What is meant by Purchasing TransparencyWhen talking about transparency in purchasing, it usually refers to the transparency of the data. This is not always provided per se at first, especially in more complex, group-like corporate structures. In order, however, to recognize cost savings potentials by comparing the prices of same or similar materials (see benchmarking) or clustering potentials for similar suppliers, comparable – read: transparent – information and baselines are needed.
The prerequisite initially for increasing efficiency potentials in strategic purchasing is to extract material and product specifications, supplier information and the prices for components and services that go beyond the corporate landscape from the corporate ERP system. The main challenge for purchasing transparency now involves cleaning up, clustering and making the information comparable, as well as ultimately presenting the information transparently at the corporate level in a “uniform language” – a standardized classification system such as eClass or UNSPSC.
The benefit of increased transparency in purchasing is enormous: transparency is the key to implementing cost savings potentials across all divisions and companies. Merely an order analysis is not enough in this case. The crucial thing is to obtain a detailed overview of all invoices and payments to the most important suppliers. Read the Orpheus blog article here: Calculate the benefits of transparency in purchasing in 6 steps
The software systems, which make the purchasing volume transparency available within the entire group of companies, are of outstanding importance. More information on this subject is available in the Orpheus blog: 3 Steps to improve Data Transparency in direct and indirect purchasing
Although the issue of transparency in purchasing is important for all areas of purchasing, it remains the central topic for indirect purchasing. Contrary to direct purchasing, the quality and availability of the data tends to be significantly worse. The number of repeatable demands as well as Maverick Buying or order rate is smaller, which in turn makes it more difficult for performance measurements and trend analyses. A description of the special challenges of indirect purchasing in regard to transparency and performance measurements can be found in the following Orpheus blog article: Indirect Purchasing: Transparency, potential analysis and performance measurement
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