Spend Analytics (Part 1 of Blog series): How can it help you in the wake of Covid-19?

The Covid-19 pandemic has shown how resilient and effective procurement organisations can be. But how can we ensure that we are spending correctly? 

What are the opportunities available to improve efficiencies, deliver with greater speed, build an even more resilient supply chain and be adaptive to other changes that could come our way - such as another wave of the pandemic or Brexit??

When we look back the way this pandemic changed the way we procure and interact with our suppliers, there is an opportunity to understand how spend analytics could provide better visibility into the spend through transparency, provide decision points, monitor and improve spend, identify demand-supply gaps and help us respond to these challenges in a quicker and a more effective manner.

We all saw how NHS scrambled its forces together to assemble the essential PPE kits required for its hard working staff and how the decentralized nature of this mammoth organisation did not really help with the leverage it could have otherwise had. 

We all faced empty shelves when we went to the local supermarket to stock up on flour, bread and even toilet paper!

We all realised how little equipped our retails chains were to respond to the huge demand in items such as hand sanitisers.

So how then do companies ensure they get the balance right (if and when such a situation arises in the future) between recognising opportunities to generate savings, meeting the demand-supply gaps that arise and above all, keep focus on a sustainable supply chain?

Its important that we stop and ask ourselves:

1. Do we have visibility into our spend? Where, how much and what are we spending on?

2. Do we have the skill set and more importantly tools to perform analytics that can show us where the opportunities are?

3. How quickly can we perform such analysis to not only create plans in wake of such situations but also deliver on low hanging fruits?

4. How do we identify savings levers specific to each category/sub-category and implement these quickly and effectively?

5. What metrics can we track beyond spend, savings and cost?

6. How do we work collaboratively with suppliers whilst supporting them with data that is available and visible to us?

Spend Analytics is key to identifying answers to all these questions. It not only helps you build a road map on category sourcing but also helps identify savings, tail spend, procurement KPIs, behaviours and provides visibility as well as action points to track spend.

Understanding and analysing spend has helped organisations succeed by identifying levers that help unlock savings and value. What further helps identify and implement strategies or tactics to manage spend during a crisis such as the pandemic is an effective digital platform or tool that is capable of raising alerts without the need for a resource intensive process. The fact that most of us have had to work remotely and will probably continue doing so while collaborating with colleagues and suppliers across the world only builds a stronger case for a digital strategy. If you have not considered a digital platform with spend analytics as a part of it, now is the time to do so.

Applying spend analytics can help a procurement organisation make better and informed decisions by providing a better control over your spend and can help navigate crisis situations more quickly and effectively. Spend analysis can enable competitive advantage, enable better supplier relationships, you may even want to see it as the most exclusive secret weapon at your disposal.

Diego summarizes the importance of spend analytics in his podcast here.