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Procurement outsourcing and the use of computerized ERP tools is meant to deliver a wide spectrum of benefits to both small and large organizations. All such benefits are important, and one of them is spend visibility. Outsourcing should enable an organization leverage tools that promote accountability and clarity of all procurement procedures, including purchases, order fulfillment, and payments.

 

But what exactly does spend visibility entail as far as procurement best practices and benefits are concerned? Below are some useful insights:

 

Spend Analysis

 

It's impossible for your Procurement Strategy organization to obtain a clear picture of its buying habits without carrying out spend analysis. Such an analysis involves collecting your spend data wherever it may be, and categorizing it in line with company and procurement industry best practices. The gathered data is then enhanced with market intelligence (based on procurement research) to produce insightful scrutiny and report depicting your business purchasing behavior.

 

Through spend analysis, you're able to obtain spend visibility that's needed to make superior, quicker, and more confident purchase decisions. It even enables you to develop more negotiating power.

 

Determining How Much You're Spending

 

When you're relying on several suppliers, it makes sense that you're able to know how much each one of those is costing you. Spend visibility makes everything clear, helping you choose your next supplier more prudently. 

 

Price Scrutiny

 

Does the procurement system you're currently using enable you to track prices by different vendors so that you can pick the most reasonable without compromising on quality and delivery time? Spend analysis tools can help indicate where there are substantial price variations for the same type of goods or services. If there are saving leaks, these will be identified and sealed too. Likewise, purchasing overlaps are revealed so that your company can save more money in every purchase it makes.

 

Industry Peers Spending

 

Do you know how much your Indirect Categories are paying for the same supplies as your company's? On your own, it can be difficult to obtain such data, particularly because you may lack resources to carry out the relevant procurement market research. Typically, that's an issue you can solve with procurement outsourcing. When you compare your spend with that of your industry peers, you can make changes that yield appropriate cost savings.

 

 

Spend visibility is certainly a much valued fruit of procurement outsourcing. It provides a window into your business' buying habits, helping make appropriate adjustment for cost reduction.