Why is Spend Analysis a Necessity for Reducing Facility Management Costs?
The primary aim of any business is to maximize profits and minimize spend. Facility management companies may realize unexpected savings with strategic sourcing by switching to preferred suppliers and negotiating volume discounts or eliminating duplicate orders or by reducing waste incurred by overbuying – which wastes money, man-hours, and storage space.
Rationalize supplier base
one of the most common levers of easy savings identification for facility management companies through spend analysis is by rationalizing supplier base. This can be achieved through strategies including recognizing inefficiencies after growing through acquisitions and sourcing selected categories globally. It can also be done by managing tail spend by reducing the number of suppliers.
It is vital for businesses to compare themselves against market development. Organizations must identify ways to systematically benchmark their performance in selected categories against relevant market indexes. This helps facilities management businesses ensure that they are not only performing well against their past performance but also keeping up with the market. Spend analysis solution help facility management service providers to benchmark their performance against their peers in the market.
By implementing spend analysis, facility management professionals can start making use of the endless streams of data available to them to create positive, innovative changes in the workplace. Request a proposal!
Optimize working capital
Optimizing working capital is one of the quick-wins that facility management organizations can take through robust spend analysis. Identifying categories and suppliers with lower-than-policy-level payment terms. This provides a great starting point for freeing working capital.
Category-specific opportunity levers
In the case of facility management service providers, not all categories are similar. There are a lot of category-specific levers that can be utilized to identify opportunities – be it controlling travel class in air travel, harmonizing job profiles in temporary labor or analyzing packaging premiums in chemicals.
Improve data quality
One of the most common points of discussion related to spend analysis in facility management organizations is the lack of data quality that meets the expected standards. However, the only way to improve data quality is to use it. Moreover, it is important for facility management companies to understand that unused data will always be bad data.
Facility management companies can use spend analysis to prevent potential vendor issues by keeping track of the vendors’ annual revenue and credit score. Dealing with preferred vendors may put the company’s supply chain and project progress at risk if the vendor fails. Note that the company is often only as timely as its suppliers.
Automate and improve internal systems
The spend analysis data can provide facility management organizations the basis for informed decisions on areas of improvement for different processes. If the payment processing is consistently slow, companies may consider an eProcurement System to streamline and speed up the process.
SpendEdge is a forerunner in offering smart procurement solutions to several Fortune 500 companies across the globe. We provide in-depth, powerful insights that help our clients in the facility management sector to develop effective procurement strategies to maintain a winning edge in the market. Our spend analysis solutions for facility management service providers are designed in collaboration with several professional consultants and provide and host of benefits including optimized design and execution process, insights into the usage of modern equipment, and overall cost management and control. SpendEdge’s unique approach to procurement transformation encompasses robust procurement strategies and technological innovations to help facility management businesses build the infrastructure required to fuel high-performance digital procurement enterprises. Request a demo to know more.