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As a procurement leader, if you are too focused on seeking discounts, sometimes you might lose sight that the cost of spend could be higher than the discount you might be seeking. Also, as the number of SKUs increases in your organization, the SG&A costs rise at an increasing rate than your top line because of increased marginal overhead with each SKU. The cost of spend is a key metric that manufacturers and distributors need to measure and control. Or you might hit the growth inflection point.
In today's episode, we have our guest, Edmund Zagorin, who describes why the cost of spend is an important metric for some of the strategic sourcing categories. He also touches on various strategic sourcing terms and processes, such as how to interpret the implications of purchase price variance KPI and why it's important. Finally, he touches on why businesses should be forecasting the outcome to reduce the cost of spend and better manage supplier relationships.
For more information on growth strategies for SMBs using ERP and digital transformation, visit our community at wbs.rocks or elevatiq.com. To ensure that you never miss an episode of the WBS podcast, subscribe on your favorite podcasting platform.
WBSRocks: Business Growth with Enterprise Software and Digital Transformation