Is your organization spending money as effectively as possible? You won’t know unless you have full visibility into your procurement process.
Unfortunately for most companies, maintaining a bird’s-eye view of spend across the entire organization is easier said than done. In fact, 72 percent of organizations don’t have the luxury of having complete visibility into their supply chains—which makes optimizing procurement next to impossible.
Without that visibility, organizations cannot reach their full potential. With that in mind, let’s take a look at five reasons why gaining complete insight into your procurement process should be a top priority.
1. It allows you to develop realistic financial goals
If you don’t know what you’re spending and where you’re spending it, you won’t be able to improve the your procurement efficiency—it’s that simple.
Once you’ve gained full visibility into your procurement, you can assess whether you’re getting the best deals and taking advantage of every available payment discount and warranty. You can then set realistic goals and come up with a plan that puts you on track to meet them.
2. You can rein in rogue spending—if not eliminate it altogether
In a perfect world, procurement managers wouldn’t need to worry about maverick spending. Unfortunately, according to one report, 54 percent of employees say they’ve gone rogue at least once before, deciding to buy something without getting proper approval.
With insight into procurement, you’re able to eliminate unapproved expenditures and rein in rogue spending significantly. That way, you won’t have to worry about employees making unbudgeted purchases and, therefore, taking bites out of your bottom line.
3. It’s easier to negotiate the best deals
Do you know whether you’re getting the best deals from your suppliers and sourcing the best materials?
Full procurement visibility enables you to know, with certainty, that you are benefiting from the most favorable payment terms and the lowest prices for high-quality products and materials.
For example, you might find out that one of the vendors you consistently shop with operates in an extremely competitive market. You may be able to use that data to convince them to extend your payment terms from net 30 to net 90. You may also be able to persuade the vendor to give you a sizable payment discount (e.g., 5 percent) if you settle your account 10 days after you’re invoiced. Either way, you can save some serious money.
4. You can maintain control of your inventory
Visibility into your spend also enables you to determine, quickly, how much inventory you have on hand at any given point in time.
Let’s say that a new member of your marketing team needs a mobile device. With visibility into your procurement, you’re able to find out whether you have any mobile devices in stock. You won’t buy another phone unless you need to.
Quite simply, visibility allows you to keep track of who has what, where it is, and how long they’ve had it. As a result, unnecessary expenditures are curtailed.
5. It’s easier to stretch out your accounts payable
You need working capital to serve your customers and continue growing your operations. Settling the invoices you owe on their due dates—and not a day sooner—is in your best interest.
When you have complete procurement visibility, you’re able to easily see which payments are owed to which vendors and when they are due. You won’t have to worry about settling an account three weeks early—thus freeing up the capital you need to grow your operations. You’ll get the peace of mind that comes with knowing you’re stretching your cash out as long as you possibly can.