The current economic scenario (even if it’s started looking little bit good now) demands every CEO, CFO to look for a way to save money from whatever way it comes. Supply Chain, Procurement, Strategic Sourcing are, Supplier Relationship Management are always major focus area for optimization. Spend visibility is one such area in Enterprise Performance Optimization – EPO - which gives a promise to identify potential savings. Now everybody knows there are too many products and players in the industry which claims to provide spend visibility. Sales people always claims to give you moon and pitch products in a way like – “you put the data from this side and see the 10% savings on the dashboard on the other side”. But as we know, in every data sensitive engagement it’s a process behind the product that needs to work on your data before you really gets that dashboard – but that’s not the point for today.
The point is do you know what to look for when you see those jazzy reports and dashboards on a spend visibility application. Is it just about “Spend by category”, “Spend by Suppliers” and some kind of “Price variance” with few columns here are there? Certainly NO. These are few mandatory “reports” that one should expect from spend visibility portal anyway. Then what’s more you can get and you should look for in the same reports?
There are 2 different areas that these applications can help you to optimize.
1. Supplier Risk Analysis – What are the financial risks regarding your “Important” suppliers. They are high on spend and obviously important and some low on spend but critical to business operations. Where are you placed in risk maturity model when it comes to these suppliers? You should certainly look for this information on your
2. SOX compliance – Yes – the most talked about thing in industry – Sarbanes Oxley act. The act aims to create auditable business processes, improve financial transparency, and create strong internal operational controls. It requires that companies prepare and maintain documentation of financial reporting processes, create internal controls, evaluate and correct control deficiencies. This one thing is not that much talked about feature in these solutions. If your consultant gives you a right advice, and able to get the right data from your systems, your spend visibility solution can be extremely helpful in reporting, tracking and compliance of SOX specifically for articles 302, 304, 401, 404 or 802.
There are different types of risks to deal with in Supplier Risk Analysis. Few of them are -
• Strategic risk
• Operations risk
• Supply risk
• Financial risk
• Fiscal risk
• Regulatory risk
• Legal risk
On higher level some of these can be categorized as Strategic, Geo Political and Financial Risks. In this series we will discuss some of these aspects in next 2 weeks and then move to really interesting topic of how spend analysis solution can help you in SOX compliance too
You can write your feedback comments right here, or send me an email to pmendki@gmail.com . Thanks for visiting.
Prashant Mendki
The point is do you know what to look for when you see those jazzy reports and dashboards on a spend visibility application. Is it just about “Spend by category”, “Spend by Suppliers” and some kind of “Price variance” with few columns here are there? Certainly NO. These are few mandatory “reports” that one should expect from spend visibility portal anyway. Then what’s more you can get and you should look for in the same reports?
There are 2 different areas that these applications can help you to optimize.
1. Supplier Risk Analysis – What are the financial risks regarding your “Important” suppliers. They are high on spend and obviously important and some low on spend but critical to business operations. Where are you placed in risk maturity model when it comes to these suppliers? You should certainly look for this information on your
2. SOX compliance – Yes – the most talked about thing in industry – Sarbanes Oxley act. The act aims to create auditable business processes, improve financial transparency, and create strong internal operational controls. It requires that companies prepare and maintain documentation of financial reporting processes, create internal controls, evaluate and correct control deficiencies. This one thing is not that much talked about feature in these solutions. If your consultant gives you a right advice, and able to get the right data from your systems, your spend visibility solution can be extremely helpful in reporting, tracking and compliance of SOX specifically for articles 302, 304, 401, 404 or 802.
There are different types of risks to deal with in Supplier Risk Analysis. Few of them are -
• Strategic risk
• Operations risk
• Supply risk
• Financial risk
• Fiscal risk
• Regulatory risk
• Legal risk
On higher level some of these can be categorized as Strategic, Geo Political and Financial Risks. In this series we will discuss some of these aspects in next 2 weeks and then move to really interesting topic of how spend analysis solution can help you in SOX compliance too
You can write your feedback comments right here, or send me an email to pmendki@gmail.com . Thanks for visiting.
Prashant Mendki
Hi Prashant,
ReplyDeleteIt will be good if we can elaborate how Spend can help in SOX compliance. Very important in current context. I would expect a bit more details in coming blog.
Rgds,
Hello Prashant,
ReplyDeleteThis might interest you too;
Recent Spend Analysis 2009 report from Aberdeen provides in depth research and trends. It also explains how spend analysis and strategic sourcing are strongly coupled.
Go to http://www.purchasing.com to download this report