How You Make Every Dollar Count Using SAP Spend Performance Management Solutions
Just about every organization spends a large proportion of their money on external parts and services. For example, a typical major airplane manufacturer will procure up to 80% of the parts that go into one of their airplanes from external sources. With global supply chains being the norm, manufacturers must be, and indeed, are critically concerned with getting the best deal on every dollar spent anywhere along the supply chain.
You Need the Best Tools and Best Practices, Along With Time to Walk Down the Learning Curve to Achieve This.
Here are those best practices.
- Enable the tracking of performance and critical success factors at all echelons of the supply chain, both internally and externally.
- Provide quality data directly to business users who need to make better sourcing decisions.
- Integrate sourcing processes from spend analytics to e-sourcing and contract management. E-Procurement should be your norm.
- Enable monitoring of contract compliance to ensure limited contract leakage.
Did you know most companies fail to enforce contract penalties?.
A SAP Spend Performance Management System provides spend performance management tools to help you capture these contract penalties. - Enable the identification of gaps within the supply base to minimize risk within the supply chain process. For example, what happens if the Strait of hormuz or the Suez Canal is closed?
- Leverage world-class Data Services to classify, enrich and normalize spend data. Data quality is reported to cost the U.S. economy approximately $600,000,000,000.00 annually. Roughly speaking, that is equivalent to the economic 2008 stimulus package and data quality issues represent one of the greatest economic loss spots to the global economy.
- Establish processes for periodic refreshes of spend data to ensure data quality and optimal decision-making.
- Provide a consolidated view of all spend data regardless of the source system, and for users to extract that data in an intuitive way using a tool like SAP Spend Analytics.
This list is deceptively short. Accomplishing all of them requires concerted effort to achieve optimum levels of Spend Performance Management. However, there many reasons to pursue these advantages.
Competitive Advantage
Effective spend performance management systems provide an unbeatable competitive advantage for companies that prioritize managing their spend performance.
Real Time Performance Tracking
By implementing spend performance best practices such as tracking performance and critical success factors at all levels of the supply chain, providing quality data to decision-makers, and monitoring contract compliance, companies gain better control over their strategic spending.
Data Driven Insights
With the help of a data driven SAP Spend Performance Management System, organizations can capture contract penalties and identify gaps within the supply base, minimizing risk within the supply chain process. For example, companies can use spend analytics to gain a consolidated view of all spend data, regardless of the source system, and extract that data in an intuitive way. By doing so, they can gain a competitive advantage over their competitors who do not have such effective systems in place. For instance, a company that procures airplane parts could gain a competitive edge over its competitors by leveraging a SAP Spend Performance Management System to optimize its supply chain and reduce costs.
Synchronized Manufacturing Signalling
For manufacturing companies that practice lean manufacturing principles, eliminating waste is a primary goal. By synchronizing demand signals with suppliers, using approaches such as Kanban, suppliers can deliver the right product at the right location and the right time, while offering lower prices.
Real Time Supply Chain Data
Real-time data analytics is an essential feature of any successful supply chain management system. With global supply chains being the norm, organizations must be vigilant about getting the best deal on every dollar spent anywhere along the supply chain.
Control Strategic Spending
By tracking performance and critical success factors (CSFs) at all levels of the supply chain, both internally and externally, businesses can gain better control over their strategic spending. A data-driven SAP S/4 HANA Spend Performance Management System provides quality data to senior management level decision-makers, enabling them to make better sourcing decisions. By monitoring contract compliance, companies can capture contract penalties and minimize risk within the supply chain process.
Consolidated View of Spending
With spend analytics, businesses can gain a consolidated view of all spend data regardless of the source system, and extract that data in an intuitive way. By doing so, they can identify gaps within the supply base, optimize their supply chain, and reduce costs while maintaining customer service levels. In today's competitive business landscape, an effective spend performance management system provides an unbeatable competitive advantage for businesses that prioritize managing their spend performance.
Advanced Analytics Driven Cost Savings
Senior management can enjoy significant cost savings by using advanced analytics to drive intelligent spend performance management decisions. Senior management can leverage a data-driven SAP Spend Performance Management System to make informed decisions that lead to cost savings and strategic business growth. Money freed up by smarter spending decisions can be strategically redeployed to drive higher shareholder value.
Annual Performance Reviews
Procurement specialist are often evaluated during their quarterly and annual performance reviews, on how well they met spend performance objectives. When a company uses an integrated ERP system, such as SAP, the SAP HCM system and the SAP Spend Performance Management system can be used to help evaluate and reward procurement specialist.
People Driven Performance Management Processes
Leading practitioners of data driven procurement know that the people part of the performance management system is at least as important as the IT infrastructure. Professional procurement experts develop long-term relationships with vendors and suppliers over extended periods of time. These relationships, when backed up with the right technological infrastructure allow a company to improve employee performance across a variety of important performance metrics.
Spend Performance Management Consulting Support
In summary, implementing a SAP Spend Performance Management System can provide organizations with a competitive advantage by optimizing their supply chain and reducing costs while maintaining customer service levels. By tracking performance and critical success factors at all levels of the supply chain, providing quality data to decision-makers, and monitoring contract compliance, businesses can gain better control over their strategic spending.
Hitting Performance Goals
SAP BW Consulting, Inc. specializes in designing, delivering, and providing continuous post-implementation support of your SAP S/4 HANA Spend Performance Management System. Contact us today to get started on your journey towards effective spend performance management.
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8 Secrets to SAP Enabled Spend Performance Management
