Top 10 Insights You Should Get from Your Spend Cube
Want actionable insights to make strategic decisions with confidence and realize bottom-line savings across your business? Your spend cube should provide everything you need. Your spend cube is as close as you’ll get to having a crystal ball (even if it does have more corners than you expect). If you observe it closely, you’ll glean an image of what your organization’s future looks like. You can become a modern-day sorcerer.
Of course, this is hyperbole — don’t go to Party City and buy yourself a wand and cloak (unless that’s your thing), but definitely expect to present some interesting findings to your finance and procurement team. There are at least 10 things your spend cube says about your company’s future.
1. How healthy your spend data is
For starters, can you see your company’s spend? Your spend can’t tell you anything if you can’t actually see spend data, and your future circumstances will catch you off guard. You won’t know how to identify your most effective savings levers, especially in a rapidly changing economy.
When you spend too much, you won’t know what hit you, much like a mom in 2007 whose teenager is buying iTunes songs piecemeal using her credit card… Not that any of us did that.
2. What your “spend story” says about your company’s spending habits
Your “spend story” can help you. Once you can correlate your spending habits with company successes, you identify tangible ways to keep up the good work.
After all, you cannot always assume that merely negotiating the lowest price today will serve you tomorrow. Financial decisions require multiple strategies (which requires context).
3. How effective your category management program actually is
Part of knowing your “spend story” means developing a category strategy from two different views. First, you need to understand whether your category spend needs to be reclassified (e.g., maybe your IT-outsourcing sub-category currently falls under your IT buyer, but should fall under your general “services” buyer).
Secondly, you need to understand granular, line-item detail to track savings, mitigate leakage, and uncover incremental value. Little changes can reap big results. Your spend cube should help set your category management strategy.
4. Which suppliers to prioritize
Maybe the prices you negotiated in 2020 are no longer fair today. Are certain purchases being made every few years or in regular increments?
When you’ve figured out where to focus negotiations or consolidate your spend, specific supplier relationships can become less transactional and more partnership oriented. The outcome is more trust, security, and flexibility when plans change (hint: plans will change).
5. How effective your supplier diversity program really is
Is your spend being sufficiently allocated to minority, women, and veteran-owned enterprises? In the future, when you have put the E in D.E.I., you can earnestly tell customers that you put your money where your mouth is.
6. Where you fall with your ESG efforts
Do you know whether your n-tier suppliers meet sustainability standards? Spend data can be leveraged to inform decisions that improve your environmental impact which also conveniently improves your bottom line.
7. What your risk level is
To say the least, the geopolitical landscape keeps shifting. Knowing where your spend goes means that you will pivot quickly when faced with new tariffs, climate change, transportation labor shortages, and more.
8. Where you have noncompliant spend
With your spend cube, you should be able to identify noncompliant spend within a given time frame from a high level or down to line-item detail (e.g., whether procurement has paid too many times toward a given item number). Not having a pulse on spend means overlooked fraud, in which case your company’s future (if it has one) involves un-fun legal claims.
9. How healthy your processes are
Are purchasing decisions factoring in stakeholder preferences? Is there enough cross-department communication about spend? Are certain workflows creating unnecessary bottlenecks to paying key suppliers? Seeing spend means seeing people and how their work can improve.
10. What you need to know about your contracts
When you can tie your spend to qualitative contract data, you know when to start negotiating renewals with vendors rather than passively incurring delayed-renewal fees and missing any new discounts. See which contract elements (e.g., dates, duration, milestones) correlate with the most savings so that you can configure your next contract accordingly.
Spend visibility accomplishes more than these 10 things (we just like the number 10). It also brings peace of mind and a sense of control and autonomy over your business. Get the non-fictional crystal ball you deserve, which is a digital spend visibility and analytics solution – no spells or witch hats necessary when presenting the business case to your team.