This shared data ultimately empowers the planning team to create more accurate budgets and forecasts that reflect continuously changing market conditions. Having access to real-time savings information also enables FP&A leaders to reallocate savings to other projects, begin new projects, or bank them for later use. When FP&A and sourcing are aligned, they can help the business remain flexible and resilient while navigating uncertainty.
6 Advantages of Connected Planning and Sourcing
Sourcing and planning teams that are equipped with best-in-class solutions drive better business outcomes across the enterprise. Data centralization and automation help keep sourcing and FP&A teams in lockstep and ultimately power better collaboration, more informed decision-making, and strategic planning for the future. Here are just a few ways connecting sourcing with planning can benefit your business.
1. Gain proactive insights. Sourcing teams with easy access to sales forecasts and production planning can provide an accurate projection of planned spending. In manufacturing, for example, sourcing teams can use this information to secure volume commitments from suppliers before creating purchase orders (POs). This gives finance a preview into upcoming spend without waiting for requisitions to come through. FP&A and finance teams also get a clearer picture of the expected pricing mix in real time, giving them the ability to plan ahead.
2. Identify best supplier partners. In the case of logistics, sourcing can determine optimal suppliers using model shipping forecasts created by FP&A and comparing vendor lane rates. Once sourcing has chosen a logistics partner, they can then update the supplier’s rates, which automatically feed into the budget. This allows FP&A to understand the impact to the total business before sourcing finishes negotiations.
3. Increase product cost accuracy. Many businesses often base their plans and costs for a new product around outdated benchmark data and rigid forecasts. This stale information makes predicting the cost of operationalizing new products tricky at best and inaccurate at worst. By connecting sourcing with planning, procurement teams can provide finance with real-time supplier pricing, allowing FP&A to create dynamic forecasts that reflect the most current supply mix.
4. Drive time savings with automation. Cut down on manually updating spreadsheets and communicating through lengthy email chains by integrating sourcing and planning software. Sourcing can take advantage of automation by directly sending actual negotiated savings to FP&A at the push of a button. FP&A can use this real-time data to adjust its plans and budgets, giving time back to both teams for additional projects.
5. Prioritize strategic contracts. Technology gives sourcing teams the ability to track contract pricing levers such as scalability and look beyond only which contracts are expiring and which are expensive. Sourcing teams who have access to financial planning are able to determine if current contracts require renegotiation due to a change in plans. Sourcing teams can also get ahead of contracts that are likely to have major increases and lead more informed negotiations with suppliers.
6. Increase visibility with centralized finance data. Workday Adaptive Planning gives FP&A teams a space to combine sourcing data with other savings drivers from across the business, such as headcount management, demand reduction, and more. This gives finance executives a single source of truth for company wide planning and savings, enabling better decisions and accelerated execution of plans.