As the global economy hits turbulence, company leaders are being forced to make tough decisions. To cut down costs, some organizations are laying off employees in mass—and layoffs could skyrocket even more if the economy spirals.
However, during the turmoil, procurement leaders have a chance to save their company from the next round of layoffs. By implementing the right spend management moves now, procurement professionals can shift cost burdens around, identify savings opportunities, increase efficiency, and help avoid layoffs.
Are you wondering how? In this article, we dig into the best ways to use spend management to increase efficiency and avoid layoffs.
Why Limited Spend Management is Leading to More Layoffs
Layoffs have surged in the last year—rising above 270,000 as of March. That’s nearly a 400 percent increase in job cuts from the same time last year. Not all procurement leaders realize how limited spend management contributes to layoffs or how mismanaged spending could ignite an ever worse string of job losses.
Inefficient spend management worsens the layoff trend for two main reasons:
- It allows bloated costs to slip under the radar, putting more pressure on leaders to cut labor.
- It trips up procurement leaders when they try to build a plan to avoid layoffs.
What’s Holding Back Spend Management Efforts?
Spend management problems aren’t necessarily procurement leaders’ fault. In many cases, procurement doesn’t have the insights to understand how money is flowing or inform their spend management strategies. Here are a few common challenges:
Noncompliant spending is creating blind spots.
Too often, employees are ducking under approved payment systems and spending with unapproved suppliers. Those rogue purchases create blindspots for procurement.
Limited spend visibility is dead-ending plans.
Most procurement teams don’t have the spend visibility they need to build an efficient strategy. Without clear data laying out where money is flowing, where there is negotiation leverage, or where supplier discounts are hiding, it’s difficult to craft a plan to maximize profit.
Inefficient P2P processes are producing inaccurate spend data.
Even when companies record spend data and pass it on to procurement, it’s often inaccurate. That’s because many procure-to-pay (P2P) processes require employees to manually input data, such as categories, units of measure, and accounting figures. And the more human touches there are within your P2P processes, the higher the chance of errors that can corrupt your spend data.
How SpendTechTM Improves Spend Management
Technology can make it easier for procurement leaders to develop and execute a more efficient spend management program. Here are a few reasons investing in SpendTechTM, or spend management technology, helps companies improve spend management:
- Centralized spending: Advanced SpendTech™ will include a centralized digital marketplace. These features let employees easily see supplier deals and purchase from approved suppliers. That reduces rogue spend, increases spend under management, increases data quality, and helps you capture more spend data. It also allows you to see what discounts your employees are using and what contracts your organization is taking advantage of.
- P2P automation: Automated P2P solutions use machine learning to identify patterns in your team’s day-to-day spend, streamline workflows, and identify errors. That all reduces mistakes, saves employees time, and increases efficiency.
- Digitization: SpendTech lets you digitize your entire P2P process, from sourcing to purchasing to PO management, payment, reporting, and everything in between. It also allows you to submit POs, approve orders, manage transactions, track order details, and handle all of your spend management duties in a matter of clicks.
How Better Spend Management Can Help You Avoid Layoffs
SpendTech can improve spend management, but you may still wonder: “How does improving spend management with technology help reduce layoffs?” Here are a few ways:
- Reduce costs: P2P automation reduces costly errors and boosts efficiency. It also helps you see how your company is spending. That means you can identify where excess spending is occurring and shave down high costs.
- Identify supplier discounts and sourcing opportunities: SpendTech gives you the insights to make more sound strategic sourcing decisions, build supply chain resilience, and identify opportunities for additional supplier discounts. That all lifts pressure off the company’s bottom line—and gives you the financial breathing room to bypass layoffs.
- Find more time to focus on strategic improvements: If you’re handling spend management manually, you may need to dedicate days and weeks to piecing together spreadsheets or inputting data yourself—and that’s time few leaders have to spare. SpendTech frees up procurement leaders to focus more time seizing sourcing opportunities and mapping out a plan to avoid layoffs.
- Contain spend within budgets: With clearer spend visibility and more accurate spend data in hand, it’s easier to build a budget, revealing a path towards more profit that doesn’t include layoffs.
Learn More Ways to Empower Your Procurement Team
Better spend management can help you lower costs, locate better sourcing opportunities, and reduce the need for company layoffs. And there are more ways to use technology to improve your company’s financial future! Read Spend Matters: The Evolution of Corporate Procurement Systems to learn how technology can open up new procurement opportunities.
