As the economy continues to evolve and change, procurement groups are looking at past spend to determine sourcing opportunities, supplier consolidation and expansion, and off contract spend. But what about future spend? How can you predict the unexpected?
Simple questions such as, “What effect will an increase in gas prices have on my spend?” and “If the real estate price index decreases 5% over the next year, what are my savings?” should be taken into consideration when forecasting for the future. How can you answer these questions?
You need a crystal ball – spend visibility!
Spend analysis software and new technologies are helping procurement groups in making strategic decisions by providing insight beyond traditional past spend numbers to answer:
What am I really spending?
With whom am I spending it?
Gaining visibility into those areas not only impacts your organization today, but also six, nine, twelve months down the road. These valuable tools help CPOs predict future spending, price indexes and even currency fluctuations. As a result, companies can better prepare for cost savings and price fluctuations.
But make sure your crystal ball isn’t cloudy. Your data must be cleansed and classified. Unclean data is useless. A clear view into your spend allows you to make adjustments to your sourcing pipelines and capitalize on savings opportunities or minimize the increase in costs. You will have the ability to do an opportunity assessment and create a strategic action plan to:
- Build a better pipeline
- Improve the sourcing process
- Improve load balancing
- Improve forecasting
- Define cost-savings targets