Authored by: Mickey North Rizza
How much are we spending? Who are we spending it with? How can we save even more money?
For many organizations – spend analysis provides the answers. But too often, the process stops after procurement cuts the ‘low hanging fruit.’
Cost cutting will always be critical, but companies miss a major opportunity to really impact their top- and bottom-line. The reasoning: Their visibility, data and analytics are limiting.
There are many roadblocks that hold companies back from going deeper with spend analysis. The most pressing: lacking time and resources, and limited data sets. Regardless of the reason, a surface-level approach to spend analysis fails to paint a complete picture of an organization’s spending, and limits procurement’s impact.
Collecting and analyzing more data takes time, but it almost always pays off. The better the data, the more actionable insight procurement can leverage to drive positive change:
• The analysis benefits the entire organization. The results go beyond procurement and are leveraged by finance, management, engineering, logistics and even marketing and IT departments.
• More savings can be realized: As opposed to the the one-off, low-hanging fruit strategy, the more data that’s analyzed, the more lasting savings opportunities can be discovered.
• The value goes beyond core purchasing: It benefits supplier performance management, supply chain risk mitigation and strategic planning.
How deep do you go with spend analysis? If you’re looking to take your sourcing program to the next level, check out this report on closed-loop spend analysis. It’s a perfect starting point for procurement transformation.