Walking the Extra Mile: Procurement Greets Finance – Part 2: Bridging the Gap between Procurement and Finance
In our previous blog we looked at the equation shared between procurement and finance, that in spite of working for the same organization and trying to achieve cost saving, they both walk alone.
Things have improved a lot. Procurement is being recognized as value driving function. Yet, there’s still more collaboration needed between the two functions. Technology though not a direct driver can be a great enabler to bridge the gap between procurement and finance.
So how can technology help bridge the gap between procurement and finance?
Procurement is largely judged by the savings it generates through different projects. However, what procurement may consider savings, finance may consider cost avoidance. Thus begins the argument over what does or does not constitute savings.
But, if for each project, savings are calculated by keeping finance in the loop, won’t that help solve the problem? And this is where technology comes to the rescue.
Organizations can leverage a tool with a tracking system that:
- Develops a function-specific view into individual projects and associated savings. This increases the visibility into organization-wide savings – a key to improved resource planning.
- Establishes a common savings definition and a baseline agreed upon by finance and procurement, thereby defining success for both Procurement and Finance.
- Maps the impact of procurement savings by collaborating with the finance team.
- Streamlines the savings approval process, thus ensuring the correct information reaches the applicable authority.
- Tracks savings at a multi-dimensional level.
- Maps forecasted savings to budgets through a project’s multiple stages. It is important to be able to track forecasted savings vs. actual savings against the fixed budget at every stage.
For further details on how technology can be leveraged to streamline the entire process of mapping procurement performance, read “Making Procurement Performance Count – A 3 Step Approach”
Stay with us as we try to find out how further advancement in savings tracking technology can benefit procurement, in our next blog.
For further reading, click on the download button to access the latest whitepaper- Walking the Extra Mile: Procurement Greets Finance