Procurement success is defined by the outcomes. The path to your desired outcomes may seem tricky, but Simfoni can help.
Spend Visibility is the foundation of any mature procurement function because it identifies inefficiencies and areas of opportunity that lead to better decision-making and ultimately, better outcomes. While many procurement professionals understand the importance of spend visibility, many struggle with how to achieve it in practice. Without it, procurement teams are forced to rely on outdated information or incomplete data to guide their decision-making processes, which often leads to less-than-optimal results. Let’s take a look at the benefits of spend visibility, and how you can get started utilizing it within your own organization
The Benefits of Spend Visibility
- Identify inefficiencies: By tracking where money is allocated and spent, procurement teams can identify inefficient processes within their departments that lead to increased costs and unrealized savings opportunities. With detailed spend reports at their disposal, procurement leaders can analyze spend patterns over time and create strategic sourcing plans that cut costs and save their organizations money. This is particularly beneficial when it comes to the issue of tail spend, which typically represents about 30-40% of a company’s annual spend but is difficult to identify and analyze due to limited visibility into the purchasing process.
- Improved decision-making: When teams have visibility into the places where they spend their money, they can identify opportunities for improvement by understanding which suppliers are used—why, when, and by whom—and tracking supplier performance in this way can help teams make better decisions about which suppliers to partner with in the future. In addition, categorizing spend in this way identifies further savings opportunities and business insights, such as reducing lead times by identifying unnecessary steps in the transaction process.
- Optimized Spending: The insights derived from spend data, pulled together from a range of systems and tools across multiple functions, business units, and/or locations is where the real value lies. When organizations can see exactly where their money is going, they can maximize their resources and optimize spending decisions to meet their needs, whether it be improving inventory levels or controlling costs. Organizations that lack visibility into their spend typically make ill-informed spending decisions that result in wasted resources or excess inventory.
Getting Started with Spend Visibility
Investing in a spend analytics platform to gain better insight into your data is the place to start, but you will need to have a strategy and processes in place to make the most of these capabilities. This means having clearly defined goals and requirements, as well as a solid understanding of the pain points and challenges your organization is currently facing. This can be daunting for organizations that are just starting or in the early phases of spend analysis. However, best-in-class solutions, like those offered by Simfoni, ensure you have the support you need to successfully implement and manage your program, and ensures you maximize the value of you spend data across the organization. Here are a few tips to help you get you started:
- Gain stakeholder buy-in early as this will make it easier to get a commitment for budget allocation and long-term support for the new initiative
- Engage category experts in your early stages of planning to ensure that your requirements and objectives are aligned with the needs of the broader organization and that these are supported by the business. If you don’t have this expertise in-house, Simfoni can provide you with the subject experts you need to assess your situation and help develop the right strategy for delivering the most value from your spend analytics program.
- Implement best practice processes and tools to streamline sourcing and procurement operations. In addition to spend analytics, these can include contract management, supplier relationship management, and optimization tools such as strategic sourcing and e-procurement. These are solutions that Simfoni also delivers to its customers to ensure the most comprehensive and efficient spend visibility program possible.
- Deploy the right strategy for the type of spend. For instance, different types of spend will have different requirements for governance and oversight. Simfoni has robust solution capabilities, backed by a team of procurement experts to help businesses determine the best approach for each unique type of spend.
- Ensure you monitor and provide objective feedback to your suppliers. Your suppliers play an important role in helping you achieve your business objectives, so you need to be transparent and offer constructive feedback to help them improve and maintain quality performance over time. Doing so will enable you to build stronger relationships with them and reinforce their commitment towards your objectives. This simply cannot be achieved without spend visibility.
How many companies are using spend visibility today?
According to a benchmark study conducted by Hackett Group last year, over three-quarters of corporate survey respondents report that they are leveraging some form of spend visibility technology to drive better performance in their procurement organization. These include tools like contract management, e-procurement, supplier relationship management, and spend analytics solutions. Most organizations have these tools at their disposal, and it’s simply a matter of deploying them to effectively leverage spend visibility and improve the effectiveness of their procurement organization. Best-in-class procurement technology providers, like Simfoni, not only give you the tools you need, but also gives you a team of experts to guide you every step of the way.