Digital transformation is the buzzword of the moment. Businesses are focused on how they can adopt technology and automation into their organizations in order to leverage innovation and future-proof their business. The threat of lagging behind competitors and the market as a whole by failing to take advantage of opportunities for digital advancement is very real. Digital transformation is as much about businesses bracing themselves for the future as aligning their business practices with their competitors in the present.
The procurement profession is no exception to digital transformation, as procurement departments everywhere are digitalizing their processes and procedures. The aim is not to automate procurement, but to automate procurement processes and transactions, allowing for procurement professionals to take on an increasingly strategic role within the business that is more about adding value than simply cutting costs.
Procurement cost reduction strategies deliver savings and minimize profit erosion, helping you understand your company’s spending strengths and weaknesses.
Spend management is the most critical aspect of a procurement department’s function. It is easy to see why when you consider:
What are the potential consequences of ineffective spend management for your organization?
A lack of visibility into spend has a multi-layered impact on your business’ balance sheet. Inadequately classified spend categories, duplication of data or supplier accounts are all examples of where human error can conceal wasted opportunities and wasted corporate dollars. Inefficient spend analysis can increase maverick spend and limit your procurement departments power to address cost-savings mandates. The bottom line is that your organization’s bottom line will be negatively impacted unless your spend management is a tightly run ship.
Naturally, the profession has turned to digital solutions in order to enhance their spend management capabilities. Spend management software will help your business manage corporate spend and recognize critical savings opportunities that would otherwise be lost in a sea of disparate data.
With many organizations still looking no further than Microsoft Office to meet their software needs for spend management and eProcurement data collection and organization, these businesses cannot be achieving optimal clarity or visibility without proper, industry-specific, expert solutions.
How procurement cost reduction strategies can help, with spend analysis software
The right spend management solution will be able to address your needs, and the right software provider will help you to determine what they are and how they need to be addressed. At ProcurePort we offer a free spend analytics assessment to all eligible companies, which will help your organization to identify the gaps in your spend analysis and what you need to change in order to streamline your processes and get the most accurate insights into your organizational spend.
Spend analytics is about providing reliable, properly categorized, easily referenced real-time data that provides you with optimal insight into your organizational spend.
By mining your spend analysis for data, you can identify and eliminate maverick spend. By introducing user-friendly e-Procurement systems in your organization, you will also drive down maverick spending by make it more attractive and simple for your internal stakeholders to buy into your preferred procurement processes.
With access to data that can fully inform decisions on which vendors to do business with, there will be fewer instances of gut feelings or hunches or connections influencing decisions to award contracts that end up leading to missed opportunities.
Your negotiating position is also strengthened when you have a full overview of your business spending and your activity with every vendor across all spend categories.
A robust spend management solution will help you to identify savings opportunities but also achieve greater efficiency and save manhours and resources. All of these improvements have a direct impact on your business financials.
But doesn’t automation mean replacing people?
Only if you are looking at digital transformation in the wrong way. As we stated previously, the aim is not to automate the procurement function but to automate procurement processes. This leads to increased efficiency and opportunity.
EBN online recently hit the nail on the head with the assertion that digitalizing the procurement process is about “improving – not replacing – procurement jobs”.
We couldn’t agree more that AI and digital transformation is not to be feared by personnel, and that technology cannot replace the procurement profession.
It can only serve for a happier, more efficient, more knowledgeable workforce who can leverage technology to spend less time crunching data and more time being part of their business infrastructure.
To find out whether your business qualifies for the free spend analytics assessment we offer at ProcurePort, contact our expert team to discuss your current spend management solution and how we can help take it to the next level.