Should you bring in the experts to gain control over your complex category spend?

Published July 2014

Using a market basket can be imperfect when seeking to gain control over complex category spend How big is your Market Basket?

When seeking to gain control over complex category expenditure, expert audits should be treated with caution as they are inevitably historical in nature and based on flawed base data that can be gathered through the company's own resources. Using a "basket of goods" represents another imperfect assumption to base key decision on. Specialist consulting firms, agencies, and a variety of service providers will offer an audit of current spend typically using a "basket of goods". Conducting an audit also represents a prime opportunity to find a route into your organization, as they are now armed with key data and thus potential to secure the contract and enough margin for them to operate. Simple online software tools provide a very powerful alternative as long as it is easier to operate than manual processes, provide help and guidance to inexperienced users through offering a simple-to-use front end interface, yet be flexible enough to accommodate expert users so they can order from a catalog and have simple workflow specifiying, selecting pre-approved suppliers, running RFX's and evaluating prices. Users commonly cite substantial, immediate savings as a benefit of installing such software. One Senior Buyer in a large UK Retailer said: "We only realized we were paying a premium for our branded clothing after taking a good look at what we were spending. It turned out we could cut costs dramatically, by giving the supplier another week to produce the goods." So what is the first step towards controlling spend in complex categories? Capture who is buying what, from whom and at what price. Once this is identified, you will be well on the way. Gain some traction by making the tools widely available across the organization and do this by making sure they are easy to use to encourage take-up. Simple steps will result in the organization being able to gain some traction. Soon evidence of savings made will prove the ROI and encourage further endemic use of such eProcurement software tools throughout the organization.