While sourcing professionals might realise the importance of spend analytics for their company’s costing department, they may not be aware of how it can benefit their supply chain. By effectively utilising spend analysis, procurement professionals can cultivate a stronger relationship with their suppliers. This will ensure better return on investment and increased revenue for the organisation in a mutually beneficial exchange.
Sourcing leaders will focus on using spend analytics optimally to benefit their company rather than their suppliers. However, if you are the kind of manager who looks beyond cost savings toward the bigger picture, factoring in the benefits for the suppliers could also prove lucrative for your business.
This innovative concept will allow you to work with your suppliers and ensure your organisation enjoys extended business value from them. It has been observed that when sourcing teams share data with suppliers, their companies tend to perform better than those that treat suppliers as a mere third party.
Benefits of spend analytics
Sharing insights like vendor feedback, business strategy and procurement goals, offer the following benefits to your organisation and the supplier:
When you negotiate a fresh contract with your supplier, both parties should concentrate on the strategic goals of the two parties rather than trying to reduce or increase costs, depending on which side of the table you are sitting.
When you share data with your supplier, you can focus on cultivating a genuine partnership that delivers capital to your organisation. Also, you will not waste time collating spend data to negotiate discounts and contracts.
Sharing valuable data with your supplier lays the foundation for a healthy and transparent relationship. This way, if there are issues with supplier performance, you can address it right away rather than at designated periods in the calendar year.
Sharing data and insights allows you to establish a relationship with your supplier as an equal. This can prove to be mutually beneficial with each party helping the other in times of difficulty.
With hard data to support your claim, you can ensure the supplier knows everything related to their performance. It helps to establish a supplier benchmark that is based on data rather than mere opinions.
If your procurement team wants to build long-lasting relationships that offer value from the supplier, it is imperative to share spend analysis with vendors.
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.