Principles of Spend Under Management
Do you feel like your procurement processes are a mess but aren’t quite sure what to do? Outlined below are actions you can take to bring your spend management under control and in the process, show that you have the ability to take the lead on an initiative of this type.
Sourcing in a competitive environment ($)
Do you know if you’re getting the best value for what you’re spending? To ascertain this, start to benchmark the costs of the goods and services to ensure that you’re receiving the most effective price. Often times companies find themselves in a position where they need something but don’t necessarily have the time to go through the RFP process. While it may start out happening with just one or two items, it can quickly get out of hand and become the norm. Take the time to go through the RFP process as this can be invaluable for organizations that are specifically trying to get their arms around their spend.
Ensure Contracts are in Place (#)
You can think of this step as a sort of numbers game. Determine what percentage of purchases are currently being done under contract. Ideally you should be working towards having 80% of your purchases fulfilled through a contract.
Increase Compliance to contracts
In looking to improve compliance, look at both sides of the equation. While it may be tempting to blame the vendor when contracts don’t seem to be living up to expectation, don’t overlook examining any in-house factors that may be the cause. Often it can be an internal problem – whether it’s a matter of contract terms being misinterpreted or simply a rogue employee going off and doing their own thing.
Requisition and purchase order management
This aspect involves improving the P2P (Procure to Pay) E2E (End to End) by ensuring that all processes and tools are effectively aligned and supported. Part of this scope also includes implementing and testing eProcurement strategies.
Channel spend through eProcurement and eAuctions
Dovetailing onto the previous step, once the procurement processes have been revisited and improved, all procurement activities should follow the same template. This allows for better visibility of the organization’s spend so you can measure the progress and make improvements as needed.
RSVP For Change: Take a look at the purchase orders that are being processed. Are you aware of which ones are under contract and which ones are not? Make an effort to flag those that are not under contract and over time bring as many as possible under contract.
Management Insight: Although the steps seem rather straight forward, be prepared that the need for further resources (whether they be financial, human resources or technology) may arise to support the progression. As a manager, it is your responsibility to plan ahead and ensure that an effective roadmap is in place to direct the process and keep things moving forward.
Linda Craig (@LindaCraigRSVP)
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