Reduce Purchasing Spend 10-15% & Keeping High Material Availability

Balancing Service Levels, Inventory and Cost

Becoming a procurement leader in today’s rapidly changing environment often comes down to one key factor: those who actively manage spend based on real-time insights will generate cost savings. Those who rely on traditional spend management practices will not. For your organization, that means knowing what is bought and how it is being bought and translating that knowledge into a stable and predictable process. It is only then that you can recognize consistent performance, unprecedented spend transparency, and reduced costs.

However, ensuring process performance improvement and end-to-end supply chain stability that derive from accuracy of master data is often an uphill battle. Organizations struggle to meet their goals because they fail to unite around a single source of truth. They end up dealing with outdated or unnecessary data, increased errors, loss of supply chain visibility, and no insight-to-action capabilities. Often, these issues stem from manual interventions and lack of process accountability and ownership.

As a result of relying on multiple sources of truth, companies find that there is habitually a high deviation between what is promised and what is delivered. To grasp the optimization benefits that derive from an operations-wide focus on best practice, SAP leverage and consistent predictability, organizations must first make a solid commitment: Moving through the Value Funnel. Doing so requires aligning business behavior (e.g., working outside SAP, manual intervention and customized external reports) with business rules (e.g., lead times, lot sizing and Available to Promise). It also demands a reduction of the Delta —the difference, or change, in a certain quantity—and an adherence to and reinforcement of all procurement activity. The illustration below explains the wider the gap between setting the right rules and executing the right behaviors, the less value you will achieve in your processes.

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