Leadership in the Services Spend
In general, existing practices suggest that there is an effective and less disruptive approach to reducing the services spend. Basically, these controllers:
· Develop a complete picture of the total services spend. Observes CAPS: “There are several disparate systems in which this data is located: purchasing and e-procurement systems; P-card databases; general ledger and accounts payable; enterprise resource planning systems; and inventory/materials man-agement.” Key point: In many companies, controllers are perfectly positioned to initiate and lead a special project that calculates the total services spend.
· Analyze the spend. Observes CAPS: “Determine which business units within the organization are buying these services and how much are they spending. Then, determine if there are opportunities to leverage purchases or to shift pur-chases to less expensive vendors.”
This obvious and basic approach bears fruit. For example, half of the CFOs participating in a survey by Forrester Research did not know their organization’s ratio of goods and services spend. In contrast, CFOs and supply management ex-ecutives at participants that the survey called world-class knew their services spend in great detail. Key point: These corporations are better positioned for what CAPS calls “sourcing initiatives,” which in turn drop substantial savings to the bottom line.
