A veteran consultant with extensive experience in spend analytics and spend management, from tail spend management to sourcing savings, has warned procurement pros not to be complacent about their cost reduction endeavours. Too many think that they have done their due spend management diligence but, he insists, they are often mistaken.
As reported in the online resource for procurement and supply chain professionals, The Strategic Sourcerer, spend management consultant, Brian Seipel, urges procurement pros to be sceptical toward their assumptions that they’ve got spend under control, whether it concerns IT, marketing, or any other area.
In light of the Chancellor’s Autumn Statement, many British procurement pros studying their UK Budget overviews would probably agree that spend management has taken on greater significance. Seipel urges them not to fall for an ‘out of sight, out of mind’ fallacy, citing the example of organisations that conduct brand-wide strategies but omit “searching for the agency best suited to see them through.”
For Seipel, it is the reliance on ambiguous definitions that is responsible for such oversights. Conventional definitions of spend management exemplify the problem, he says, offering the typical ‘any spend under active control by procurement’ mantra to illustrate his point. This may have a certain appeal – it is clear, concise and simple – but says nothing to procurement professionals about how they should go about managing spend.
Seipel poses procurement teams with four questions, which he believes will orientate them to the realities of effective spend management:
Is the spend properly sourced?
Is the spend covered by contract terms?
Is the spend audited regularly?
Is the spend analysed and reviewed?
Finally, he insists that procurement teams don’t make the mistake of seeing this as a one-off operation. It is fundamentally cyclical. As the Strategic Sourceror concludes, “When it comes to bringing and keeping spend under management, Procurement’s work is never done.”
Steve has over 28 years of success as CPO, MD and Procurement BPO leader in a range of industries. Steve is COO at Odesma, responsible for Odesma’s delivery capability & infrastructure.