You don’t know what you don’t know.
Donald Rumsfield, past US Secretary of State for Defense, was famously lampooned for his speech in 2002 about that concept:
“There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say, we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know.”
Ridiculed though he was, these insights ring true, and his philosophy applies to all areas of life and business.
There will always be gaps in our knowledge, there will always be things we are missing. But, if you aren’t shining a light on all aspects of your corporate spending, then you are in the dark about how much your business could be saving.
Ask the right questions, and be able to answer them
An efficient spend analysis results in a clear overview of the ‘who, what, where, when and why’ questions that your procurement function should be able to answer about your organization’s spend at any given time.
What are you really spending? Who are you spending it with? Why are you spending it? When you get it, does it live up to promises? Where are the opportunities for improvement?
A robust spend analysis solution can reveal not only facts and figures on your spending but can also help you establish your rationale for spending, helping your business ensure you ask the right questions of yourselves and your suppliers.
Are you buying the same goods from different suppliers in different areas across your organization? Who and what powers those decisions? Are you able to achieve lower prices through bulk purchasing agreements and increase efficiency in supplier management? Are your internal stakeholders spending corporate dollars and resources wisely?
Spend analysis provides actionable insights into your business’ spending
Though the world is increasingly digitalized and data-led, there is no point in collecting data simply for data’s sake. Spend analysis isn’t just about neat and tidy reporting, recording, and forecasting. It is about the ability for accessing real-time analyses and using the results to instigate meaningful organizational change – and, ultimately, it is about increasing profitability.
Investment inaccurate spend data management achieves transparency
Supply chain optimization simply isn’t possible without complete spend transparency. If you are dealing with disparate data, and your supplier list doesn’t show a complete and accurate picture, then you don’t know what you don’t know. But you do know your bottom line is being compromised. Complete, up-to-date, accurate information reduced risk and expense.
Organizations that invest in spend data management software are benefited by achieving a comprehensive view of their business operations. This is turn furnishes them with the ability to make informed decisions based on real-time, customizable insights.
Be concerned with the cost of not investing in spend data management tool
Ultimately, spend data management software is a tool for making your payment structure work in your best interests, consolidating suppliers and purchasing, optimizing your inventory and delivery performance. Most importantly, it can highlight opportunities for profitability and maximizing working capital.
Another famous saying about knowledge also applies to this scenario. Sir Francis Bacon famously said,” Knowledge is Power”. The information available from a comprehensive spend analysis can be a powerful negotiation tool when securing cost-reduction agreements with suppliers.
Manage costs with a comprehensive view
Making the most of spend intelligence can help businesses capitalize on savings and growth opportunities. Spend analytics can support cost reduction initiatives, by using accurate and actionable data, to help companies increase their bottom line and improve the efficiency of spend data management.
At ProcurePort, we have processed over $3 trillion in spend globally. Our software and services allow procurement teams to conduct the comprehensive, accurate analysis necessary to drive and measure cost savings.
Our spend analytics software is a cloud-hosted solution that allows you to conduct various scenario analyses on all your organizational spending. You can access all your spend data via user-friendly dashboards and pre-built reports, and can also build your own unique reports to extract what you need to know.
Our best in class e-procurement solutions can help shine the light on your corporate spending that could help you identify those unknowns and turn them into profit. To find out how our team of industry experts can help you implement change, please get in touch.