In an increasingly cut throat environment where every single sale counts, businesses around the world are looking to transform their supply chain and procurement processes. Transforming these processes requires a systematic approach that addresses multiple operational aspects in order to achieve profitability and increased efficiency. Using a spend analytics tool is an extremely practical way to harness the power of data and come up with useful solutions. These solutions lead the way to implementation of practices and methods that are the secret to success in any industry.
With most major corporations around the world rushing in to spend analytics, it is reasonable to have high hopes for your spend analytics tool. That doesn’t mean that you will be able to achieve everything you are looking for without some basics. Here are some things that can help you avoid nearly half of all common problems involved in implementing spend analytics:
Rule #1: Data Integrity
The first step involved in spend analytics is data collection and analysis. Understandably, the entire spend analytics process is built upon data. A strong foundation of reliable data is therefore, essential in order to obtain an accurate picture of operations and propose suitable solutions. Research indicates that data provided by businesses – including large corporations – usually has an accuracy rate of around 50 to 70 percent. In an increasingly competitive business environment where information technology can be used to your advantage, that rate is surprisingly low. It is recommended to involve employees in the data collection process to ensure you obtain accurate information. Furthermore, depending on the nature of the business, data also needs to be refreshed. A bakery or FMCG business may need fresh data every week; a parts supplier can comfortably refresh data once a quarter.
Rule #2: Restricted Access
Most organizations that do in house spend analysis only make the relevant information to small teams or specific departments, such as planning or procurement. The result is that the full potential of the tool is not harnessed by managers from other departments. Spend analysis data is not meant to be restricted, it is meant to be shared throughout the organization. This is done to make available instant information about products, identify pricing trends, and understand supplier issues.
Rule #3: Organizational Behavior
Getting the maximum benefit out of spend analytics requires that your company’s managers and departments have great synergy and work towards the same goals. This helps implement operational changes with minimum hassle and ensures steps towards cost cutting and increasing profitability are taken immediately.
Rule #1: Data Integrity
The first step involved in spend analytics is data collection and analysis. Understandably, the entire spend analytics process is built upon data. A strong foundation of reliable data is therefore, essential in order to obtain an accurate picture of operations and propose suitable solutions. Research indicates that data provided by businesses – including large corporations – usually has an accuracy rate of around 50 to 70 percent. In an increasingly competitive business environment where information technology can be used to your advantage, that rate is surprisingly low. It is recommended to involve employees in the data collection process to ensure you obtain accurate information. Furthermore, depending on the nature of the business, data also needs to be refreshed. A bakery or FMCG business may need fresh data every week; a parts supplier can comfortably refresh data once a quarter.
Rule #2: Restricted Access
Most organizations that do in house spend analysis only make the relevant information to small teams or specific departments, such as planning or procurement. The result is that the full potential of the tool is not harnessed by managers from other departments. Spend analysis data is not meant to be restricted, it is meant to be shared throughout the organization. This is done to make available instant information about products, identify pricing trends, and understand supplier issues.
Rule #3: Organizational Behavior
Getting the maximum benefit out of spend analytics requires that your company’s managers and departments have great synergy and work towards the same goals. This helps implement operational changes with minimum hassle and ensures steps towards cost cutting and increasing profitability are taken immediately.
Rule #4: Tying Everything Together
Research shows that when employees use more than one source for reporting, valuable data is more likely to be lost or ignored. Therefore, it is recommended to stick with one system that contains all reporting information in the same place.
Rule #5: Proactive Procurement
Spend analysis generally utilizes data from previous quarters and ties it together with trends to propose corrective actions. Using ERP systems for requisitioning and purchasing is one solution that comes with benefits such as real time visibility and ensuring contractual compliance.
Research shows that when employees use more than one source for reporting, valuable data is more likely to be lost or ignored. Therefore, it is recommended to stick with one system that contains all reporting information in the same place.
Rule #5: Proactive Procurement
Spend analysis generally utilizes data from previous quarters and ties it together with trends to propose corrective actions. Using ERP systems for requisitioning and purchasing is one solution that comes with benefits such as real time visibility and ensuring contractual compliance.
