When procurement professionals are speaking with me about spend visibility, one of the first questions I ask them is: “What do you want to accomplish with improved spend visibility and data?”
I lead with this question because there are many ways to define spend analysis as part of the strategic sourcing process and countless ways to empower sourcing professionals with actionable information.
I encourage my clients to start with spend velocity reporting as a traditional starting point, which helps access how money the organization is spending by:
- Business Unit
Following this approach gives procurement professionals a rearview mirror look at previous spend information, which is a critical first step in the strategic sourcing process. In my opinion, this is only the beginning of what robust spend visibility can deliver. Remember, spend analysis isn’t just about what you did; it’s about what you’ll do next.
So, what can you do next? Spend visibility enables you to “put on your detective hat” to conduct extensive compliance reviews. You can quickly answers questions such as:
- We negotiated a great contract, why aren’t we realizing the savings?
- What are the best categories to fill our sourcing pipeline?
- Can we monitor spend against our budgets?
- Where is the maverick spending actually occurring?
- My internal stakeholders are reluctant to work with procurement, how can I overcome their resistance?
Spend visibility also provides you with the ammunition you need to quickly and effectively look for clues to “solve the mysteries” laying with your spend data.
Other companies are also looking to use spend visibility for future forecasts and “what if” type analysis such as:
- How will trends in commodity markets affect our decision process?
- How will supplier risk volatility impact our company?
By using spend visibility to analyze and compare multiple scenarios, you can move into a new level of effective procurement performance by using spend data that was previously hidden from your team.