Spend Visibility 101: Here’s Why Team Members Need Access To Spend Data
If you’ve experienced the rollout of a spend management solution, you know how important that initial launch is. Often, an organization consolidates from many data sources to one. In others, it’s making the leap from spreadsheets to automated tools.
There’s enormous value that comes with seeing all spend data together. This is especially true when you categorize that data by supplier and buyer, and view it in real-time. In fact, in those moments, it makes the upfront effort all worth it.
But, right after initial launch, many organizations make a big mistake: they limit spend data to finance teams only. This means that although finance teams can view spending in real time, the wider organization stays in the dark.
Here’s why every team member needs access to spend data, no matter who they are.
Because maverick spending is a real (and costly) problem
One of the most frustrating things for procurement teams to deal with is buyers who ‘go rogue’. In short, these team members purchase from whatever suppliers they want with no consideration to preferred vendors.
For the procurement team, this often leads to frustration and annoyance. In truth, though, maverick spending stems from a lack of understanding and clarity. From their perspective, they’re just trying to get the job done and disregard the impact their actions have on the finance department.
Without clear-cut spend policies in place, and without bringing awareness to bad spending habits, team members will keep calm and carry on. And the finance team will do the exact opposite as a consequence.
Our advice? Educate all your team members. By re-explaining spend policies, teaching newbies, and training troublemakers, you can begin to spread accountability for spending. And only then can you start to tame rogue spend.
Because it’s hard enough to drive purchasing engagement
Procurement teams often struggle to get the wider organization brought into new spend policies. It’s no surprise, either. For many team members, knowing how to purchase properly is the last priority on their long list of things to do.
But failing to get stakeholder participation into spend management tactics results in spend apathy. And regardless of whether you have a visible spend management platform in place, without internal buy-in, people won’t monitor it.
Ultimately, pulling spend visibility away from team leads means that it occupies a smaller role in their daily job. And as time goes on, it becomes harder to engage in efforts to improve purchasing value.
If a review of spending is part of regular team meetings and reporting, however, engagement increases. For operational teams, they’ll begin to see the importance of managing their impact on the bottom line as well as the top.
Because procurement teams are rarely listened to
Strong communication is the key to successful growth. But, when it comes to communicating priorities, procurement teams are often ignored.
And it’s easy to understand why. Quite simply, procurement teams don’t contribute to increased sales. But sales are just one piece of the growth-shaped pie.
What’s the other piece? Operational efficiency. Achieving this leads to the creation of shareholder value, increased market share, and competitive advantage. For many organizations, these things attract stronger team members, lead to more compensation, and result in year-end bonuses.
Given that these are the primary reasons we all work, it’s in everyone’s interest to have a clear and visible lens into spend management.
Team leaders are accountable to spend, not procurement teams
Segmented systems and manual spreadsheets are inefficient. Fact. They lead to human error; they create inconsistencies; and they cost time.
A centralized purchasing solution, however, helps procurement teams increase efficiency and creates visibility into an organization’s spend.
For procurement teams who lack a centralized tool, they’re often left responsible for each team’s spend management practices.
To solve this, procurement teams must roll out spend visibility to as many team members as possible. Only then can an organization reap the benefits of smarter spend management.
Editor's note Original publish date: 11 Sept 2017 Original author: Kelly Barner We've since updated and republished this blog post with new content.