Spend Visibility 101: Here’s Why Team Members Need Access To Spend Data
If you’ve experienced the
rollout of a spend management solution, you know how important
that initial launch is. Often, an organization consolidates
from many data sources to one. In others, it’s making the leap
from spreadsheets to automated tools.
There’s enormous value that
comes with seeing all spend data together. This is especially
true when you categorize that data by supplier and buyer, and
view it in real-time. In fact, in those moments, it makes the
upfront effort all worth it.
But, right after initial launch,
many organizations make a big mistake: they limit spend data
to finance teams only. This
means that although finance teams can view spending in real
time, the wider organization stays in the
dark.
Here’s why every team member
needs access to spend data, no matter who they are.
Because maverick spending is a real (and costly) problem
One of
the most frustrating things for
procurement teams to deal with is buyers who ‘go rogue’.
In short, these team members
purchase
from whatever suppliers they want with no consideration to
preferred vendors.
For
the procurement
team, this often leads to frustration and annoyance. In
truth, though, maverick
spending stems from a lack of understanding and clarity.
From their perspective,
they’re just
trying to get the job done and disregard the impact their
actions have on the finance department.
Without clear-cut spend policies
in place, and without bringing awareness to bad spending
habits, team members will keep calm and carry
on. And the
finance team will do the exact opposite as a consequence.
Our
advice? Educate all your team members. By
re-explaining spend policies, teaching newbies, and training
troublemakers, you can begin to spread accountability for
spending.
And only then can you start to tame rogue
spend.
Because it’s hard enough to drive purchasing engagement
Procurement teams often struggle
to get
the wider organization brought into new spend
policies.
It’s no surprise, either. For many team members, knowing
how to purchase properly is the last priority on their long
list of things to do.
But failing to get stakeholder
participation into spend management tactics results in spend
apathy.
And regardless of whether you
have a visible spend management platform in place, without
internal buy-in, people won’t monitor
it.
Ultimately,
pulling spend visibility away from team leads means that it
occupies a smaller role in their daily
job. And as
time goes on, it becomes harder to engage in efforts to improve
purchasing value.
If a review of spending is part
of regular team meetings and reporting, however,
engagement increases. For
operational teams, they’ll begin to see the importance
of managing their impact on the bottom line as well as the
top.
Because procurement teams are rarely listened to
Strong
communication is the key to successful growth. But, when it
comes to communicating priorities, procurement teams are often
ignored.
And
it’s easy to understand why. Quite simply, procurement teams don’t
contribute to increased sales. But sales are just one piece of the growth-shaped pie.
What’s the other piece?
Operational efficiency. Achieving this leads to the
creation of shareholder value, increased market share, and
competitive advantage. For many organizations, these
things attract stronger team members, lead to more
compensation, and result in year-end
bonuses.
Given that these are the primary
reasons we all work, it’s in everyone’s interest
to have a clear and visible lens into spend
management.
Team leaders are accountable to spend, not procurement teams
Segmented systems and manual
spreadsheets are inefficient. Fact. They lead to human error;
they create inconsistencies; and they cost time.
A centralized
purchasing solution, however,
helps procurement teams increase efficiency and creates
visibility into an organization’s
spend.
For procurement teams who lack
a centralized tool, they’re often left
responsible for each team’s spend management
practices.
To solve this, procurement teams
must roll out spend visibility to as many team members as
possible.
Only then can an organization reap the benefits of smarter spend management.
Editor's note Original publish date: 11 Sept 2017 Original author: Kelly Barner We've since updated and republished this blog post with new content.
