Do you have tight control on your spend inflation?

Spend Inflation | Data Analytics

Visibility to spend is important for companies to have a good understanding of their costs. Most spend reporting looks at past data and provides various slice and dice of historical spend data. While such reporting is useful, it does not provide a tool to identify specific drivers of inflation and act on them. For establishing holistic accountability around spend inflation, you need a solution that provides an Early Warning System and enables you to identify and address each real drivers of inflation.

Imagine the number of transactions performed each period when you consider the combinations of items and suppliers being used by each of your manufacturing/processing plants and other office locations. Suppliers may have valid rate increases as per contract; suppliers may be taking early payment discounts; new suppliers may be used by some manufacturing locations. In such a complex ecosystem, how would you identify and act on the true drivers of inflation?

Finance and procurement leaders have the accountability to identify such inflation signals proactively. Once identified, there needs to be a process of addressing them. Not all inflation signals need a change in your supplier ecosystem but having the ability to review them, assign them to your team members for further research and closing them out is critical for cost control and accountability. The need is more accentuated in vertically integrated industries (such as food processing) where you rely on your suppliers heavily and your customers rely a lot on your supply chain efficiency.

NLB Services utilizes a Control Tower approach to apply a set of configurable business rules on our customers’ spend data. Our Spend Analytics Control Tower is an exception management engine that flags potential inflation signals based on business rules and allows a business user to work on it from the time it is raised till closure.

About the Author
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Bhaskar Banerjee

President - Americas


/ Bhaskar Banerjee