What is Spend Analysis? Why is it Essential for Better Spend Management?
Spend analysis helps professionals and supply chain managers identify, consolidate, cleanse, categorize, analyze the company’s expenses, or spend, and enable improved strategic decisions. The expense of successfully running and maintaining a business is significantly high, and companies often find themselves struggling to identify efficient ways to reduce costs. It also helps companies find alternative methods and approaches to reduce costs, increase efficiency, and improve procurement or sourcing processes. The rising complexity of supply chains has led to a significant increase in the demand and need for visibility and transparency across the supply chain. As companies grow, expand, or attempt to lead their industry, there is increasing pressure from consumers, stakeholders, competitors, and employees to identify, evaluate, and apply robust, sustainable cost-reduction strategies. Leveraging and applying a spend analysis can help companies use data-driven insights to reduce procurement, sourcing, and marketing costs. While competition continues to rise, the marketing budget continues to decline in companies, and the marketing department often struggles to execute proper strategies. Spend analysis can help tackle these challenges.
What does marketing spend management mean?
Over the years, marketing has become an increasingly imperative, expensive, and effective tool for growing businesses. As professionals struggle to compete in challenging markets and industries, suffer from the rising costs of raw materials, skilled labor, changing processes, and supply chain complexities, experts, advise leveraging marketing spend management. This practice aims to help companies identify, analyze, and mitigate unnecessary expenditure, assess problem areas, leverage data, analytics, collaborative strategies, and new approaches to improve marketing expenses while reducing costs and terminating inefficiencies. To successfully optimize it, companies must understand and implement the best practices and processes to enable efficient, effective, and robust marketing spend management in their company.
Best Spend Analysis Practices to Optimize Marketing Spend Management
Collaborate with Procurement: In a growing company, supply chain managers, chief procurement officers, and sourcing teams work closely to mitigate unnecessary costs and identify cost-efficient strategies, products, or services. The procurement department often practices spend management as a necessary and inevitable part of daily processes. Marketing teams must learn to work closely with procurement experts and identify methods, modes, or strategies to mitigate unnecessary expenses. Additionally, particular skill sets such as negotiating and formal sourcing are more commonly found with procurement and sourcing experts, leading to teams’ rising need with combined expertise and differing skill sets. Incorporating both can transform the marketing approach to negotiation, sourcing, and budget management.
Renew Focus on Savings: Marketing budgets have suffered significantly in recent years, leading to the growing need for companies to identify and allocate alternative sources for re-investment and measure savings and returns from various investments. Collaborating between sourcing, procurement, and marketing to reallocate savings achieved from other sourcing programs or initiatives launched to support spend management in the relevant department is a common step for companies to take currently. Utilizing the re-invested and repurposed monetary support can help the marketing departments focus on various crucial top line generating focus areas, better understand company spending, and execute better control over marketing spend. Businesses can choose to invest said money in activities with a higher return on investment and leverage their strategies to improve savings and re-investment further.
Leverage Data and Analytics: The value of data and analytics has exponentially exploded over recent years, and marketing has become a highly number-driven and analytics-based field. Growing focus and investment on tools, platforms, and approaches to increase leads, search rates, sessions, and other numerical values has led to the rising need for data and analytics. Similarly, when executing a spend management strategy, companies need to utilize past data, current changes, analytics, and processes to improve their systems, procedures, and spend. Therefore, companies leverage functions such as spend analysis, contract management, risk management, and more to identify, quantify, and mitigate challenges across the supply chain. Data has become increasingly easy to access, and companies must take preemptive initiatives to determine the impact, relevance, and solutions to challenges within the organization.
Acknowledge Different Categories: Although procurement, sourcing, and marketing require similar spend management strategies, it is crucial to remember that the separate departments cannot work, categorize, or address their spend challenges similarly. Commodities, goods, products, and creative categories fall under different approaches, price ranges, and challenges. Implementing proper spend management in this space while identifying and evaluating the various unequal types within the marketing spend is crucial to overcoming inefficiencies, finding potential room for improvement, and implementing changes to transform marketing strategies. Procurement and sourcing experts must approach this tenet carefully and accommodate possible changes or alterations to the procedure for proper marketing spend management.
Utilize Spend Analysis Data: A comprehensive, well-conducted, and accurate spend analysis can give companies unparalleled insights into their expenses, savings, and strategies needed to mitigate unnecessary costs or losses. The process consists of seven distinct steps: identifying, gathering, cleansing, grouping, categorizing, analyzing, and repeating, and provides companies with data, clarity, and accurate measures of their spending. To improve marketing spend management, companies must leverage a spend analysis, utilize the data, and overcome the impact of their inefficiencies with accurate information. Additionally, a spend analysis helps companies identify and reduce problem points within procurement and serve the same purpose for the marketing team. With the insights gained from this process, companies can develop and execute improve marketing spend management strategies.
Success Story – SpendEdge Advantage
Understanding every transaction’s value and the impact of every inefficiency is important to grow companies and can serve as the catalyst for immense success or unexpected challenges. As industries continue to grow, a food retailer chose to leverage our expertise in offering a spend analysis and wanted SpendEdge insights into improving their marketing spend management processes. Our experts helped the company conduct an extensive spend analysis, identify the challenges and shortcomings within their strategies, and implement enhanced spend systems for their rapidly expanding future. With the data from the spend analysis, and recommendations from the spend management experts at SpendEdge, the retailer executed unparalleled marketing spend management, and utilized the suggested best practices to create quality-focused, low cost, and high returns marketing initiatives, and gain a strategic lead in their highly competitive market.