Spend management is a Collection of systems, procedures and tools that enable you to collect information on what your organization purchases and then turn it into intelligence which you can take action on. This gives you and confidence that money is being spent wisely and is in check. This report looks at the ways you may use spend management efficiently. Spend data is often dispersed throughout an organization. Some of it will be in your core data systems including your procurement to cover system but some of it might be on spreadsheets, on contract registers kept off line and even in paper documents. The job is to collect all this data, classify it such as by giving it a spend code and then turn it into useful business intelligence.
Once you have completed this it will give you insights which may be acted on to provide value to your organization. Here are a few of the actions you can take and the benefits you may receive from the knowledge gained from spend management utilizing data different sources.
- Intelligence on what you are buying. This will steer you to opportunities for rationalizing the assortment of things you purchase so you can go to market with larger volumes and use this to leverage lower costs.
- Intelligence on which Suppliers you are buying from. This will show you some opportunities to rationalize the amount of suppliers you are using, again so you can negotiate with larger volumes and drive lower costs. Additionally, it will let you identify any purchases that are made off-contract.
- Intelligence on who is buying. Particularly in larger procurement process, lots of individuals may make purchases. However, not all they will have the expertise to do so. This intelligence will allow you to train individuals that are buying so they could do the job better or provide the buying task to a skilled buyer.
- Intelligence on prices. This will permit you to test whether you are getting a fantastic price by benchmarking against known standards, even if the standard is exactly what price you paid last time. This knowledge permits you to obtain a better deal.
- Intelligence from financial Ratios applied to your providers. These can often recognize those suppliers that are financially vulnerable so you can take mitigating actions to reduce your risk in using them.
- Intelligence on the policies used by suppliers. This will let you know which providers have policies which encourage yours – policies on areas like sustainability and diversity.