Top Financial Concerns for CPOs
How to Spend Well
CPOs all face the challenge of controlling overspend. This challenge is daunting for many procurement leaders, who struggle to control spending in the hands of many purchasers. Even with the best in preparation of negotiated contracts and planned budgets, there are many things that can derail procurement spending.
Potential pitfalls that lead to overspend include:
- Poor Preparation
- No access to contracts or preferred suppliers
- Rogue Spending
- Poor Strategy
How to Resolve Overspending
Business spending principles and consumer spending principles are often not so different. Just like you need a personal budget to manage your spending at home, your business or organization needs a budget, too. Budget planning can be a monumental task, but if you are armed with the right information then planning becomes easy and streamlined.
Access to Information on a Unified System
The value of a unified system for maintaining a healthy spending flow cannot be overstated. A major frustration for many procurement leaders is when they have great supplier contracts already negotiated, but no way to communicate the way purchasers need to purchase in order to optimize those contracts. Contract negotiation can be wasted, hurting both the buyer and supplier, when organizations cannot internally communicate those agreements. With an e-procurement system, users can easily see preferred contracts and suppliers so they can make the best choice for their team.
Leading your team to in-system (non-rogue) spending can be a challenge if you don’t have the right resources. When purchasers participate in rogue spending, it is generally the result of a poor system they are trying to avoid. With an easy, intuitive purchasing system, users are empowered and happy to keep their spending in the system because it makes their lives easier.
Strategy Based on Real-Time Analytics
Spending can feel out of control when the initial planning was not done properly. Poor planning at the beginning is often the result of poor analytics. Today’s e-procurement systems provide real-time analytics that allow procurement teams to see the real spending data now. Not only do real-time analytics help in preparing budgets and spending, but it also helps organizations who need to pivot later. Real-time analytics can guide your buying strategy in every stage of purchasing.
For a more in depth-analysis on managing spend, read our white paper, ‘How Mid-Size Companies Manage Run-Away Spend.’
To learn more about Vroozi Spend Management, register for a demo today or message us below.