How do metrics contribute to your spend management success?
During the last few years, Dynatos has focused its products and services on Accounts Payable (AP) processes by automating the supplier invoicing and approval workflows activities.
Based on this experience, we understand the difficulties our customers face reaching excellence in the entire source to pay process. These difficulties our customers face partially arise from inefficiencies in the procurement process leading up to the invoice handling.
Having identified these issues, we here at Dynatos have decided to focus our expert advice and services not only on AP activities, but on the entire “Source-to-Pay” (S2P) process.
Spend under management?
How is your organization spending its capital? Is there visibility on what you are spending your capital on? Are there metrics in place to measure your performance?
Spend management goes beyond just buying the lowest priced supplies. A successful spend management strategy is aligned with your company’s business goals and helps you to make the right decisions while establishing the best-fit vendor relationship.
Everybody buys something using the company’s budget. Therefore, every person in the organization is involved in the spend management process. Your goal should be to get all spend under management so you can drive profitability and successfully achieve your business goals.
In order to improve performance, companies define their own metrics based on their internal goals. As a consequence, we recommend our clients to focus their effort on activities that can be measured, in order to improve the efficiency and effectiveness in the S2P process, aligned with the internal goals.
It is great feeling to see how companies and clients experience the valuable outcome after the entire S2P process is optimized. When this is done right, the result is the sum of many underlaying opportunities that are capitalized into valuable measures. To name a few of these opportunities; the improvement of visibility of total company spend, avoiding maverick spend and improved contract pricing negotiations with most of your suppliers.
Other opportunities that relate to reduction of process costs, include the elimination of sub optimal processes, less administrative work and maximum process adoption of all users throughout the company.
What gets measured, gets improved
By working on the opportunities mentioned above, we can effectively help our customers in obtaining the following results:
· Direct cash flow effect
A direct cash flow effect occurs when there is more income or less cost from one day to another. An example is supplier discount: by bundling expenses in a single contract, the pressure on the market increases, allowing discounts to be made. This leads to a direct “cash flow effect”.
· Increase of efficiency
Efficiency benefits are often translated to release Full-Time Equivalents (FTEs). As an example, the timesaving on procurement or management activities. This time is quantified in units of FTE and therefore in money, since every FTE has a price itself. This is, however, not a direct cash effect because the savings are not tangible in the short term. The number of employees is not reduced from one day to another. However, they can use the saved time for other activities, which will make the indirect savings already visible.
· Increase of effectiveness
This category includes qualitative benefits. These are often difficult to quantify since they refer to service improvement, increase compliance and higher internal/external customer satisfaction. Even though these benefits are present, they cannot be directly identified with a “price tag”. In order to measure these benefits, regular customer satisfaction surveys are used.
Coupa’s spend management platform
In our mission to become our customers’ financial process advisor, we focus our efforts on selecting the best tools to help you in achieving your goals. For spend management, we have chosen the Coupa Spend Management Suite as the best option in the market.
This solution will help in achieving considerably higher operating profits, as the overall procurement costs will be significant lower over time. In addition, it will help to improve compliance and encourage collaboration within the various business departments.
Coupa is a cloud-based platform solution with a committed focus on customer success and profitability. Coupa provides measurable business value by seamlessly integrating with your business processes helping to meet strategic company goals. For 3 years in a row, Coupa has been a Leader in the S2P field according to most recognized analysts in the field like Gartner and Forrester.
Interested in more?
In order to provide the insights and metrics that can contribute to your spend management success, we have various webinars planned in June. In this webinar we’ll discuss the impact of some Key Performance Indicators (KPIs) on the most critical strategic objectives in spend management.
Join our webinar to learn more about measuring spend management success in order to achieve operational excellence, compliance and savings for you organization.