Don’t Be Traditional With Your Spend Management Thinking: Part 2

Welcome back! Just joining in? Click here to read Part 1.

As many of you know, providing a high level of influence and performance in non-traditional spend categories will require subject matter expertise and skills beyond traditional negotiating skills such as:

  • Strategic thinking and analysis
  • Project / program management
  • Data analysis and modeling
  • Change management and Influencing skills
  • Problem solving
  • Relationship management

All of the above business skills are key for sourcing professionals to learn and adopt.

While these non-traditional spend categories have been harder for Sourcing and Procurement to penetrate in the past, sourcing organizations can help the business unit leaders discover and drive supply innovation early by gaining access to and being involved in these areas. Additional benefits include:

  • Reducing price and other costs
  • Improving quality and service levels
  • Better supplier management and contract management
  • Managing and reducing supply chain risk
  • Helping improve the profitability of the company

Measuring the successes and benefits the Sourcing organization is bringing to the table is important as well. The amount and percentage of ‘Spend Under Management’ is a metric used by many Sourcing organizations to measure performance. There are numerous professional studies that provide evidence and data indicating that by simply increasing the amount of spend under management, sourcing organizations can drive increased savings. As a result, companies should see improved corporate profitability as well. Improving company profitability is still a key metric for sourcing organizations to use, which is driven by cost reductions from all spend categories.  It is a simple formula … “More spend under management drives more savings to the company which improves company profitability”.

Don’t be traditional in your spend management thinking. Be creative and innovative in the deployment of sourcing tools and outside resources in non-traditional spend areas. In addition, make sure that you develop quantifiable measures of success to share with your organization.

Are there spend categories that your organization is current not managing or not managing well? Paladin Associates may be able to help you increase the spend under management by providing resources, Subject Matter Experts, technology tools, training, change management, and other services to increase the amount and quality of the  influence your organization has on non-traditional spend categories. For more information see www.PaladinAssociatesInc.com.

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