Most organizations are racing to achieve higher profits and increased growth. But if spend management isn’t lighting your path, your company could slam into a pile of obstacles, including unmanaged spend blindspots, bloated operational costs, payment inaccuracies, and compliance violations. And with recession fears, high costs, and shaky supply chains upending organizations, a single obstacle can derail your organization’s growth plans and wreck profits.
Fortunately, there is a clearer path to more efficient spend management and company growth. By following a few steps, procurement leaders can elevate spend management, automate purchasing, and guide your company to higher profits.
Why Improve Spend Management?
As essential as it is, spend management sometimes slips off a growing company’s radar. Still, improving spend management is critical for both procurement leaders and the entire organization. Here are a few ways the whole operation benefits from elevated spend management:
- Uncover more favorable supplier deals: The more efficient spend management is, the clearer procurement’s spend visibility will become. When spend visibility is high, you can identify how well each of your suppliers is performing. For instance, you may assess how often suppliers deliver products on time, what discounts they’re providing, or if they offer additional deals. By digging into these details, procurement can uncover supplier opportunities that free up cash flow in the long run.
- Strengthen supply chains: Enhancing spend management shines a light on your supplier relationships and reveals potential problems or advantages hidden within the supply chain. With those insights in view, you can achieve supply chain resilience, increase your company’s agility if shortages strike, and cut down your inventory levels.
- Lower costs: With efficient spend management, procurement can see where money is flowing, where money is wasted, and what moves to make to retain more money. It also stirs up opportunities to negotiate better deals or leverage a supplier’s unique characteristics, such as their locations.
How to Improve Spend Management
Here are four ways to improve your spend management:
1. Provide a digital marketplace.
One way to boost spend management is by providing a user-friendly digital marketplace where employees can complete purchases with approved suppliers. If the purchasing system is easy to use, user adoption will rise, along with your spend under management. By encouraging employees to purchase through approved channels with approved suppliers, you can see where the company is spending, identify new opportunities, and map out a spend strategy that drives growth.
2. Digitize the procure-to-pay (P2P) process.
Digitizing your procure-to-pay (P2P) processes means using SpendTech™, or spend management technology, to wrap your processes, enterprise resource planning (ERP), and payment systems into one digital platform. By eliminating time-consuming manual inputs—when your team has to transfer data from one system to the next—you craft more efficient P2P processes. And the more efficient your procure-to-pay (P2P) processes are, the more time you’ll have to focus on refining spend management.
At the same time, by digitizing the purchase process, including requisitions, approvals, goods receipts, and purchase orders, business purchasing becomes easier and faster, and your control over spend improves.
3. Adopt automation.
Digital procurement platforms use automated three-way matching before payment approval to avoid over-payments and duplicates. Not only do these steps save you money, but they also save your suppliers’ payment settlement costs—resulting in additional discounts for your business.
Additionally, with just a few clicks, automated SpendTech™ lets your team purchase items, automate purchase request coding and classification, submit approvals, and keep spend under budget. Plus, purchase requests created from preferred and approved suppliers can automatically generate and send purchase orders to suppliers without any buyer intervention. The less manual work your procurement team has to funnel into tasks, the more time they have to improve spend management.
4. Refine spend management with reports.
The only way to improve spend management is to analyze how the company is spending, where money is going, and what patterns are emerging. That’s why reports and metrics are critical to improving spend management. You can increase the quality and quantity of your spend management data by adopting a digital system that consistently captures spend information and formulates real-time reports for you. With those insights, it’s easier to make smarter, more profitable spend management decisions.
Lay the Groundwork for Better Spend Management
When the economy starts shaking, procurement needs to elevate its spend management strategies. And the first step towards stronger spend management is increasing spend under management through employee adoption.
Are you wondering how to motivate more of your organization to use your digital purchasing system? Download our “Procurement Checklist: How to Boost Employee Adoption of Technology and Maximize Value” to learn the secrets to higher user adoption.
