Procurement Greets Finance – Part 3: Bridging the Gap between Procurement and Finance with Advanced Technology
Last in the three part series, in this blog we will talk about how further advancement in savings tracking technology can benefit procurement. To read part 1 and part 2 of the series, click here and here, respectively.
Most of the existing savings tracking tools come with one big drawback – lack of integration with spend analysis. This means the user would have to manually enter baseline (past) data. Every saving calculation is based on baseline spend. For instance, one of the basic formulas being Baseline Spend – New Spend = Savings. The baseline spend could be for a period of 6 months, going back to the last 5 years. Manual entry of such data would lead to
- Longer cycle time
- Inaccurate data
- Incorrect savings result
With advancement in technology, it is now possible to do away with manual data entry by integrating the savings tracking tool with the spend analysis tool. This means the user will:
- Spend less time on getting the baseline data. Be it for 6 months or 5 years
- Have access to accurate information
- Get the savings result more quickly
- Be able to present a true picture of the savings generated from a project
In the savings tracking tool, after creating a new project and filling in the necessary details, the user needs to get the baseline spend. With spend integration, fetching baseline spend for every category is just a click away.
E&Y, in its recent study, tried to identify if supply chain executives and finance executives are on the same page. The study showed mixed results. While both departments share almost similar views on most of the parameters, there is a difference in what gets top priority. While improving quality was seen as the number 1 priority by supply chain executives, finance executives rated cost cutting and efficiency as their top priority.
Differences in perspective are always going to exist. Having a structured process and investing in better infrastructure can help both functions to align their goals and save more money.
For further reading, click on the download button to access the latest whitepaper- Walking the Extra Mile: Procurement Greets Finance