Technologies for a New Frontier in Indirect Spend
Technology innovations, especially those driven by advancements in consumer buying, social technology, and big data management, can now be applied to pull together the complex web of suppliers, intangible deliverables, and inconsistent pricing and processes of indirect spend. These readily available technologies can meaningfully simplify the buying experience while optimizing other aspects of indirect spend cost such as supplier fees, terms and conditions, performance specifications, and performance management. If executed correctly, optimizing indirect spend adds a significant improvement to the bottom line through cost reductions, productivity gains, and control – often 6% to 13% of overall indirect costs.
The consumer “procurement” a.k.a. shopping, that takes place today has taken over two decades to mature. Amazon was founded in 1994 and back then, the experience left more than a little bit to be desired. But the extensive knowledge, technology, and expertise developed over that time improved the customer experience and those learnings and innovations are now being transferred to the B2B world. Simply put, with any target audience – employees, customers, partners, and more – the use of cloud-based technology offers an immense opportunity for business optimization and while solving some of the greatest client service challenges. Where an “Amazon-like” experience has now become cliché, it’s taking that baseline of ease of doing business and wrapping it into an enterprise experience where controls remain in place that are the goal for eProcurement technologies.
The lessons from consumer retail sites like Amazon, Zappos, and a myriad of others don’t stop with just ease of use. For example, technology’s ability to support real-time chat communication simplifies processes on both sides of the business transaction. In the manufacturing world, where a cutting tool from an incumbent supplier is out of stock, emergency orders from alternative suppliers may be a phone call away – however, that phone call is messy, creates significant back-end headaches, and most often results in significantly higher costs. Imagine real-time communications like chat in this manufacturer example, where you can conduct expedited transactions through an entirely digital experience – where emergency POs can be placed, orders expedited, and collaboration can occur between requester, buyer, and seller – without negatively impacting the plant. This collaboration also reduces errors and saves time, which translates into dollars saved and in the case of a production line, less downtime. From connecting people to improving processes, the opportunity for applying new (consumer-tested) technologies to the indirect supply chain is tremendous.