an efficient delivery model. This helped improve the tail spend management process and further aided in the identification of additional strategic sourcing opportunities for the company. The enhanced tail spend management process also enabled category managers to focus on key suppliers and reduce the number of tail-end suppliers. This helped the company to increase catalog coverage and focus on larger contracts that add more value to the business.

Want to implement an effective tail spend management framework?

Request a free demo and know how our experts can help you gain accurate insights.

Key Findings

In a span of six months, the productivity of the company increased by 20% for their procurement functions. Additionally, the tail spend management services allowed them to control, monitor, track transactions, and prevent excess spend occurring in the purchasing process. This enabled them to better manage their total spend apart from complying with changing policies and contracts.

What is Tail Spend and How Can We Manage it?

Tail spend, or low value spend, is usually refers to the 20% of non-core transactions that lie outside the main strategic purchasing strategies. It is usually left unmanaged due to the high volume of suppliers and inadequate resources. However, the increasing pressure on cost reduction and sustained savings through purchasing are making tail spend management a procurement priority for businesses. Companies can also improve their tail spend management process with the help of following steps:

  • Analyzing tail spend data and classifying transaction data at regular intervals to improve spend visibility.
  • Implementing category-commodity specific sourcing levers such as contracts, spend aggregation and many more.
  • Increasing the compliance and efficiency of procure to pay process and reducing the transaction cost.

Still wondering how to increase the spend visibility? Get in touch with our experts and know how our tail spend management services can help you devise precise purchasing strategies.

 







IR35

Spend Analysis : Assessing the Current Spend and Improving Supply Chain Efficiency for a Medical Devices Company – SpendEdge

Spend Analysis Solution Transforms Finance Operations and Reduces Operating Costs

About the Client 

The client is a leading medical devices company, specializing in the development of medical devices, laboratory instruments, and diagnostic products. The company supplies devices to hospitals, laboratories, and clinics worldwide. The company has ingrained its place as a leader in the medical devices market.

The Business Challenge 

The future looks sharp for the medical devices industry. With global economic growth, innovations and an aging population that has a growing need for healthcare, revenue for medical devices is poised for growth. However, in this turbulent environment, companies that can shift their supply chain priorities and better manage spend will be able to deliver significant value. Moreover, the rising need for supply management and strategic cost management have urged players in the medical devices manufacturing space to leverage the use of robust spend analysis solutions. Spend analysis solutions help companies in the medical devices manufacturing space to identify the potential opportunities and deliver actionable insights into the spend data to generate improved ROI. The spend analysis solutions also address concerns about the maverick spends across the supply chain and help achieve superior supplier relationship efficiently.

The client, a renowned medical devices company was facing challenges in reducing the cost across the supply chain and managing their tail spend. While public spending has become endemic, the client realized the need to drive more competitive pricing. Moreover, the client’s objective was to adopt spend analysis strategies to identify and optimize their spend areas. Additionally, the client needed to streamline their supply chain management and subsequently maximize profits by leveraging SpendEdge’s spend analysis solutions.

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cyber security

Spend Management Solutions: A Holistic Guide for Procurement Companies

“Only a truly integrated spend management solution can fetch value for your company and result in intelligent procurement.”

Limited supply chain visibility, poor supplier transparency, new regulations, spend creep, contract management, risk mitigation, and the growing need to do “more with less” are some of the key challenges that procurement companies face. Spend creep has become one of the biggest challenges for companies today as companies are spending extensively to stay ahead of the competitors.

Unnecessary spend happens when businesses buy additional items, products or services, from suppliers that aren’t needed. Also, it happens because of misguided bid management process, weaker supply chain management systems, and lack of auditing and spend analysis. Therefore, procurement professionals need to have the right spend management solutions to tackle these challenges efficiently and effectively.

At SpendEdge, we understand the impact that spend management solutions can have on your business. And to help companies identify latent opportunities to devise strategic plans to minimize their expenditure in every category, our team of experts have provided a comprehensive guide to spend management.

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