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CPOs: Get this One Thing to Reduce Wasteful Spending with Procure to Pay

Friday, September 1, 2017

5 minute read

CPOs: Get this One Thing to Reduce Wasteful Spending with Procure to Pay

Welcome to #BasBites – your source for bite-size procurement info for your busy life. This blog focuses on the one thing CPOs need to be effective using a procure-to-pay solution: 100% spend visibility.

The most important thing to understand about automating procurement and finance functions is that any improvements leadership wants to make are contingent on collecting data in your procure-to-pay solution and leveraging advanced analytics against the data to transform that information into action.

If you’re a CPO who wants to reduce wasteful spending, you must get 100% spend visibility – you have to see the entire picture. 

You do that in 2 ways:

  1. Manage as many spend categories as possible through your e-procurement solution. Take an iterative approach to getting more spend under control. Once you feel comfortable with the large, primary categories like IT, office supplies, Maintenance, Repair & Operating (MRO) spending, go broad – look at spending on things like assets and travel & expense; start funneling contingent services through your e-procurement solution; optimize your inventory carrying costs. Don't stop short with your scope – your goal should be to manage as much as possible using that phased approach.

  2. Automate the processing of ALL of your invoices – meaning that all invoice types (paper, electronic, EDI/XML, PDF, etc. covering direct, indirect, PO, Non-PO spending) are being processed through the AP Automation arm of your procure-to-pay solution. Make sure your AP department becomes a true transaction hub for all invoices – regardless of the level of sophistication of the suppliers sending the invoices. 

Once you've accomplished these tasks, you will be able to achieve 100% spend visibility in your procure-to-pay platform, enabling powerful analysis. This data will show you the areas where you have wasteful spending happening and you can activate your procurement team to:

  • Negotiate better contracts

  • Stop duplicate orders

  • Seize opportunities for volume discounting

  • Run strategic sourcing events

  • Prevent overstocking inventory and use perishable items before they expire


The key to being effective is reliable data and for CPOs that means 100% spend visibility. Read more about what to look for in the Gartner Magic Quadrant for Procure-to-Pay Suites report.