5 Surprising Uses of Spend Analytics Data
Organizations are working hard to increase their savings on their hard-earned dollars. The process of savings starts by analyzing when and where you are spending all your money. Analyzing your spends across different categories, processes, and suppliers give you a pretty fair idea where you, as an organization can improve the overall savings. A consolidated […]
Organizations are working hard to increase their savings on their hard-earned dollars. The process of savings starts by analyzing when and where you are spending all your money. Analyzing your spends across different categories, processes, and suppliers give you a pretty fair idea where you, as an organization can improve the overall savings. A consolidated and accurate spend data collected from multiple sources allows procurement teams to perform spend analysis which can provide insights on overall spends and explore areas where savings is possible. So the question arises, once you have the spend analysis data, how can it be useful to the organization?
#1- Increase Savings
In order to maintain profitability, organizations are stressing their procurement teams to deliver savings. Profitability increases when prices are increased or cost-base is reduced. Since product prices are more dependent on the market, companies are focusing on cutting down costs to drive the company profits. Spend analysis can help identify savings opportunities that usually aren’t so obvious.
#2 – Manage Maverick Spends
Maverick spends that does not comply with the rules set by company’s pre-established procurement policy can cost the company money in the long run. Some purchases have to be made urgently or may be insignificant to merit the time and energy to complete the process. Usually, such spends are forgotten in the long run and continue to bleed money for the organization. Spend analysis can help prevent such maverick spends by identifying anomalies such as non-compliant purchases with the supplier, spends with non-contracted vendors, and spends across multiple suppliers without any contract.
#3 – Improving Supplier Relationship
Your suppliers will have a good idea on your spend with them across different items than you. This is because your vendor values customer relationship. However, spend analysis provides you detailed data on spends and expenses with every vendor. It helps an organization to identify suppliers that are crucial to the organization so that a better supplier relationship can be maintained. Additionally, it can also help companies to rationalize their supplier base.
#4 – Managing Risks
It is not uncommon that an organization usually deals with a single vendor over a number of years. However, being over-reliant on a single vendor can become risky, if they fail to deliver as promised or are out of business. The organization can be severely handicapped if such instances occur. Spend analysis data monitors what commodities and components are bought from each supplier which helps them to know financial, legal, operational, and geographical risk exposure for each supplier.
#5 – Ensure Compliance
One of the most complicated task for a procurement manager is taking care of compliance issues. By analyzing historical spend of the organization, issues around contract compliance can be disclosed. Increased visibility into spend data can thereby improve contract and regulatory compliance.