Top 10 Measure to Tame your Indirect Spend – Part 2

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In the first post part of the 2 part series, I provided you with the 5 key measures to tame indirect spend. In this post you I will be sharing the remaining 5 measures procurement groups can adopt.

Taming Indirect Spend_Part 2

1. Consider investing to improve and upgrade spend analytics capabilities to extend coverage of spend analytics across all possible payment workstreams for indirect categories; pay special attention to increasing granularity of spend classification and abilities to tie spending to specific sub organizations and cost centers.

2. Review and improve internal capabilities for analyzing markets, identifying leverage opportunities and building & selling business cases in favor of preferred supplier contracts; study and leverage difficult work already done by other companies, such as unbundling services, assigning standard unit costs, writing SLAs and devising effective supplier relationship governance structures for formerly uncontrolled spend categories.

3. Implement routine compliance measurement and open reporting of results to all relevant business leaders (SBU leadership, budget owners and so forth) as a tactic to achieve best-in-class compliance results.

4. Consider transitioning to an eProcurement system (if using ERP) that takes an active role in guiding requisitioners first to preferred suppliers and then to best-cost standard choices within suppliers’ product or service lines. An important prerequisite for achieving this is that the system be capable of accurately recognizing — based on free-text search — what a requisitioner is attempting to obtain and of employing a robust workflow to engage the correct procurement personnel very early in processes when needs cannot be immediately recognized and/or matched by the P2P system.

5. Information integration is the key to improvement here. Integration enables more accurate tracking of compliant spending as well as creation of alerts and/or workflow triggers when various contract conditions such as purchase volumes are met. Meantime, automated matching of requisitions, POs and invoices enables greater promptness in supplier payments, allowing for more consistent realization of early payment and similar types of discounts.

I hope you enjoyed reading through this 2 part series. Eager to have your thoughts on the measures discussed in these posts.

Click on the download button below to access your whitepaper-10 Key Measures to Manage Indirect Spend

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