|
Executive Summary
The past three years have highlighted the importance of supply management to overall business success. Unable to grow revenues, companies were forced to develop strategies to rein in costs and to maintain profitability. New regulations also required companies to become more diligent in ensuring accurate financial reporting and compliance. Leading enterprises have found that supply management offers the largest and most direct opportunity to achieve these goals.
The case for supply management is straightforward: spending with external suppliers is the single greatest expense for most enterprises. Supplier relationships also directly impact an enterprise’s product quality and overall responsiveness and competitiveness in the market.
Supply management involves a host of interrelated strategies and tactics — from strategic sourcing and procurement execution to supplier management and development. However, the success of any supply management strategy is largely dependent on the ability to access, organize, and analyze spend data.
When organized and classified to a standard schema, spend data can be mined for a wealth of intelligence on spending patterns, inventory status, and part attributes. Such insight is critical to identifying hard-dollar savings opportunities and to developing optimal sourcing, budgeting, planning, and product strategies. Spend data can also be used to facilitate business processes, such as triggering discounts and rebates in procurement systems once volume thresholds are met.
Unfortunately, few enterprises are effectively controlling their spend data. At most companies, spend data resides in multiple, disparate systems and is not classified to a level of detail that is useful for analysis. As a result, supply managers and business executives are being forced to develop strategies and make decisions based more on intuition than fact. Aberdeen Group estimates that enterprises are losing billions each year owing to a pervasive inability to organize and analyze spend data.
Faced with such facts, leading enterprises are making Spend Data Management (SDM) a priority. SDM is the process of aggregating, classifying, and leveraging spend data for the purpose of reducing costs, improving operational performance, and ensuring compliance. SDM requires enterprises to select a common classification schema that can be applied across all spend data and used for actionable analyses and guided business processes. Because of the sheer volume and complexity of spend data within an enterprise, SDM must be enabled through use of business applications and services that automate labor-intensive classification, enhancement, and analysis activities and that can organize spend data at a detailed, attribute level — all on a repeatable basis...
To read more download full white paper. |
