Spend Analysis Solution Transforms Finance Operations and Reduces Operating Costs
About the Client
The client is a leading medical devices company, specializing in the development of medical devices, laboratory instruments, and diagnostic products. The company supplies devices to hospitals, laboratories, and clinics worldwide. The company has ingrained its place as a leader in the medical devices market.
The Business Challenge
The future looks sharp for the medical devices industry. With global economic growth, innovations and an aging population that has a growing need for healthcare, revenue for medical devices is poised for growth. However, in this turbulent environment, companies that can shift their supply chain priorities and better manage spend will be able to deliver significant value. Moreover, the rising need for supply management and strategic cost management have urged players in the medical devices manufacturing space to leverage the use of robust spend analysis solutions. Spend analysis solutions help companies in the medical devices manufacturing space to identify the potential opportunities and deliver actionable insights into the spend data to generate improved ROI. The spend analysis solutions also address concerns about the maverick spends across the supply chain and help achieve superior supplier relationship efficiently.
The client, a renowned medical devices company was facing challenges in reducing the cost across the supply chain and managing their tail spend. While public spending has become endemic, the client realized the need to drive more competitive pricing. Moreover, the client’s objective was to adopt spend analysis strategies to identify and optimize their spend areas. Additionally, the client needed to streamline their supply chain management and subsequently maximize profits by leveraging SpendEdge’s spend analysis solutions.
Carrying out a study of historical purchases and compiling the data by supplier, category and business department is the best way to distinguish opportunities to save costs. Contact us to leverage our spend analysis solution.
Top Challenges Faced by Medical Devices Company
Problem Statement 1
As directing regulatory and production-related complexities created difficulties for the company, the client wanted to adopt processes to control their supply chains, while also focusing on the costs, speed and quality of their operations.
Problem Statement 2
The hidden costs of the medical devices resulted in financial losses for the company. Thus, the client needed to outline their budget around total landed supply costs. With the help of a spend analysis solution, they wanted to be aware of the losses they would incur from certain aspects of expired products and excess supplies.
Problem Statement 3
The client was also facing challenges in operational functions which restricted them from increasing their process efficiency and streamlining their sourcing and procurement functions. So, with the aid of a spend analysis solution, the client wanted to identify and automate strategic sourcing and procurement solutions.
According to the experts at SpendEdge, “to future proof supply chain management, medical devices companies will need to examine not only at the leaders among their peers, but ahead of their industry borders to analyze from companies that have molded supply chain management and adapt to new business requirements in order to persist disruptive change.”
SpendEdge understands the traditional roadblocks to spend management and how important it is to gain insight into operational ineffectiveness to improve your sourcing success. Request a FREE proposal!
To cater to the business requirements of the medical devices company, SpendEdge’s spend analysis specialists tailored a spend analysis solution. The solution offered followed these phases:
The spend analysis experts at SpendEdge surveyed the top competitors of the company to find their priorities for the year ahead. We also examined the long-term strategic agenda to identify the cornerstone of the transformation. According to the survey report, mostly all the medical devices companies concentrated on upgrading their supply chain management for managing the procurement spend of the organization.
The surveys also reported that, category management played a major role in the spend management of the companies in the medical devices industry. Thus, for strategic cost management, the experts employed a procure to pay system, to analyze the category level spend of the company.
Based on all the data collected, the experts at SpendEdge prepared a robust spend analysis report to help the clients figure out industry data and helping them make better business decisions.
The spend analysis report provided by the spend analysis specialists at SpendEdge helped the client evaluate the industry specific spend data. The spend analysis report also helped the client gain real-time insights into the firm’s procurement activities and expenditures, which further helped them identify the best-in-class suppliers in the medical devices manufacturing space. This subsequently helped the client in cutting down the prices of high quantity products.
The category level spend analysis data also helped the client to effectively price their products according to the industry standards. This consequently helped them overcome supply chain risks and build their presence in the industry. Additionally, the solutions and recommendations provided, allowed the firm to increase their spend management capabilities, which, in turn, helped them drive savings.
With proven strategies to streamline suppliers within specific supply markets, SpendEdge’s spend analysis solutions helped companies to reduce supplier management costs and increase the efficiency of their procurement process. Request a FREE proposal below!
What is Spend Analysis?
Spend analysis focuses on examining and analyzing enterprise-wide expense data to identify opportunities that can help in maximizing the value in a category. Spend analysis can give enterprises a clear perception of what is affecting their spending, how they can maximize profitability over the long term and the best strategies that they can take towards budgeting and supply chain management. Spend analysis empowers businesses to reduce inventory, improve strategic sourcing cycle time, and assists in long-term planning and financial forecasting. It also confers a realistic picture of future spend requirements based on the forecasted data. A spend analysis strategy will allow a business to see where their money is going and encourages them to distinguish ways to reduce their costs, re-evaluate relationships with suppliers, and assure that they are getting the best value for their money. The ultimate goal of spend analysis is to improve a business’s profitability and reduce unnecessary spending and overspending as much as possible. Spend analysis is also valuable in improving compliance and improving supply chain management.
Benefits of Spend Analysis
Clear visibility into spend: With the help of spend analysis, companies can obtain a greater understanding of the costs of materials and services, valuable suppliers and can adapt their procurement processes as necessary. Maverick spending is also reduced through the implementation of a centralized procurement process, that often comes out of a comprehensive spend analysis report.
Direct savings: As businesses are under pressure to both maximize profits and reduce costs, through a spend analysis, companies can gain insights into both their spending patterns and supplier profiles. Moreover, by controlling the activities as part of a spend analysis initiative, your business can bypass duplicate payments. Additionally, late payments, which often result in penalty fees and a loss of preferred status with suppliers, can also be avoided.
Risk management: Constant monitoring of the suppliers’ actions and category management process will help advance your risk management strategies. Through a spend analysis, businesses can monitor dependency on certain suppliers through the level of dealings with them, while also keeping track of their annual revenue and credit score. A proper spend analysis often helps to distinguish and track suppliers. Effective risk mitigation can be quickly translated not only into direct savings but in turn, contribute greater capacity to scale up the business.
How to do spend analysis?
Spend analysis is the process of cataloging your aggregate business spend throughout your organization, with the end goal of decreasing expenses over the long term. Let’s look at the 6 simple steps for conducting a spend analysis.
Step 1: Identify and consolidate your spend data
The initial step in spend analysis is to capture your spend data, start by distinguishing the areas of your business that purchase items such as procurement, finance and marketing and consolidate the data into a single source.
Step 2: Categorize the data
Once you have assembled the spend data throughout the business, categorize the data into meaningful groups to recognize how and where the business is spending capital.
Step 3: Cleanse the data
This step includes detecting and correcting errors as well as standardizing the spend data for easy viewing.
Step 4: Analyze
Once the data has been collected, cleansed and grouped, the data can be compared to previous spending data to monitor if there is an opportunity to make new and meaningful changes.
Step 5: Make a Plan
After analyzing the data in detail, determine the best possible method for cost savings and develop an action plan for each service or product categories.
Spend analysis will allow a business to identify ways to reduce their costs, re-evaluate relationships with suppliers, and ensure that they are getting the best value for their money. The goal of spend analysis is to increase a business’s profitability and reduce unnecessary spending and overspending as much as possible.
Leverage SpendEdge’s spend analysis solutions to identify potential saving opportunities and build strategic plans to reduce expenditure in every category. Get in touch today!