Everyone is a buyer – make them and the organization aware
Everyone realizes that when the organization buys a new machine for 100 000 EUR it is an investment that needs a business case, and probably a contract with the supplier. When 100 people in the organization buy subscriptions, reports from research firms or web agencies for 1 000 EUR each, the need for a business case and contract with the supplier is not as obvious.
Today’s organizations are typically full of buyers that make decisions daily, that together generate large costs. Bundled together, these decisions can constitute a need for a business case and motivate agreements with the suppliers. How do we make the organization and the individuals aware, without being too bureaucratic and creating new non-value adding activities and costs?
There are several ways to do that and most of them start with identifying, categorizing and visualizing the cost through a spend analysis.
Smart spend, spend or just shopping?
Once visualized, the spend is possible to communicate, benchmark, and address. By assigning category managers to contextualize and evaluate the spend, the organization can correlate the purchasing efforts with the potential savings. They can also evaluate the relation between cost and value creation of each purchase.
Some spend is truly smart and value creating: e.g marketing, training for staff, and computers. Some spend is truly necessary but not obviously value creating, cleaning, travel, packaging and logistics being examples. While some spend is just shopping, done without the perspective of value creation and without a “strategic purpose”.