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.
Here are those best practices.
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.
Effective spend performance management systems provide an unbeatable competitive advantage for companies that prioritize managing their spend performance.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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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