How To Utilize A Source-To-Pay Solution For Spend Analysis In Supply Chain Management
Spend Analysis In Supply Chain Management
Finance executives are constantly looking for solutions to improve data procurement and accuracy in the realm of supply chain management. Source-to-Pay (S2P) solution is great tool to effectively track and manage expenses incurred in the procurement process. Using an S2P solution for Spend Analysis (or SA) in Supply Chain Management (SCM) enables finance departments to identify cost reduction opportunities through better visibility into their spend data. This comprehensive guide outlines the steps finance professionals need to take to implement an effective SA program.
Begin by Designating Spend Analysis Advocate
An SA Advocate is responsible for leading the adoption of an S2P solution. This might mean designing and executing technical framework to manage spend categories and introduce clean data. It can also include setting rules and processes to increase data accuracy and drive user adoption. Ultimately, the SA Advocate should be able to anticipate risks associated with the process and the effect it could have on the desired outcomes.
For instance, the Advocate should have good working knowledge of the companies current spends and be able to identify areas that have the most potential for cost reduction. When setting rules and processes, the Advocate should ensure that the data collected is of the highest quality and that appropriate validation checks are implemented.
Establish Solid Data Foundation
To ensure the accuracy of an S2P solution, finance departments need to take the time to establish sturdy data foundation by aggregating, cleansing and enriching the available data. This can include building standard taxonomy and validating supplier information. It is also important to track historical spend data for deeper insights and analysis. Having solid data foundation can help the team compare and contrast the number of supplier categories and approximate their spends, enabling the team to recognize any discrepancies and inefficiencies.
Analyze and Interpret the Data
Once the data foundation is in place, finance departments can begin to analyze and interpret the data. This will enable them to measure savings and benchmark performance, while uncovering emerging spend areas. The Advocate should also compare pricing, supplier performance and quality to help identify areas of cost reduction and opportunities for switch-outs. Additionally, the data should be regularly reviewed to identify and mitigate compliance risks and fraud.
Lastly, the Advocate should remain in the loop when it comes to creating dashboards and reports that provide the necessary insights to all stakeholders. They should take the pulse of the organization, as well as design and execute appropriate strategies that shape and benefit the companies overall financial position.
Finalize Implementation Identify Areas for Improvement
Once the data is analyzed and interpreted, the Advocate should finalize the implementation of the S2P solution. This includes validating the data, implementing automated analytics and configuring the data model. The Advocate should also be able to identify any areas for improvement, such as adding additional data categories or increasing the frequency of reporting.
Furthermore, the Advocate should ensure that the relevant stakeholders are onboarded with the S2P solution, to ensure that they are aware of their responsibilities and have good understanding of the data. Going forward, they should also create functional processes that allow for continuous improvement.
Conclusion
The ultimate goal of any finance departmentshould be to increase overall savings and reduce costs through effective data management. Utilizing Source-to-Pay (S2P) solution for Spend Analysis (SA) in Supply Chain Management (SCM) is an effective way to identify cost reduction opportunities. By designated an advocate to lead the adoption and implementation of the S2P solution, establishing sound data foundation, and analyzing and interpreting the data, finance departments can maximize their resources and drive better insights to key stakeholders.
