Cost management: lessons from the Sales department

Having spent two days at ProcureCon in Brussels last week, it is good to be reminded that many organizations have got over the initial challenge of getting good spend data. Quite a number of CPOs referred to having got to grips with this early in their tenure. However, I think that this is only the start of the journey - not the destination.

There is also supplier consumption information, supplier performance data, detailed Purchase Order/ P2P info and many other sources which can be brought together and integrated.

I know that all the companies attending ProcureCon have huge insight into their sales data. It’s the way of modern business. With sales data, the problem is not getting it, it is the extent to which it can be analyzed to drag out insights that give an advantage over the competition. Dunn Humby has created a business out of it.

How costs are managed has a long way to go to be on a par with what is achieved with sales data.

Imagine how powerful it will be when all of the cost information available is pulled together in the same way. This is the direction that businesses such as IBM post Emptoris acquisition, will surely go. There is an enormous prize for vendors, and businesses which spend billions of dollars, euros, pounds to have the same level of insight, via algorithms and smart tools, as exists within sales.

Taking place in less than 2 weeks   Our latest research reveals that businesses spend, on average, two-thirds of their revenue on non-labor costs – 68.3% in 2011. This far outstrips their collective labor costs, which averaged just 12.9% of their revenue. Yet headcount reduction is traditionally seen as the best way to tackle cost. This raises a number of questions: Are businesses ensuring that their non-labor cost base is being effectively managed? If not, why not? And what are the potential benefits of making that investment? Click here to download the £10 billion profit opportunity whitepaper Watch the webinar recording here