Effective Spend Management Tips for Success
by Abhishek Jain Management 19 July 2016
Let’s talk about something that decides your company’s financial future – Spend Management. The process can be loosely defined as the way the organizations control and optimize the money they spend. As a practice contributing great benefits for your company, it has a mighty impact on the whole purchasing lifecycle. It helps the buyers to take a wide-angled view of the procurements. From sourcing the goods to choosing suppliers and to paying those suppliers, it touches upon all the aspects of the purchasing lifecycle. Here are a few Spend Management tips for your business success.
Accumulate Expenses Organization-Wide:
A variety of factors, such as disparate technology infrastructures, geographically dispersed locations, expansions, and acquisitions can make an effect on the buyer’s ability to gather company-wide efficiencies. If an expert can bring all of these fragmented entities and focus on them as a whole, it will help the buyers to see the benefits of Spend Management. It always delivers good when you use a company-wide contract for janitorial or office supplies. Accumulating expenses organization-wide can act as a quick remedy for increasing costs and falling purchasing efficiencies.
Knowledge Accumulation For Better Negotiating Power:
Want more educated buys on a company-wide basis? Effective Spend Management is the way to go! Yes, the objective of Spend Management goes much beyond just making improved purchase decisions. By focusing on a particular commodity or product category, buyers can get this added advantage by understanding its dynamics and then sharing the information with other purchasing departments within the organization. It always helps you to gain negotiation power when you aggregate knowledge.
Get Managers and Leaders Aboard:
Want to get maximum benefits from a Spend Management program? Get more than two purchasing agents to achieve this objective. Identifying and assigning responsibilities across the organizations can be a help in enhancing the value in Spend Management. The process demands strong, united leadership and management from several areas across the organization. It is important to keep the Business units and functions informed about key buying decisions and discussions with the suppliers.
Indirect Spend Management Is The Key:
On the contrary to popular perception, Spend Management is also effective for indirect spend areas such as repair, maintenance and operations supplies, and services. Direct spend is always in the spotlight when it comes to Spend Management. To gain power across the organization, buyers should manage indirect and direct expenses better. MRO purchasing is ripe for Spend Management, consolidation and optimization in most companies.
Do Periodic Supplier Audits:
If you are looking for a Spend Management strategy that can help buyers to monitor their long term contracts and supplier relationships, you need to review top expense categories regularly and compare present market pricing to the amount your company is paying. You should also work with the payable department to ensure all contracts, invoicing and remittances align with the negotiated pricing and terms.
Strive for centralization:
Centralize your buys across various departments to make Spend Management work wonders for you! An effective Spend Management process must always start with the purchasing organization. Centralizing makes you gain more power, improved communication and better positioning with vendors.