SPEND analysis

Spend analysis classifies and analyze business’s expenditure in order to decrease overall procurement costs. With Spend Analysis, you gain insight that allows you better use of your buying power, cost reduction and improvement of supplier relationships.

We use spend analysis to categorize your data. This is essential to determine where and on what a business is spending its money. Once a business can see what category they spend highest on, they can further examine the costs within the category to figure out how to boost their profits and reduce overspending. Spend Analysis provides a complete overview of purchases, down to the individual category level.

Some benefits of Spend analysis

  • Cost savings - Spend Analysis gives you an insight over spend data and can help you identify cost saving opportunities.
  • Supplier Relationship Management – Your suppliers use to know more about how much and on what you spend than you. Spend analysis helps you to correct that imbalance and in some ways, tip it to your favor.

     

    Having done a comprehensive spend analysis will give you more information about your spend with a specific supplier and will also provide you with insight into how much you are spending with that supplier's competitors, this information is something your supplier do not have.

  • Too much spend on one supplier - Are you spending too much on one supplier? That supplier can be very depended on your purchasing which means that your business decision has a large impact on their company. Your supplier might be forced to reduce their staff or even go out of business if you decide to reduce the spend or change the supplier. Make sure that your spend do not stand for a large percent of supplier’s turnover.
  • Single source risk - this risk is if you are too dependent on one particular supplier and if that supplier goes out of business or choose not to be you supplier anymore. This could cause a delivery stop on some critical products or services that are essential for you, here is where dual sourcing comes in and secure your deliveries. You can easy identify single-sourced items and develop a supplier base to ensure that critical items are always available
  • Supplier base rationalization - Rationalizing a supply base is picking the right suppliers and the right number of them. That requires you to categorize yours spend and identify current and potential suppliers for each category.

     

    Look always for inadequate suppliers and find new ones as replacement. Keep in mind that new suppliers must prove themselves before you do any actions on your inadequate suppliers, do not trade one problem for another!