Tags: Supply Chain
The Top 4 Benefits of Great Spend Strategy
Spend management is the process of collecting and analyzing spend data in an organization in order to uncover major cost savings opportunities. Spend management typically pertains to an organization’s procurement process. Below are four of the most impactful benefits of adopting a spend management strategy for your organization.
Firstly, a spend management strategy provides increased visibility company-wide. This makes it easy to track, organize, and record expenses from every department in your organization. Increased visibility into your total spend helps decision makers pinpoint where they can incur additional savings and where they can cut costs.
Increased visibility into spending patterns also increases compliance. Organizations have to meet a variety of requirements throughout the procurement process. By maximizing your organization’s visibility, leaders are better positioned to monitor compliance regulations.
Recognize Cost Savings
Secondly, a spend management strategy helps organizations recognize and capitalize on various savings opportunities. Because of increased visibility, organizations have a better understanding of their total expenses. Organizations can check for unnecessary or redundant purchases and look out for opportunities to save.
This also impacts an organization’s productivity as employees can dedicate more time to performing their core responsibilities and less time cross referencing reports or managing duplicate orders.
The third major benefit is supplier management. Having a comprehensive spend management strategy provides organizations greater visibility into their supplier portfolio to identify redundant suppliers as well as low spend suppliers. This helps companies get a better understanding of their expenses. Through our spend management services, Group O manages the categorization, verification, and consolidation of data through our e-Procurement platform. With all of your spend data in one place, we are able to monitor your suppliers, manage relationships with your existing preferred suppliers, as well as on-board new suppliers. This helps with contract negotiations and sourcing opportunities as well.
An important aspect of supplier management is supplier consolidation. If your company is purchasing from too many suppliers across too many different categories, spend management should uncover areas where it makes sense to consolidate suppliers. At Group O, we evaluate each supplier on various performance aspects to identify and categorize them. This enables us to determine the right amount of suppliers your organization uses, reducing risk and increasing efficiencies across the board.
And finally, with a great spend management strategy your organization will have greater control over payments. In the procurement process there are a lot of suppliers, contracts, and expenses to manage. Unauthorized or maverick spending poses risks to your operation. These can be easily mitigated when your organization implements a spend management strategy. Spend analysis helps organizations uncover unusual spending such as duplicate payments and late or missed payments. This leads to major cost savings and stronger supplier relationships.
Understand Your Total Spend and Save Money
Managing your organization’s spend is essential for the long term success of your organization. Formulating a spend management strategy will help you gain a full understanding of total spend in your organization. It will also uncover areas where your organization can save money. It lends itself well to supplier management and offers greater levels of control over spend operations.
To learn more about the benefits of spend management and Group O’s offerings, give us a call at 866-476-8761.