According to research by Ardent Partners, for the average enterprise the percentage of spend under management for 2017 is 61.2%. That number has remained relatively flat over the last year. In fact, Ardent Partners research shows that only 16% of all CPO's are focused on increasing their spend under management over the next few years.
This satisfaction with only managing 60% of total spend is shocking, particularly when Ardent Partners' research has consistently shown that procurement organizations with more spend under management realize superior performance across other key metrics. In fact, their research has revealed that for every dollar under management by procurement, the typical enterprise has seen a benefit of between 6% and 12% during the first contract cycle.
On Wednesday, September 27th, professionals representing more than 200 procurement organizations participated in the interactive, online seminar, “Strategic Spend Management: Best in Class Strategies for CPO Success”.
(If you were unable to attend the live event, don’t worry, the event was recorded.)
More Spend Under Management = Measurable Benefits
The session, hosted by Ardent Partners, featured three dynamic speakers. Andrew Bartolini, of Ardent Partners shared some recent study data from their report, CPO Rising 2017: Tools of the Trade.
Among the details Andrew discussed were the following:
- Savings is a critical metric for CPO’s, but the metrics have expanded to include items such as the impact on cash, internal feedback, spend under management along with other measures.
- The CPO’s interviewed for the study indicated that their planned investments in technology where an “Active attempt to develop and scale organizational expertise”.
- While savings is a priority, over the next 3 years, CPO’s indicated they are focused on “fixing in-house items” such as process efficiencies and effectiveness.
As he concluded, Andrew remarked that companies with higher spend under management are more successful in metrics such as savings, contract compliance, and supplier enablement.
Real-World Example of Driving Spend Under Management
Chanin Styka of Kimberly-Clark shared her experiences on an internal program called, “The Path to 100”. For Kimberly-Clark, a company with a diverse product line, a single buying channel that fits each material and product that Kimberly-Clark needs is difficult to achieve. As part of their program, they segmented and determined for each channel the amount of oversight and control needed to ensure management of the spend. A specific area of spend to be addressed was Non-MRP PO’s.
Chanin and her team realized that difficult buying processes most often cause rework, which takes time and causes frustration, driving users to buy using other methods.
Chanin shared some of the results of her project. The end results were impressive. Over 1500 users were transitioned to the tool in 2 months, as well as 3000 senior executive approvers. Even with casual users, Chanin was proud to report high levels of engagement and use of the BuyerQuest platform.
As part of the rollout, Chanin remarked that different individuals at Kimberly Clark had different learning needs, so they provided a variety of training options to promote adoption. She also highlighted that simplified policies helped compliment the ease of use.
Applying Technology to Improve Adoption
The final speaker, Kyle Muskoff discussed the broader BuyerQuest platform for Procure-to-Settle. He highlighted the Marketplace, the e-commerce interface designed to create an intuitive, simple user buying experience. He discussed the application of technology to drive from the 60% spend under management number towards 100.
Kyle noted that leveraging the web forms module aligns to driving more spend under management. By using the forms engine, services and non-catalog spend can be integrated to the rest of the shopping experience, providing relevant forms when searched. He pointed out that forms are being used beyond just spend, with clients using the forms capabilities for processes that are critical to the organization, such as P-cards, or another process to be enabled to users in a single location.
Kyle went into detail on the use of supplier collaboration and RFQ’s for large purchases or one-time services.
Finally, he noted the right insight that can drive from 60 to 100. Catalog and non-catalog spend and product and services spend in a business intelligence. Flexibility to create reports to analyze and create actionable insights to improve end-user experience and drive more spend under management.
To complete the event, Andrew Bartolini returned to offer some strategic recommendations to drive more spend under management, including steps such as developing talent, technology and creating an “Agility Agenda”.
Together, the speakers offered valuable insights that any procurement organization could apply to leverage technology, processes, and industry expertise to bring more spend under management. We strongly encourage you to watch the webinar when time permits.
To view the recorded event, click here.