Spend Management

How does Spend Management work?

Spend Management decreases the instances of "maverick" spend. Maverick spend can be defined as instances where company buyers purchase items or services that are outside the preferred process or system. These purchases are usually ad-hoc and result in an average 20 percent premium in total cost, as they are not sourced from a preferred supplier and lack pre-negotiated terms and discounts. Maverick spending can be decreased by implementing mechanisms for approval and auditing which prohibit this type of purchasing, and by imposing penalties if they occur.

Spend Management Bundling Gives Economies of Scale.

A key part of Spend Management is following basic economic principles: direct more spend toward one supplier and gain better pricing leverage. An element of this bundling is focused supplier rationalization, i.e. strategic evaluation of supplier's capabilities, pricing, technology, business units, location, etc.

Spend Management Increase Process and Procurement Efficiencies.

By combining automation in sourcing, procurement and payment processes with critical thinking, the cost of visibility and control decreases rapidly. Efficiencies can be measured by decreases in the time it takes to place an order, time spent on accounting for suppliers, etc. Spend Management is proven to aid procurement through by delivering better tools for bidding and contract award processes. It creates a more level playing field, where buys have greater visibility and choice. It also helps to clarify product requirements and RFPs.

How can Spend Management Fit into Your Organizational Hierarchy?

Spend Management may be classified as a subset of Total Cost Management, which accounts for financial management like tax/VAT, exchange rates, the impact of demand, manufacturing, and other factors. Spend Management is also highly linked with supply management due to its direct effect on how assets and inventory are procured and managed. Spend Management is a critical element in evaluating the Total Cost of Ownership for any product or service. Like most accounting evaluations, it must be considered as an ongoing process of evaluating costs which are not static, with the ultimate aim of creating long-term and sustainable savings.

Transportation Spend Management

NPI's transportation Spend Management services are implemented quickly, with typical savings 15 to 30 percent gained through analyzing shipping characteristics, determining the best methods of shipment and ensuring you receive fair market pricing from carriers and 3PLs. In Small Parcel Shipping, we are experts at contract benchmarking & negotiation, network optimization (i.e. identifying the most effective and efficient shipping methods), bill auditing & service recovery.

For ground freight shipping, NPI helps rationalize thousands of regional and national carriers' rate structures, strengths, weaknesses and surcharges. Our contract benchmarking & negotiation helps you understand whether LTL, FTL, or small package hundredweight is optimal. We analyze fuel surcharges, accessorial charges, complex tariffs, and minimum charges. With international shipping, NPI lends visibility into brokerage and customs, documentation, language barriers and geographical location costs, whether you are moving goods via ocean, air or even courier. NPI's international freight and logistics experts help you assemble the right mix of international shipping methods to deliver tremendous cost savings and improve shipping accuracy.

Information Technology Spend Management

The gap between what you pay and what a similar company pays for the same contract can vary by 20, 30, even 50 percent. NPI understands all aspects of hardware, software, telecom and outsourcing procurement strategy and execution, and uses a combination of pricing visibility insight, analytical tools and best practices to deliver measurable results. Our expertise includes application portfolio inventory & benchmarking, software license acquisition analysis, maintenance & support cost reviews, application licensing benchmarks, software acquisition & maintenance program reviews, application development & integration of professional fee reviews, application licensing model analysis, application hosting benchmarks, outsourcing analysis, data center hosting facility benchmarks, managed services review & analysis, network, server & storage pricing benchmarks, disaster recovery cost analysis, cost/benefit reviews of virtualization, security cost analysis, infrastructure outsourcing benchmarking.

In IT outsourcing, we offer business case development, vendor evaluation & selection, fair market valuation & negotiation, contract analysis & evaluation, collaborative goal setting, governance & gainsharing support, and measurement & benchmarking.

Telecommunications Spend Management

NPI's Telecommunications Expense Management (TEM) Services give efficiency and visibility to the purchasing, billing and contracting process, ensuring you never overpay for telecom services or equipment. We have visibility into thousands of telecom purchases, and are expert in reducing spending by securing best-in-class pricing with new and current vendors. We aid in decreasing billing errors and payment processing time, eliminate overpayments, optimize current telecom investments, improving control and visibility into telecom expenses and creating a flexible spend strategy that grows and contracts with business demand. Our strategy also includes taking a current environment inventory or your telecom expenditures, billing analysis & audits, and rate & pooling plan optimization. We offer a total sourcing solution from RFP development to executing reverse auctions, and implement cost management best practices and policy & procedure development.

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