Defined as the process of identifying, gathering, cleansing, grouping, categorizing and analyzing an organization’s spend data, spend analysis is accomplished with the goal of decreasing procurement costs and improving efficiencies via increasing visibility and transparency in mind. Using real-time data and analytics provides the insight needed to gain efficiency – and save money.
In this post, we will be talking about how this process can benefit a company’s bottom line while covering some of the basic aspects of the approach.
A Larger Part of Spend Management
Analysis is just one piece of the much larger field of spend management, used primarily to visualize all data so better sourcing and supplier decisions can be made. In addition to this, it can also help with enhancing contract compliance, thus reducing cycle times and uncovering what is known as maverick spend.
iQuantum Fun Fact: Maverick spend is an action of buying from suppliers without following the company’s pre-established procurement policy. It can harm vendor relationships, affect future contract terms and open the door for underhanded business practices.
With a bit of planning, organizations can build a versatile, self-sustaining analysis process to visualize improvements over time…and that’s a big factor when it comes to benefitting a company’s bottom line.
(Spend) analysis is comprised of three core areas: Visibility, analysis and process. When these areas are leveraged, organizations are able to identify how much they are spending, with whom they are spending and the ROI (return on investment) on that spend.
Key Enablers to Optimizing Spend
Here’s the good news: People, resource and processes roadblocks can be avoided, and adopting the practices below can help manage suppliers more strategically while promoting contract compliance and delivering more bottom line value to a business.
- Utilization of Automation to the Max – With the ideal tools of technology, a company will be in a position to take a systems-wide approach by gathering, consolidating and analyzing data from all companywide procure-to-pay platforms. Using an automated technology ecosystem can support the aforementioned procure-to-pay process workflows, thus maximizing visibility into suppliers, disbursements and internal operations.
- Analyze and Measure – Using a technology ecosystem can also benefit measuring and monitoring company performance globally, including the percentage of indirect spend controlled by way of contracts that are negotiated, the amount of purchase orders and more.
- Standardize Controls and Policies – When an organization supports standardized and automated controls and policies, they can look at critical data as a consolidated whole, evaluate compliance and control “maverick” purchases conducted outside the realm of procurement-negotiated contracts. They will also be in a position to develop new insights into more required standards and controls.
Everything there is to know about spend analytics can be obtained by getting in contact with iQuantum.