Avoiding Procurement Malpractice – Using Spend Analysis for Success

I keep hearing that the recovery is here. I’m pretty sure that most of us want to believe that 2011 will see the lifting of the dark and gloomy economic cloud that’s dampened our days for almost 3 years.

But people I respect when it comes to these questions are pointing to real indicators that a deeper recession looms on the horizon – driven by continuing high unemployment, home foreclosures, increasing fuel prices and the U.S. federal deficit, which will limit the government’s ability to step in should things turn rough in late 2011 or 2012.

Entering the New Year under this uncertainty are chief procurement officers, who now – more than ever – are expected to know which levers to pull on supplier costs so that their organizations can deliver products and services without disruption and at margins that support growth.

How do you know which levers are the right ones? We consistently see that leaders who deploy strong, enterprise-wide spend analytics behind any sourcing strategy are in a much better position to succeed. In the coming months, I believe that those who don’t will be judged by their organizations, the market and their peers as guilty of procurement malpractice.

There’s a cure. There are 3 key disciplines that can truly empower your supply strategy and move it forward in 2011 – to meet whatever challenges arise.

    • Start with spend analysis to get the visibility you need
    • Once you have visibility, analyze the information to define sourcing strategies:
    • Bring visibility, intelligence and an enterprise-wide view to the entire sourcing process

In this 3-part series we’ll examine each in depth, starting with visibility.

Why is visibility so important? Today’s economic conditions require nothing less than best-in-class spend management and without visibility into enterprise-wide spend, it’s impossible to truly manage your spend.

It starts with spend analysis to answer the critical questions:

• How much am I spending?
• Who am I spending it with?
• In which categories do I spend the most?
• Where are my opportunities for saving more money?
• Can I achieve better terms of service?

The information gained here delivers the visibility needed to:

• Drive strategic planning
• Refine operational focus
• Improve business results

You can’t manage what you can’t see – making visibility the critical first step in avoiding procurement malpractice. Once you know what you are up against, you have a starting point from which to drive improvement. You’re already in a better position.

In the next post, we’ll look at how you can get more with analysis – moving from data to insight that can fuel sourcing strategies aligned with business objectives.

Paul Martyn

Want to learn more about avoiding procurement malpractice and capitalizing on spend analysis? Check out the white paper from industry expert Andrew Bartolini and BravoSolution here.

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