Gaining Visibility Into Unmanaged Spend Can Lead to Innovation
Small purchases by employees for products like office supplies or services like office cleaning may not seem like a big deal, as you may think that whatever your company spends in these areas pales in comparison to your largest expenses like payroll and rent. When left unmanaged, this spend can start to add up, create compliance risk, and ultimately lead to poor business decisions.
The good news, however, is that unmanaged spend can be addressed relatively easily by tracking spend data through an e-procurement or spend management platform, and when your company starts to gain visibility into this area, you can not only cut costs but also spark innovation within your company.
In particular, gaining visibility into unmanaged spend can boost innovation by:
- Increasing collaboration: Part of the reason why unmanaged spend exists is because of a lack of collaboration within companies. If an employee is not communicating with procurement or finance teams about their spend, and if procurement and finance leaders are not communicating with management about expenses, then it’s easy for certain purchases to not get tracked. Yet when there’s a centralized platform in place for everyone within an organization to make purchases, receive approvals, and share data, it’s easier to collaborate.
For example, if finance teams have visibility into unmanaged spend and identify that departments are at risk of going over budget, they can easily have those conversations with department leaders, with clear data on hand to explain the problem. From there, those discussions can spark new ideas about how to meet budgets, which may include innovative ways to reduce expenses, such as deciding on a better mix of in-house vs. outsourced production. This collaboration also does not have to be limited to finance, as once communication lines open up, it can be easier to collaborate about other areas of business that can lead to innovation.
- Establishing a more data-driven culture: Similar to how gaining visibility into unmanaged spend can create a more collaborative culture, using a spend management platform to collect and analyze spend data can help companies establish a more data-driven culture. As companies start to make more data-driven decisions in procurement and finance, employees may get more comfortable with these processes and be more willing to use data in other areas of the business, such as sales and marketing. Some companies may realize that they need to hire more talent with data skills, while others may realize that their current employees can increase their productivity and come up with new ideas if they have more access to data and analytics.
- Identifying new products and services to use: When you have more visibility across all areas of spend, it’s easier to identify changes you want to make, such as switching suppliers in areas that seem to have particularly high expenses. In doing so, you may find suppliers that not only offer lower costs but also offer new products and services that help your company become more innovative. Even seemingly small changes like changing your coffee supply company from one that uses pods to one that delivers freshly brewed coffee can have a ripple effect leading to more profound changes. For one, employees may be happier with the new service and feel more productive with coffee they’re excited to consume. The change from single-use coffee pods may also inspire ideas about ways to improve sustainability in your own products and services that your company offers.
- Adding diversity to your supply chain: Once your company starts to look more closely at your suppliers, you may find that you’re missing an opportunity to work with more diverse vendors, such as women-owned, minority-owned and veteran-owned businesses. Not only do these diverse companies often provide access to new products and services, but they can also spark innovation such as by inspiring new marketing campaigns. Highlighting your work with diverse vendors can help draw in new customers and attract more talent, which can help diversify your company overall. Having more diversity within your company can lead to even more innovation, because including people with different backgrounds and perspectives can decrease groupthink.
As these examples show, unmanaged spend can be far more connected to a company’s overall performance than many businesses realize. Using an e-procurement or spend management platform to gain more visibility can have a profound impact on companies of all sizes in terms of their ability to reduce costs and spark innovation.
To learn more about how leading firms are innovating, getting line of sight to new revenue, and obtaining cost savings while increasing their diversity spend, register for our upcoming webinar today. This 45-minute live and interactive event will be hosted by industry leaders, Raj Verma, VP- Procurement Services at GoProcure and Christina Morrow, Director – Global Procurement at Ricoh USA, Inc.