The phrase, ‘you have to spend money to make money’ is sort of a constant in the business world. Although, as with everything in life, there needs to be balance to the spending. This is where procurement comes into play. While procurement is often looked at as simply the sourcing lifecycle of contracts for needed goods and services by a company; it actually plays a vital role in managing your business spend.
Business spend management, or your business spend, is the set of processes and procedures that are enhanced and streamlined by business software in procurement. In other words, business spend management entails the software that automates and assists in everything from the procure to pay process to invoice and expense management. Essentially – it’s the collective group of activities that account for your company’s spending.
To manage business spend, then, since it’s essentially each and every penny that your business spends, it’s vital that your company incorporate a series of sophisticated technologies and software solutions that are compatible and comprehensive in nature. This, in turn, will enhance your company’s entire procurement lifecycle and optimize each of the procurement processes on an individual level. Upon optimizing each of these individual processes and connecting them together through compatible software; the entice cycle is streamlined, automated, and collectively optimized.
Ultimately resulting in a minimized cost of procurement and effectively reducing business spend. There are a variety of business spend management solutions available that will help you consolidate the procurement lifecycle within your business, improving efficiency and reducing overall cost.
Breaking Down Spend Management Even Further
While spend management is an umbrella that the entire procurement lifecycle falls under, we can break its function down even further and examine the various aspects of business spend management (bsm) and how they fit together for a smooth procurement solution.
Vendor Management and Vendor Relationships
Procurement is more about the vendor and supplier than it is about the business seeking goods or services. With a business spend management solution your vendor relationships are managed under the same software as the rest of the procurement process. This gives your company an advantage in several ways.
In setting up reverse-auctions, having your vendor management portal in the same software that the rest of your procurement activity takes place in bridges any sort of manual input or file-transferring. Rather, the supplier-vetting, requests for proposals, short-listing, and reverse-auction are all conducted under the same software with minimal effort and oversight by your employees – so they can focus on more meaningful business activities.
In addition to keeping all of the front-end vendor relationships under the same roof, so to speak, vendor-feedback and vendor-rating is also maintained within the same software; making it easy to find and remember negative or positive remarks about any of the suppliers to which you award a one-time contract.
Invoicing, Accounting, and Finance
In a similar vein to vendor management, business spend solutions will maintain the invoicing, accounting, and finance aspects of the procurement transactions as well. This allows the accounting and finance department more direct control and influence in the business. This is an added benefit as these departments are often siloed from business decisions. However, having their station wrapped into the same spend management solution breaks down that wall and gives them access to more real-time input.
Not only that, but your procurement team will be more consistent in hitting their procurement marks, in turn reducing the number of one-time buys in which your company engages. This is a major area that procurement professionals often focus on reducing; as these unforeseen expenses can quickly add up and begin eating into your yearly budget.
As a comprehensive system, business spend management solutions need to be comprehensive in their coverage of the procurement lifecycle. As such, one of the other inclusive aspects of a spend management solution is contract management. Bringing contract management into the mix bridges the vendor management and accounting aspects of a business spend solution, truly making it comprehensive.
Having contract management involved in the same software-system will allow your team to analyze stronger data that relates to cost-analysis and cost-reduction. Your team will be able to compile data from both the vendor management and contract-management aspects of the software, to make informed and conscious decisions about partnerships and contracts moving forward into the future.
Putting It All Together
Between vendor relationship management, contract management, and accounting, finance, and invoicing, a business spend management solution addresses the entire lifecycle of procurement within any business structure or organization. Wrapping the entire procurement system into this container streamlines the procurement process with better and stronger data, minimizes the cost, and also allows for business professionals and organizational leaders to make higher-level decisions that address the entirety of the life cycle.
Business spend management is an important and growing practice in procurement. Rather than using a variety of softwares and automated technologies that are incompatible; spend management theories implore the procurement professional to use a single software, or a series of compatible softwares to streamline and optimize the procurement system by addressing each level of the process as an individual unit.
For more information on how managing business spend with spend management solutions can reduce the cost of your procurement lifecycle, visit ProcurePort. ProcurePort is the internet’s premier place for everything on procurement, from information and knowledge, to software and technology, and everything in between.