From Tokyo to Boston, unlike an ERP (enterprise resource planning) system, a cloud based spend management platform can be installed within hours and can tell you in real time exactly how much you’ve spent.
Here’s how it’s done.
How much did you spend today?
Your PO or Accounts Payable system might give you line item detail, but does it let you know that the order could be 20% cheaper if it was delivered in 5 days not 3? Or you could order a higher quality product for the same price if you could accept it wrapped not boxed? Your reporting might not spot that you ordered the same item in Germany as you do in France, but will it spot the 50% premium price or help you aggregate demand for future orders.
Having granular, transaction level data, for every penny of your expenditure, globally and real time, puts you in charge of your expenditure.
That’s why it’s important. This article examines the importance of having accurate, complete and current data and just how key it is to making informed business decisions. And yet, very few businesses can truly say they have sufficient information to make the right decision at the right time.
Do you know how much your organization spent today? How about the last hour? What did you spend it on and was it good value? How about your entire organization locally, nationally and globally?
I’d guess most Chief Procurement Officers (CPOs) would answer ‘no’ to most if not all of these questions or, at best, make approximations based on budgets and forecasts. But isn’t that like a Doctor trying to diagnose today’s head-cold based on last year’s painful back?
At Claritum, we work with organizations large and small. We provide a cloud spend management platform that helps CPOs gain visibility of frequently ordered transactions globally and in real time. So we’ve seen how well some organizations do, but we’ve all-too-often seen how little organizations know about what they spend. Hence, they miss out on savings opportunities, live with a certain level of supplier risk and accept ‘off contract purchasing’ as part of the problem.
What is true spend visibility and why is it important?
True visibility is where you have line item data for every transaction throughout your supply chain, across every category and every business unit. And it’s live, ie you can see and influence an order happening right now in Tokyo from your office in Boston.
So what are the key challenges to gaining true visibility of expenditure?
For many large businesses, there are a multitude of systems, silos of information, discrete supplier bases and so getting to the information is often deemed too difficult.
The majority of businesses, large and small, use manual processes to source and procure frequently ordered, low value products and services. Using online searches, phone calls, emails and spreadsheets means there is no centralized visibility of spending, and very few controls.
Send in the consultants! A widely adopted approach of paying someone to find your data and analyze it, is equally problematical. It will inevitably be historical, often incomplete and can include so many assumptions as to be not far off pure guess work. A ‘point-in-time’ audit is typically inaccurate today, out of date tomorrow and irrelevant by the end of the week. The era of basing business decisions on out-of-date, incomplete, inaccurate data or general benchmarks is gone.
Some service providers even offer ‘free’ audits of historical spend in order to form the basis of proposals to improve future purchasing. But there may be a temptation to make the data fit the requirement – how many service providers have you met that say “you’re doing a great job, don’t change things”?
So, if you don’t capture it, you can’t measure it. If you can’t measure it – guess what? You can’t save it!
If it’s so easy, why do so many businesses still have visibility challenges?
It’s not easy. There’s no magic wand. Much as we’d love it to be different – getting to granular visibility of every transaction globally and in real time is difficult. It takes time, requires senior management sponsorship and it needs systems: the right kind of systems.
Cloud spend management is a potential solution. As opposed to installed enterprise ERP, Procurement and Financial platforms that are complex to deploy, difficult to use and expensive to adapt, cloud based solutions can be rolled out across your entire supply chain in hours and days rather than months and years.
They’re easy to use, so users like them. And therefore they use them. Being quicker and easier than picking up the phone to their favorite supplier means higher levels of adoption. And adoption means you’ll be able to collect data, lots of data such as:
- Live tracking of who is following compliant processes and who isn’t;
- Which budget holder uses approved suppliers and who stays with the sales guy they like best;
- Monitoring how competitive your pricing is and what the maximum potential saving could be;
- Checking the exact specification of a product or service and how that compares to more standard products.
A cloud spend management platform also helps drive process efficiencies. From sourcing, procurement and invoicing, a fully streamlined process means your people get less frustrated with time consuming tasks and circumnavigate best practice. It also ensures they spend less time on admin and more time being productive.
And with the right cloud spend management platform comes easy supply chain integration. So, for true visionaries comes the potential for monitoring every penny of spend across your supplier base.
With granular visibility of every transaction globally and in real time CPOs can make better strategic decisions based on firm information. They can spot trends, see opportunities and predict and model the future. They stay ahead of their clients and their competitors.
So, how much will you be spending tomorrow?
Claritum helps many of the world’s largest enterprises, leading businesses and fast-growing service providers control their complex, frequently ordered expenditure such as marketing & operational print, promotional products, uniforms & apparel, packaging, IT & consumables and related services.
Our cloud spend management platform enables our customers and partners to gain granular visibility and control of every transaction, globally and in real time.
Over 150,000 users in 35 countries rely on Claritum to deliver significant, measurable and sustainable savings.
Talk to us about the benefits of implementing a cloud based spend management platform in your business and start making savings today.