Spend visibility is crucial for organizations to gain control over their expenses and track their spending in real-time. It offers several benefits beyond cost savings, such as identifying inefficient processes, maverick spend, and risk areas.
Spend analysis can provide both an overview and a granular view of procurement activity, giving insights into:
- What you are buying,
- How much you're spending,
- Who are your suppliers, and
- Who is buying in your organization.
Benefits of Spend Visibility
Having a clear view of validated spend information provides organizations with the ability to take a more strategic approach to sourcing, which can result in several benefits:
1. More saving opportunities
Improved visibility helps identify cost-saving opportunities by reducing wasteful and maverick spending. With a high level of visibility, you can benchmark your suppliers and their contract terms.
2. Better supplier relationships
Understanding whom you're buying from and what the recent changes in spending are helps improve supplier relationships and minimize contract risk.
3. Improved spend consolidation
Avoid duplication of purchases across divisions and geographies by aggregating demand. Consolidating spend under your key suppliers is easier when you have visibility on spend under management.
4. More efficient processes
Clarity on your spend can identify and rectify poor processes, leading to more efficient use of resources. Visibility helps you tap bottlenecks in purchase processes.
5. Informed decision-making
Finally, visibility supports creating informed future procurement strategies. With a holistic view, you make fact-based decisions when it comes to spending.
Challenges in Achieving Spend Visibility
One of the challenges in achieving spend visibility is not having the right tools in place. Collecting data from various sources is not a walk in the park. It's often an error-prone and labor-intensive process. Data is collected from company-wide ERP or procure-to-pay systems, other accounts payable processes, and data obtained from suppliers.
Miscoding and inaccurate data analysis can cloud visibility, resulting in missed opportunities. Errors in analysis can lead into bad decisions and missing the big picture.
Another challenge is the tail spend, which refers to a high number of low-value transactions with multiple vendors in any organization. Here's a 5 step guide to better tail spend management!
Common Mistakes in Achieving Spend Visibility
In this section we advice you with the common mistakes so you can be prepared and dodge them!
One common mistake in achieving spend visibility is selecting the wrong time frame for the analyzed data. Different commodities or services may require different review periods and more or less visibility into the detail. Another mistake is ignoring shifts in purchasing trends, which may require a change in focus on suppliers.
It is also impractical, costly, and time-consuming to track all spend internally. There are top-notch software solutions available for speedier results and automation.
How to Increase Spend Visibility
To increase spend visibility, organizations should define clear policies and processes that limit errors and inconsistencies, promote accountability within sourcing teams, and avoid confusion about the purchasing policy and procedure.
Achieving visibility and aggregating payments from every source can take time. Automated spend analysis solutions can provide results faster. Such solutions help track real-time spending, deliver validated reporting, and present results in a user-friendly dashboard format that can be accessed from anywhere.
Visibility fuels actionable insights and transformation
In conclusion, spend visibility is a critical aspect of any organization's decision-making processes. It enables better buying performance by providing insights into spending patterns and identifying inefficiency, risk, and cost-savings.
With the help of technology, data collection, cleansing and analysis can be automated and made more efficient, giving you a clear view of your spending in real-time. As your analytics partner, Sievo can provide a best-of-breed solution that offers a holistic view of spending and ensures that your data is accurate and in better shape than ever.
Join a demo to learn more about how we can help you achieve better visibility and to see our solution in action!