Supply Chain Management

Rarely, would you have come across a scene where the demand (read as CPO/CFO’s desire to view 100% of his/her organization’s spend) has steadfastly remained the same over number of years; but in-spite of the tremendous advancement in the supply scene, the gap does not seem to narrow at the same rate. Ironically, this pain is felt the most in large global organizations where the need is the most. Let me clarify though, the reason is not for want in trying. Almost every company worth its salt would have had its fair share of exposure to spend visibility initiative – a few already on their path to next gen analytics (market analysis, supply risk analysis, opportunity analysis…)  but the majority of them do seem to still struggle with the basic spend analytics.

I talk about this matter today because I am in the midst of a similar such pain felt at a global health-care major. But this company is not alone. Quoting AMR research, “only 42% of large firms (having >$4 billion in spend) surveyed, can view their spend at the detailed level needed to drive informed decision.”  While one can write an epic on the failure reasons – lack of master data management, poor analytics, disparate data sources, inadequate technology, poor data quality to name a few – they all point to the same root-cause: that the organization failed to put “information management” central to their decision making.  

The companies that have made the cut have been those that have not let organizational (people), process and technology issues supersede information management; that they viewed every decision in light of whether it made them move closer or farther from their goal. More often than not, IT and procurement departments in such organizations work in alignment to attain the spend visibility goal. This, I believe, holds the key to a successful spend visibility initiative.