As businesses strive to carve a niche for themselves in an increasingly complex and interconnected global marketplace, the importance of effective spend management strategies cannot be overstated. Ashwani Narang, Vice President and Head of Spend Management at SAP, brings a unique perspective shaped by a decade-long journey of transforming business operations across diverse regions. With a keen focus on driving bottom line improvements and delivering value to the table, Narang is at the forefront of using technology to optimise spend and drive sustainable outcomes.
In this exclusive interview, we dive deeper into Ashwani's innovative strategies for aligning spend management goals with overarching business objectives, while also anticipating future trends and innovations in this dynamic landscape.
What strategies do you employ to optimise spend and drive cost savings within SAP?
SAP has recently made a strategic move that I find particularly impressive. We've consolidated all aspects of spend management under one umbrella called Intelligent Spend and Business Network. This encompasses everything from employee expenses to direct and indirect material procurement, as well as services and contractual labour. Additionally, we're offering supply chain finance solutions for suppliers, all within this unified platform. This approach is unparalleled in the market, providing a holistic view of spending that allows for more effective strategies to be developed.
For instance, consider contingent labour, often overlooked despite accounting for a significant portion of organisational spending, up to 30 per cent in some cases. By addressing such areas of spending, companies can unlock new efficiencies and savings.
Moreover, SAP's focus on sourcing savings and cost containment, particularly for direct materials like gold, demonstrates a proactive approach to managing expenses. By leveraging insights and predictive analytics, companies can hedge against market fluctuations and make informed decisions about procurement timing. This level of foresight and agility is crucial in today's dynamic business environment.
How do you ensure alignment between spend management goals and overall business objectives?
In the current business landscape, companies are placing a high priority on cost management and spend management to sustain their operations amidst various challenges. For example, recent events, such as the increase in sunflower oil prices due to geopolitical tensions between Ukraine and Russia, have highlighted the importance of effective supply chain management. CEOs are now focused on ensuring that their supply chains and external collaborations are optimised to maintain product availability and market competitiveness.
The dynamics of the automotive industry further exemplify this shift. With supply shortages leading to extended waiting periods for popular models like the Toyota Innova Hycross and XUV 700, suppliers wield significant power in determining product availability. This underscores the need for robust procurement and supply chain strategies to navigate such challenges.
Looking ahead, supply chain spend management and procurement are expected to take center stage. As India transitions into a manufacturing driven economy, the importance of these functions will only increase.
The role of SAP Business Network in facilitating commerce is substantial, with USD 5.1 trillion in annual transactions. This is equivalent to the combined GDP of India and Australia, showcasing the platform's significant impact. Moreover, the platform's expansion in India, with a threefold growth in the last three years, reflects the increasing digital literacy among businesses, including traditionally offline entities like scrap dealers who now participate in online bidding processes.
These success stories not only demonstrate individual company achievements but also highlight the broader positive impact of SAP's initiatives on the Indian business community.
Looking ahead, what do you see as the future trends or innovations in spend management, particularly within the technology sector?
During a conference, I was struck by a profound realisation about sustainability. A speaker pointed out that supply chain practitioners contribute significantly to pollution, generating 70 per cent of the earth's carbon footprint. This revelation deeply resonated with me, as it highlighted the immense impact our practices have on the environment. Personally, I believe that addressing sustainability challenges within our supply chains is one of the most crucial changes we can make for humanity.
By aligning with the 17 UN defined sustainability goals, we have the opportunity to positively influence twelve of them. Simple actions like reducing paper waste by digitizing processes can have significant environmental benefits. Initiatives by the Indian government, such as promoting digital invoicing, are steps in the right direction towards reducing our ecological footprint.
SAP's introduction of Sustainability Data Exchange reflects the growing importance of sustainability in business operations. While the fundamentals of spend management remain essential, they are evolving to become more informed and proactive.
Looking ahead, I anticipate recurring supply chain shocks every six months, whether due to conflicts, geopolitical tensions, or other factors. In these moments of upheaval, technology will play a crucial role in helping industries adapt and mitigate disruptions. Despite the rapid pace of change, it's essential to remain focused on sustainability and leveraging technology to navigate future challenges.
