Why transactional data shouldnt just be reserved for strategic planning
One of the most important tools for procurement professionals when planning for strategic purchasing decisions is having the ability to access solid and reliable data. But when it comes to making the same decisions with non-strategic and lower-value spend in the tail, oftentimes, swathes of transactional data flows through the process going uncaptured and under-utilised.
The difficulty with capturing data
The speed at which low-value services or products can be obtained in a modern organisation is already fairly quick especially with multiple stakeholders being left to their own devices to source the needs for their own department or project, however, with that speed often comes a sacrifice in a number of things which might be detrimental to your bottom line in the long-run:
- Lack of approval to spend before spending - leading to runaway budgets
- Lack of compliance and governance - where and whom are we buying from?
- No real way to assess value for money - are we spending twice as much as needed?
- Lack of procurement oversight - low-value, quick spend usually sits outside procurement
With most high-transactional and low-value purchases being out of the hands of procurement to better negotiate, they usually bypass the mechanisms and tools that procurement traditionally use to manage their larger-value spend. This means no tracking of what's being bought and in which frequency – a huge missed opportunity to negotiate a contract with better prices, payment conditions and deliveries, no matter the value.
Giving procurement the tools to having visibility of all transactional data, no matter the value, can bring transformation to the entire organisation. And from the perspective of tail spend, it doesn't matter if the threshold for a purchase to be considered small is £2k or £1 million, if procurement is not strategically managing that purchase or looking into that data, it means that most companies are ignoring almost 20% of their spend.
How to bring transactional data into procurement hands
For procurement to gain access to this data without increasing their overheads it's important to look at a solution that puts automated processes, seamless integration and easy adoption at the forefront of its offering, especially for high-frequency spending in which the data will always need to be up-to-date. Not only this, we want to avoid grinding those speedy purchases to a halt and doubling the workload of already busy procurement teams.
The answer to gaining transactional data isn't so much ensuring there are mechanisms in place, but in ensuring those mechanisms are fit for purpose. For instance, if a company has several systems but zero standardisation and the process itself starts and ends on different platforms, then it is going to be harder to collect and make sense of the data needed.
The solution is to have technology as an ally, leveraging automation and even putting artificial intelligence into use, having the ability to track data from multiple entry points, and display it on-demand as and when needed, all in the background with no process slow-down.
Having organised and readily available data for your tail is one of many steps that will impact your company with even better savings, conditions and predictions to avoid future risks.
To find out how Maistro's smart tail spend management solution is giving organisations the power to capture and utilise data in their tail, get in touch.