Getting a handle on procurement spending isn’t easy, but it can pay off in many ways. Spend analysis and the resulting opportunity to participate more efficiently in purchasing decisions can pay off in the long, run even if the up front costs are significant.
A good place to start is with an audit of existing purchasing data. Look for invoice duplication, overcharges, and transactions that are contractually prohibited. Initial savings can bolster the case to bring in new software to better manage and analyze spending. Forcing all purchases, including Pcard, to go through a PO system doesn't necessarily, solve the problem, but the purchasing group needs to be able to better see the spend in an easier and more complete fashion.
Some of the solutions available include:
SAS's Supplier Relationship Management
i2 Technologies' Strategic Sourcing
Oracle's Purchasing Intelligence
Ariba's Spend Management Solutions
When supplier analytics are put into place, cleaning and aligning the spend and supplier data between the systems and data feeds can be messy. Properly mapping the data is a crucial step because it provides a mechanism to aggregate the spending and supplier information. The data has to be cleaned as well and this a aspect can be costly in time and effort.
The spending visibility gained through spend analysis can help the purchasing group better prioritize the efforts of a small staff—a real improvement over the static queries and Excel spreadsheets that need to be used without these kinds of tool. The risk is that the purchasing staff is spending a lot of time chasing small savings, such as office supplies and copiers, rather than larger purchases that are simply unknown. It's worth real effort to change the margins, as important as increasing sales.
Adapted from: http://bit.ly/9QtT0c
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