Spend Visibility allows companies to Make better decisions and with greater accuracy.
Organizations with spend analysis have reaped benefits in the areas of cost effectiveness and process efficiency. Their procurement reports provide insight into their potential for improved supplier relationships and increased profitability.
To be competitive, companies must control spending. But believe it or not, very few companies have a current, complete and accurate view of how much they are spending and where they are spending. Typically, executives can view only a fraction of spend with their suppliers. An accurate view of data delivers the agility and actionable insight that can enable businesses to create successful strategies including competitive advantages.
To further support this fact:
Nearly 90% of companies still use basic spreadsheet applications as their primary analysis tools, limiting the breadth and sophistication of analyses that can be executed. These issues lead Aberdeen to estimate that inadequate spend data management capabilities are costing businesses $260 billion in missed savings opportunities annually.
Resource: Aberdeen: Best Practices in Spending Analysis — Cure for a Corporate Epidemic
What are the benefits of greater spend visibility?
With a clearer view into spend information from a vendor management solution, large enterprises can take a more strategic approach to sourcing and focus their efforts on more valuable opportunities. This can reduce costs by a substantial amount.
These opportunities can include:
Gaining visibility into and aggregating demand across commodities, business units, regions, and plant locations, for example, can give companies greater leverage in supplier negotiations.
In commodities where companies use many suppliers, there can be benefits to consolidating with fewer key suppliers. As the spend with each supplier increases, the company can typically negotiate better terms and prices across the board.
Duplicate parts are often sourced across plants, product lines, and geographies and opportunities for substitute parts are not identified. With detailed spend visibility at the part level, companies can identify these overlaps enterprise-wide and consolidate supply.
Enforce contract compliance.
With a detailed view into who is buying what from which suppliers, enterprises can better enforce contract compliance. Armed with this information, organizations can often cut off-contract spending substantially.
Mergers and integrations are another area where spend visibility can provide significant value. The supplier rationalization process in a typical merger can be daunting. However, with cross-enterprise spend visibility, this task can be greatly simplified and the new organization can quickly begin to realize many of the benefits described above, particularly those from supplier consolidation and purchasing leverage.
Why is spend visibility difficult to achieve?
In pursuit of company-wide spend visibility, enterprises are confronted with three key problems:
• The data available is poor and ill-suited to driving procurement decisions
• Enriching the quality of the available data has been challenging and costly
• Business dynamics are constantly changing
What is needed to achieve better spend visibility?
Over the past three years, Aberdeen Group has examined the spend data management strategies, processes, and systems of nearly 200 enterprises. Research uncovered a harsh truth: few enterprises know what they spend, on which products, or with which suppliers. As a result, supply managers and business executives are developing strategies and decisions based on intuition rather than fact. All told, Aberdeen estimates that industry is losing $260 billions each year due to a pervasive inability to organize and analyze spend data.
Aberdeen set out to identify strategies effective spend-data management examining initiatives, software and services implementations at more than 30 leading enterprises.
Research clearly found that the most successful spend data management initiatives rely on the following:
1. Audit existing spend data management capabilities.
2. Access all spend-data sources within and outside the enterprise.
3. Adopt a common classification schema enterprise-wide.
4. Establish efficient and repeatable data cleansing and classification capabilities through the use of software or services.
5. Augment category expertise to ensure data and classification accuracy and validation.
6. Classify spending at a detailed level.
7. Enhance core spend data with vital business intelligence.
8. Increase frequency and coverage of spending analyses.
9. Utilize advanced reporting and decision support tools.
10. Continuously expand uses and scope of spend data management program.
Best Practices in Spending Analysis — Cure for a Corporate Epidemic
The potential savings are great. Many organizations are pursuing spend analysis solutions. While each enterprise faces unique challenges, some common themes emerge to define robust solutions. LIMITLESS VMS enables companies to consolidate, optimize and organize data from multiple sources into a single enterprise view. VMS provides a solution where spend visibility is accurate, granular, and can be used to drive business decisions.
VENDOR MANAGEMENT SOLUTIONS
Our Vendor Management Solution (VMS) is a discipline that enables businesses to not only cut costs but also: control expenses, drive service excellence and mitigate risks…while gaining increased visibility and value from their vendors. Through LIMITLESS’s on-line software overall vendor management, as well as – vendor expense management, is accomplished by giving you absolute visibility into your vendors and spend. No matter what the vendor or type of service they provide – companies can have a comprehensive view into their: services, contracts, rates, terms, conditions and spends through this sophisticated web-based solution.
If you have questions about any of our VMS benefits contact us today at 866-504-4050 or email LIMITLESS at email@example.com to learn more about our Vendor Management Solutions.