A Penny Saved is a Penny Earned: Ten Insights into Making Spend Decisions in Real Time | DCR Workforce Blog

A Penny Saved is a Penny Earned: Ten Insights into Making Spend Decisions in Real Time

Tried and tested adages such as “a penny saved is a penny earned” are supposed to help encourage employees to curtail spending. However, even the employee with the best intensions need a little more than an old maxim to stay away from procurement pitfalls and focus on sustainable spend.

Establishing a reliable spend culture

In the face of dynamic changes in market conditions, which are further impacted by risks, making spend decisions is a huge challenge. Moreover, procurement professionals need to ensure that spend is in control, the procurement process is transparent and all dealings can be substantiated. And of course, you should never lose sight of the regulatory requirements, legal issues, ethical concerns and sustainability considerations as they are also essential components of any procurement process.

Some precautions that can be put in place to improve the spend culture in the organization include the following:

  1. Control spend in process-driven manner and plan it in a proactive way, using real-time data, to make it sustainable and effective.
  2. Maintain a careful eye on the budget and the overall project plan to ensure that it doesn’t take on a life of its own, and end up at twice the original projected costs and time.
  3. Insist on establishing transparent processes across the supply chain and make the costs a part of the consideration set in the procurement process.
  4. Evaluate spend by looking for signs that expenditures are being pushed under obscure headings such as “miscellaneous” or “indirect spend” to find culprits in hiding
  5. Review your annual spend plans to check if any of the items will prove too risky or aggressive to be approved in the newly adopted spirit of thrifty spending.
  6. Consider, where feasible, replacing consumption with sustainable and continuous use or even re-use of resources.
  7. Find new ways to streamline processes and derive value from outsourcing or other functions. Source materials and resources globally, at highly competitive prices.
  8. Develop the financial acumen needed to follow up on costs to check performance against investment and identify processes that are turning into a drain on the resources.
  9. Be open to establishing win-win arrangements with vendors on your agreements to engage their loyalty, commitment and willingness to negotiate over the long term.
  10. Embrace the new capabilities offered by big data analytics to support your decision-making and embrace the opportunity to set strategic direction for your process or the business itself, using insights provided by predictive analytics.

 


Disclaimer:
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Dan spent the last 20 years selling technology solutions in the Spend Management and VMS spaces, targeting the Global 2000. He enjoys cooking as well as taking advantage of many outdoor activities during all four seasons in New England. Naturally, he’s a huge fan of the Patriots, Bruins, Celtics and Red Sox.