You know the old saying, “Knowledge is power.” It’s especially true when it comes to spend visibility, or the ability for companies to know how much they’re spending, with which suppliers.
It’s surprisingly tricky information to gather and keep current. And it’s important – both to manage costs as well as understanding risks within the supply base. For instance, a business may not be aware that seven of their suppliers are owned by a single company (cost savings opportunity) and that the parent company is in financial trouble (supply disruption risk).
Most companies – 86% – know that spend visibility is important. However, less than half of them are doing anything about it, according to an SAP study. Why the disconnect? Inconsistent and poor data quality, manual processes, disparate data sources and weak visibility on suppliers are just a few of the culprits.
To bridge this gap and create sustainable value from spend analysis, companies need accurate and up-to-date information. Only with the right information can a company take the next steps – to analyze and consolidate costs, lower supply base risk and reach their business goals.
A spend visibility solution does more than just data aggregation and visualization. It must include lightning-fast analytics that can crunch large volumes of data and show return on investment metrics for every investment. And it yields information that supply managers can use, such as:
- Total combined spend with intelligent classification
- Aggregated spend among families of suppliers
- Identification of suppliers that pose a disruption risk
- Provide reporting for supplier diversity
For a deeper dive on spend visibility solution capabilities and benefits, I highly recommend the webinar, Spend Analysis: Driving Spend Management Excellence with the Numbers on Your Side, that took place earlier this year with D&B’s Phil Fisher, and Sandar Kamakshisundaram, Senior Director of Global Solutions Marketing at Ariba. The presentation covers what a spend visibility solution can do. And it gives real-world examples of how insights and data from spend analysis can help build a better sourcing pipeline, improve category savings and improve overall supply management.
Good spend management begins with good spend visibility. Businesses want to know: How much am I spending? What am I buying and who am I buying from? Whether hammers or walnuts, tractors or routers, businesses need to know they are getting the best price for the volume of product they need, from a supplier that is operating with a low level of risk and in compliance to company policies.
The answers are out there. Answers that can help supply managers buy with confidence, cut costs, mitigate supplier risk, and address diversity and sustainability initiatives. All of which show up in the bottom line as savings. That’s knowledge worth investing in.
Image credit: Alexander Baxevanis