A key learning about business transformation in sourcing and procurement is knowing the Four V methodology, clearly bringing the organization and spend to a high degree of spend under management processes of 85 percent or above. When defining what that means in the organization, keep a keen eye on the following questions:
- Is spend in a competitive environment?
- Is spend under contract or written agreements?
- Are the contracts under a compliance management process?
- Is spend under a Purchase Order Management Approval Process?
- Is spend visible through e-procurement technology?
Asking the above questions will challenge the CFO, procurement professionals and stakeholders as to how well-managed spend is within their organization. It’s a very powerful method for changing the mindset in the organization about best practice spend management.
Jack Hess is Vice President of Solutions and Business Transformation at Xchanging Procurement Services