Make managing your annual audit easy with a spend management solution that ensures spending policy compliance and transparency.
For the first time in ten years, Deloitte’s 2021 Global Chief Procurement Officer Survey has reported that CPOs did not name “reducing costs” as their top priority, instead “driving operational efficiency” took the lead as the key focus of CPO’s business strategies. “CPOs clearly realize that with efficiency improvements and digitization comes the capacity and capability to up their game.” In fact, CPO priorities are increasing and evolving as they’re expected to successfully lead their organization’s procurement efforts despite:
- Economic downturn and inflation
- The continuing impact of the COVID-19 pandemic
- And supply risks
Although being cost-conscious will always be a high priority and cost reductions remain a key driver of an effective procurement strategy, CPOs need to promote agility to thrive during times of disruption. High performers confirm this theory, with achievements across metrics that go well beyond cost savings.
So, what does agility mean? Deloitte defines it as “the ability to think and draw conclusions quickly, and move nimbly and easily.” Within procurement, this translates to being able to monitor and respond to fast-moving activity: from vendor and supply risks to opportunities. All with adequate resources to make the best decision within every scenario.
Digital transformation is necessary to complete this shift from procurement with heavy cost-cutting measures, to a more proactive procurement model, focused on vendor management, operational efficiency, bottom-line growth, and corporate social responsibility (such as supplier diversity programs).
Leveraging new technologies for spend management
The highest performing organizations are at the forefront of “next-gen” technology adoption and scaling. Specifically, they are:
- Up to five times more likely to rely on features like spend analytics to gain a competitive advantage
- And ten times more likely to have fully deployed process automation to reduce repetitive, manual tasks.
Unfortunately, It’s fair to say that this growing digital divide creates a large gap between high performers and laggards within the industry. Almost 50% of CPOs express low confidence in their ability to execute successful strategies with their current setup.
Meanwhile high performers experience measurable benefits of efficiency (65%), effectiveness (50%), and raised agility (50%). They value the standardized processes and data visibility that the digital realm offers, and account spend management software to be a key part of their operating model and future strategy.
Build resilience with spend analytics and process automation
Spend analytics and process automation have been listed as necessary spend management software features for a reason: they are pivotal to almost every procurement process, sparing CPOs time and guesswork.
Spend analytics facilitates informed decision making and can provide a roadmap for supply base restructuring or rationalization, meaning you can use it to consolidate contracts to top performing suppliers. It can also be used to analyze:
- Spend by employee
- Spend by supplier
- Price comparisons
- Transactional spend
- Processing costs
- And more
Meanwhile, accessible cloud-based solutions that enable process automation have never been more integral to achieving scalable operations that promote business continuity. Without automated workflows, CPOs are left to complete tasks and manage business spendmanually, despite being better positioned as strategists for their organization’s procurement objectives.
Low-agility CPOs spend 10% more time on transactional administrative tasks, while high performers spend 15% more time acting as strategists. In total, 65% of high performers spend up to 50% of their time shaping strategy, including that of their digital transformation.
Offloading manual tasks to the broader team has also proven to not be an effective solution. Lower performing procurement teams report that their employees spend approximately 74% of their time on manual, repetitive transactional tasks, which inevitably require the CPOs input.
Conversely, procurement teams in the high performing category spend 15% less time going through transactional activities. They’re focused on achieving transformational procurement goals that help them achieve long-term resilience and higher performance.
Adapt to a changing procurement landscape and manage business spend with ease
Put simply, this shift in procurement priorities isn’t just a means to stay afloat during times of disruption, it strongly correlates with operational excellence and financial resilience. In a digital world, CPOs need next-gen spend management software like Fraxion to help reduce their operating tasks and costs, enable visibility, and inform their strategies.
Want to see Fraxion’s spend management suite in action, complete with process automation and embedded spend analytics? Click here to request a demo.