Procurement organizations miss supplier consolidations, contract negotiations, or value generating opportunities (i.e., “spend synergies”) due to the complexity (time, dependencies, and resources) and associated costs of capturing, comparing, and integrating new spend data into existing spend cubes.

According to Ernst and Young (EY), both finance and procurement leaders struggle to optimize spend due to fragmented data, siloed technology, and inconsistent processes. 

Although significant cost reduction efforts in recent years, most organizations find non–interest expenses still represent a significant figure compared to their bottom lines. Covid pandemic has only made the situation worse, even as it has increased the need for procurement and general organizations resilience and agility – initiating dual – multi sourcing for the same products and even sometimes services. At the same time, over the last decade the role of third parties has significantly increased. 

Elephant in the Room

Let’s dive deeper and address the elephant in the room before getting into solution mode. The root cause for fragmented spend profiles and siloed technology is the existence of diverse types of sources of this data, usually the ERP systems. Organizations keep growing, build new factories, acquire other smaller companies and with both of those comes diverse types of ERP systems.

In our recent project, we have worked with a multinational company which is very much active in M&A and have more than 40 different ERP systems none connected to each other. Other engagement, procurement organization is being re-established as standalone and now needs to selectively onboard different businesses and division which each of course utilizing set of different tools and ERP’s. Different organizations across different industries but the challenge is the same. Silos of spend portfolios across the business which prevents both CFOs and CPOs from exerting proper oversight and control.

Of course, initial solutions come to mind are integration of these ERP’s into cloud or unifying the ERP systems into one however either of these solutions not only take years to yield any result but also will be a heavy toll on organization in terms of investment starting from few millions to hundreds depending on the size of company. The most painful part is that building new factories and acquisitions is never going to stop, therefore there will never be a moment in which these organizations will have full spend visibility

Breaking spend silos 

Having beeen through the above storm ourselves as procurement professionals, we have been thinking of changing the paradigm. Procurement and finance teams need to have spend data at their fingerprints and able to select which part of the spend, they would need to integrate today to create value and/or mitigate risks

Using the Mithra-Ai Synergy Finder, both procurement and finance team can simply download an extract of their spend in a spreadsheet and drag & drop it into our Mithra-Ai secured cloud. Instantly they can see the overview of the spend profile and compare that to their legacy profiles to understand potential synergies and opportunities like overlap on suppliers, purchase price variance etcetera. This allows instant scans across multiple spend profiles and prioritizing the once with the highest value or necessity for the business.  

Harmonize spend integration process 

The next step which again is a nightmare for many organizations is the integration of selected spend profiles with the organization’s global spend taxonomy in a harmonized and consistent process. Instead of having an army of teams working on spreadsheets, Mithra-Ai will serve as central repository facilitating the integration using AI technology to first learn your legacy taxonomy and then accelerate integration of other spend profiles using the legacy structure. 

The above approach helps teams to continuously be able to review, compare and integrate spend portfolios in the right order and seamlessly. We believe procurement and finance teams should be value drivers and not number crunchers.

You can contact us so we can walk you through in more detail.