Money Talks, So How Can Procurement Prove Its Worth?

We are pleased to welcome this guest post from Daniel Ball, director, Wax Digital.

The procurement profession works hard to justify its profile as being responsible for the delivery of more than cost saving initiatives, or sourcing and negotiating better deals with suppliers. However, there’s no denying that in spite of the wide range of procurement-driven benefits or initiatives, cost savings remain a firm priority for the C-suite and are the one key deliverable that everyone at the top table understands.

Strategic sourcing, category management and getting a grip on maverick spend are just some of procurement’s tactics for generating savings. Taking responsibility for many spend categories, procurement can have a significant impact on the profitability of the business.

The ability to measure and record any savings initiated by the procurement team can help procurement demonstrate its value to the business. However, in addition to cost savings, data capture can also offer valuable insight into price trends, enabling continued best practice purchasing. Also, the ability to show how cost savings can be made across the business means that procurement is more likely to be invited to get involved in any future new business initiatives from the outset to offer advice and control savings.

Spend data and tracked savings are powerful assets and procurement teams have access to a wealth of tools and technologies that can help them analyse spend and secure savings. Yet when it comes to measuring and reporting on those savings against forecasts and targets, many are still relying on manual processes and Excel-based reporting.

While spreadsheets may work to report on savings, their rigidity and limitations can be frustrating especially if procurement is a centrally-led function in a global organisation and the CFO wants a consolidated breakdown on all saving initiatives across the business. We’ve seen organisations struggle to showcase any form of group-wide savings using spreadsheets, mainly because they are difficult to manage across large or multiple teams, all of whom need regular access a file and this can lead to formula and input errors, unwanted formatting changes, content duplication and ultimately inaccurate versions of the truth emerging. Coupled with multiple versions being held and completed across numerous sites, spreadsheets quickly become a cumbersome and error-prone way for larger organisations to present and share any savings successes accurately.

However, this data doesn’t have to be laborious and unreliable to analyse as cloud software offers a ready solution, removing all the frustrations that come with spreadsheets. Software designed specifically to track savings, like this one, provides a centralised online, audited environment for managing procurement-led savings, providing visibility and control of budget targets and outcomes. It can also be used to generate and approve savings objectives which can be mapped against operational budget goals.

Once targets are agreed and signed off by the business, subsequent procurement savings activities can be recorded against those targets and savings can be circulated and approved on an ongoing basis so that there is audited acceptance throughout the year, rather than a potential disagree months later about how savings over the past 12 months have been generated and how much should be attributed to procurement activity. Recorded savings can then be grouped for reporting and evaluation purposes as savings strategies.

This electronic analysis of actual spend against defined savings targets allows procurement teams to accurately record and present savings against targets across an entire organisation. Procurement professionals no longer need rely on manual spreadsheets to showcase savings achieved, they can now optimise and analyse this data electronically to showcase value across the entire business.

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