Spend Intelligence Found

3 comments January 9th, 2007 David Bush - Iasta

I am still amazed by the very high quality publication coming out of the UK, European Leaders in Procurement. Custom images, thick glossy stock, and quality content make this relatively new mag quite enjoyable to read. Last month, an article by Matthew Harrowing, was written about the challenges of procurement and sourcing systems that exist without the benefit of spend intelligence.

This is an excellent write up that gives background on where problems generate and ways that spend intelligence can address them. An example discussed in the article describes how a company negotiated 5% savings but closer analysis determined that the average invoice was less than $500, payments weren’t being consolidated and 14% of transactions were reversed, resulting in a process cost of about $120 per transaction, wiping out all the savings. The diagnosis of this problem is effectively addressed through good spend visibility.

As the author explains, the future of spend intelligence lies in dealing with historic data and system issues by enriching source data and providing flexible on-demand reporting for all aspects of P2P. The data must not only show how much was spent but where it is impacting the organization and clearly help frame issues that can be resolved easily once identified. I would also add that this data must be easy to view and report in different dimensions. Data is not static, even if it is not live, and users should have the flexibility to make flexible analysis and data combinations.

All said, a very nice overview and worth reading.

Entry Filed under: General, Spend Analysis, Supply Management Best Practices, Technology