Digital Dealer - February 2019 - 10

D E A L E R OP S & M ANAGEM ENT: Sp e n d M a nagem ent Continued from pg. 9

IT IS OUR OBLIGATION TO SIMPLIFY THE
COMPLEX...TO SET EMPLOYEES UP TO HAVE
CLARITY IN ORGANIZATION STRUCTURES, ROLES,
RESPONSIBILITIES, PROCESSES, AND CONTROLS."
client organization admitted
that they didn't have all the
answers and were looking
for some assistance. Complexities in the spend management space include:
 Managers and employees do not know which
suppliers to use for a given
expense category - so they
source a new 'qualified'
supplier, obtain some pricing and hire them to solve a
problem.
 Accounts Payable
Departments initiating 1,200
checks to pay suppliers
each month even though
the organization really only
needs 250 to 300 suppliers
to satisfy all 100 expense
categories.
 Managers who sign a
five-year supplier contract
because they were offered
a 'great deal' that supposedly provides best-in-class
pricing and service levels.
 Large groups using
3,000 suppliers across the
organization, again across
100 expense categories because management doesn't
want to centralize and
dictate the specific supplier
each location should use.
 Accounts payable
notices that supplier pricing
has increased, but they are
not sure if the increases are
acceptable or were expected by management.
 Employees are on the
receiving end of spiffs and
gifts from suppliers that
10

FEBRUARY 2019

management finds objectionable and concerning,
but there are no policies
precluding employees from
accepting those 'gifts.'
 A manager is introduced to a new marketing
service, that will undoubtedly add new top-line
revenues or improved
CSI scores, so they sign
a contract and begin the

cally and be willing to break
some eggs in the process to
get things right. We need to
devise policies and strategies that set our employees
up for success, answer
obvious questions they
have and provide guidance
to employee actions within
defined limits, provide structures that will ensure that
the organization will run ef-

WE NEED TO BE
READY TO CHALLENGE
THE STATUS QUO, THINK
STRATEGICALLY, AND BE
WILLING TO BREAK SOME
EGGS IN THE PROCESS TO
GET THINGS RIGHT."
service today, not realizing
that the same functionality
is already resident in other
services they have subscribed to, creating redundancies and adding new
expenses.

LEADERSHIP'S ROLE -
SIMPLIFY THE COMPLEX

If we agree that it is the
role of leadership to lead
by plotting the company
direction, to simplify the
complex, and ensure the
organization runs efficiently
and effectively, it cannot
happen by nibbling around
the edges or by being a
caretaker. Rather, we need
to be ready to challenge the
status quo, think strategi-

D I G I TA L D E A L E R . C O M

ficiently, effectively and in a
predictable manner. In other
words, it is our obligation
to simplify the complex...to
set employees up to have
clarity in organization structures, roles, responsibilities,
processes, and controls.
So, how do we simplify
the complex, drive efficiencies and effectiveness in
the spend management
space?
 Be willing to admit we
don't know it all, and be
willing to break some eggs.
 Be willing to make
some unpopular decisions
by leveraging the supplier
base to an optimal level.
 Establish some ag-

gressive cost savings and
supply base objectives.
 Realize that economies of scale are the result
of deliberate management
actions and do not happen
automatically when scale
occurs.
 Be willing to look at
the downstream impact
of our decisions or lack
of decisions across the
organization.
 Strive for simplicity
and maximum control in
process design.
 Realize that centralization offers inherent
efficiencies and more
organizational control and
efficiencies than decentralization.
SIMPLIFYING THE
SPEND MANAGEMENT
FUNCTION

To begin to simplify
the complex in the spend
management space, consider the following actions,
which are designed to provide clear lines of control,
responsibility, efficiency,
and effectiveness.

1. CENTRALIZE
PURCHASING CONTROL
AND DECENTRALIZE
EXECUTION. Policies

and controls are established at the top and
authority is then delegated
to selected employees to
execute the mission within
established guidelines.
Result: Clear policies and
less confusion.
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