Sourcing has always been an opaque part of the procurement process. Finding suppliers and closing business deals is a job that depends in large part on personal connections. In the modern age of globalization though, efficiency is the number one priority. If an organization wants to remain competitive, it needs to digitize. That’s where tail spend management software comes in. As procurement activity happens, tail spend management software cleans, cuts, evaluates, and reports what is going on. This feedback is crucial for running your procurement processes in the most efficient way possible.
So what is it about e-Sourcing that has traditionally been difficult to manage? To put it simply, supply chain efficiency can be opaque. Thanks to the advent of technology, here are 6 ways that tail spend management software offers transparency and improves the process.
1. Record keeping
With a dependency on soft skills, unwritten rules, glad-handing, and subjective decision-making, sourcing is not an obvious candidate for conversion into business process management (BPM) system. It’s hard to digitally codify best practices of deals that are known to require a bit of flair.
If traditional sourcing happened in person, e-Sourcing happens on the cloud. The cloud “watches” and provides a digital record of when, where, and how sourcing activity goes down. This record keeping ability is something that computers can do much better than people ever could. A computer system can tell you with a high degree of accuracy how long it takes a single procurement officer to close a deal on a single product. It can tell you how much you spend for a certain part, how many other vendors offer the same part, and how many messages go back and forth from buyer to vendor before the average deal is done. From the first contact to a signed contract, tail spend management software is passively recording and measuring everything.
2. Centralized Spend Management Database
Where are all those records going? In order to process the recorded information to provide data-rich spend analysis to your organization, the data all have to go to a single space. That space is your spend management database.
A single data-set means you take everything into account. There are no silos. There are no numbers unaccounted in a disparate platform. You can capture data from required legacy systems, peripheral databases, online transactions, and integrated platforms such as from Purchase Card spend, Time and Expense systems, Travel Spend, Physical Invoices, and more. Leading developers like ProcurePort always include user-friendly tools for exporting and importing data from various sources such as Excel, CSV, and XML files. Thanks to cloud-hosted spend management software, all old and new records from the organization are housed in a single, central repository.
3. Data Cleansing
Once all the data is in a single location, spend management software has the ability to cleanse the data. Cleansing involves removing or combining duplicate entries, categorizing, and making it easy to read and comprehend for system users. Incorrect or questionable data also gets flagged. This improves the data integrity at the foundation of your e-Procurement operations. A few examples of automated data cleansing are:
- Normalization – checks spelling consistencies across platforms (such as vendor names)
- Categorization – accurate categorization of types of spend to UNSPSC or custom taxonomies
- Spend Type Analysis – cross-references supplier type, supplier density, location, spend amount range, category, sub-category, and other scenarios.
No more endless scrolling. With the click of a button, your data will be cleansed.
4. Transparent Budget Management
A key benefit of spend management software is the transparency it gives your organization for managing budgets. Drill down to PO line items, detailed supplier information, and spend category by business unit. By having real-time budget numbers at your fingertips, your procurement officers have improved visibility.
5. Pinpoint Maverick Spending
Nobody likes to admit to having maverick spenders in the organization, but unchecked purchasing is common in procurement. With the clean data of spend management software, its easy to see which buyer is spending the most and buying the quickest. Rein in the culprits and your procurement efficiency will level off big time.
6. Uncover Savings Opportunities
With clear visibility, spend management software helps you find savings with existing and new suppliers. You can spot immediate downstream benefits or the market intelligence in a spend analysis report may suggest opportunities from a new supply chain. When the data is simplified and presented in a user-friendly way on dashboards, you can compare information across multiple years, quarters, or months.
From record keeping to a centralized database with cleansing and transparency, digitized spend management does things that humans have never done with the same level of speed or efficiency. This software is exceptionally powerful and organizing information. Thanks to technology it’s possible to execute a fully-complete spend analysis and know for certain that no single piece of information was overlooked. With incredible transparency, spend management software gives the kind of visibility across platforms that allows your procurement buyers to consistently seek, make, and close better deals on a daily basis.
To learn more, download our whitepaper: Spend Analysis – Leveraging Technology to Translate Data into Sourcing Intelligence.