Alleviate Spend Management Pain: Gain Insight Fast With Analytics
Spend analysis is a powerful part of the latest spend management solutions available to supply chain professionals, and the reason is clear: It can help supply management teams obliterate roadblocks and get what they need quickly and efficiently. We’ve looked at how to cut costs and how to master your procurement data. In this last of three articles about spend management, we’ll look at how you can speed up the time it takes to attain valuable insight into the supply chain.
More and more procurement organizations strive to implement spend management programs that allow them to increase the speed of data integration and processing, that help them quickly trigger actionable insights, and that accelerate reporting mechanisms which save costs and increase working capital.
However, there are still multiple challenges they face that represent a combination of different obstacles blocking success:
- Manual categorization and cleansing processes
- Limited ecosystems or integration with multiple data sources
- Limited ability to customize reports and dashboards
- Lack of real-time data refreshes
- Inefficient, non-standardized contract clause tracking
- Limited or no ongoing monitoring and screening capabilities
Procurement professionals need to access accurate information and be able to make updates to supplier data in real time, incorporate organizational knowledge, and monitor and integrate changes to data on an ongoing basis.
Advanced spend analytics capabilities available in the market today can help procurement teams eradicate inefficient manual processes, break down siloed data walls, and enable monitoring and screening capacity. It has the power to inject the necessary ingredients into the spend management cycle to increase velocity across multiple components of a spend management program in three important ways:
1. Faster integration and implementation cycles
Many procurement organizations continue to rely on labor-intensive cleansing and classification processes, using basic spreadsheet applications and manual reviews to aggregate, classify, and analyze spend data. Manual or semi-manual processes can take too much time to map the data to fixed structures and then normalize, cleanse, and classify the data. The result is that data collection and data refresh processing could take from two to three weeks up to four to six months or more to complete.
Effective spend data management automates data extraction, classification, enhancement, and analysis and streamlines existing procedures to make data consolidation and integration a repeatable process. Advanced spend analytics can enable procurement organizations to complete data cleansing and classification in a matter of days – if not hours – rather than weeks.
Today’s spend analysis tools systematically accept and process spend data from any data file, such as GL and PO data, supplier performance information, expense data, and contract data from multiple systems. Proprietary intelligent agents and an extensive library of scripts automate these processes, significantly increasing speed and enabling effective data extraction for fast implementation and data refresh processing, saving a significant amount of time, resources, and cost.
2. Speed to insights
Gaining timely and accurate insight into detailed spend data affords a business visibility into master data and supplier relationships, and gives them a view of overall spending, supplier diversity, and risk, which enables better-informed decisions.
One of the ways procurement teams can achieve speed to insights is by combining search and query tools, which enables them to seamlessly search and filter both structured and unstructured data simultaneously. Through spend analytics, procurement teams can quickly classify and organize information for analysis and decision-making purposes by using functionality that enable them to make changes on the fly and apply instant adjustments to logic and parameters, resulting in faster turnaround time and more relevant and actionable analysis.
Additionally, online user feedback can quickly and efficiently incorporate organizational knowledge to ensure accuracy, completeness, and quality of information. Self-learning or rules-based systems can accelerate the handling of exceptions to improve classification rates on subsequent rounds.
3. Real-time monitoring and screening
A major trend in procurement strategy is the transition toward automating supplier monitoring and screening processes. Procurement teams need access to spend management capabilities that enable ongoing monitoring of any changes to suppliers’ master data – such as organizational structure and corporate linkage – and systematic triggering of screening procedures to determine suppliers’ compliance with company policies and contract terms. Spend analysis can help procurement professionals automate that process.
Procurement teams can also use capabilities provided by spend management solutions to accelerate their due diligence, by pre-configuring risk parameters and thresholds to proactively determine whether a supplier needs additional or enhanced screening. Embedded work flow functionality can be used to speed up supplier completion of compliance training, audits, or required annual certifications.
Assure continuous success
Spend analysis is a continuous process that requires constant visibility and access to updated information quickly and efficiently. One way to assure continuous success is through the implementation of spend management processes and analytical tools that enable businesses to consolidate and integrate data, review and update information on the fly, and proactively identify changes. These capabilities can help organizations achieve:
- Easy Extract, Transform, Load (ETL) processes, import/export of data and categorization mapping
- Systematic cleansing, classification, and data refresh processes
- Configurable duplicate- and error-detection capability
- Dynamic visualization and flexibility and customization of dashboards and reports
- Dynamic feedback functionality that incorporates organizational knowledge
- Ongoing monitoring to track changes to master data, contracts, internal policy, and applicable regulatory and compliance requirements
- Easy integration with other data sources to apply analysis beyond spend data, such as suppliers’ risk scores and financial and operational information
The most successful procurement organizations understand that supply market dynamics are constantly in flux, and they cannot afford time devoted to labor-intensive manual processes. Advanced spend analytics can help organizations automate processes to seamlessly integrate data and inject velocity across the spend management cycle to accelerate intelligence-gathering and support decision-making more efficiently.