It is necessary to go beyond spend visibility and contracted savings if you want to integrate procurement into the business, a conference was told.
Sammeli Sammalkorpi, co-founder of Sievo, said understanding spend by category and supplier was the “basic building blocks of any organisation”, and measuring savings was important, but they are only one part of a wider picture for the business.
Speaking at the CIPS Annual Conference in London, he said: “I would argue both of these things are limited when you look at where you really want to take the procurement function.”
Sammalkorpi said it was important to see spend in the same way finance does, such as in terms of operational and capital expenditure, one-off and recurring payments and the influence of currency and market fluctuations. Reported savings should also take these factors into account.
“Keep what’s good in procurement, but change the way you measure things so that’s more integrated with the business,” he said.
“When you speak about savings it may be very clear to us, but when you talk to finance you need to translate it so they know what you are talking about.”
Sammalkorpi said once this level of understanding was achieved it was possible to create projections of how spending and other business decisions would impact the bottom line in the future.
“Procurement is no longer a backwards-looking savings chaser, but is productively working with the business,” he said.