What does your company spend on to support its business needs? Who is doing the spending and who are they spending it with?
These are the basic questions to arrive at data sets that help you find the savings in your procurement practices. Spend analytics is the act of capturing, isolating, classifying and analyzing the data that arises from documentation produced in the procurement process.
A spend analysis guides the way to not only savings but to risk management, enhanced buying power and better relationships with suppliers. It allows your sourcing to be driven by cost and other efficiencies by making it clear where the snags are.
Professionals in the procurement space are moving to a more strategic model. To do this, they need data. And data plays a role in strategies to identify savings, both short and long term.
What’s the data?
The data you’ll be using in spend analysis derives from purchase history. This information provides the basis for assessing the how, where, who, when and what of your company’s spending.
- How often do you buy it?
- How much do you pay?
- Where is it shipped?
- Who are you buying it from?
- Who is purchasing it?
- When is it bought?
- What are you buying?
Other questions include whether you’re satisfied with product/services, quality, price and delivery (on time/reliable? Damaged/missing items?). You can also learn much more about procurement’s effectiveness by comparing the data derived from your purchases to that of the previous year or years.
Where’s the data?
The three foundational sources of spend analysis data are purchase orders, contracts and ERP data. Add to that general ledger information, financial data and data derived from suppliers and you’re beginning to pull together the disparate data sources you need to conduct an effective spend analysis.
Spend management and spend analysis can be seen as similar but they’re not precisely the same. Spend analysis speaks to visibility and process. Visibility means that you can see the factors hidden behind supply-chain performance, efficiency of processes and improved cost savings. This information allows you to look into the future and plan for it.
Spend visibility drives first-class performance in procurement. It teases out knowledge of your spend categories, permitting you to make the best decisions possible and to avoid not only budget over runs but supply chain difficulties and process inefficiencies.
How you deploy the data once it’s been gathered and collated to create the foundation for spend analysis is the trick.
At CenterPoint Group, we offer a free spend analysis to our prospective clients. Using the talents of our analytics team, we run comprehensive comparisons and benchmarking exercises for each of your indirect spend line items, providing you with an optimized solution to your procurement needs. We understand the importance of transparency and visibility when it comes to capturing spend data, so we work directly with our clients to deliver superior insights and savings.
Data is what makes the procurement world go strategic. It’s the basis for taking procurement to another level, making it the driver of efficiency and solid fiscal management.
At CenterPoint Group, we’re hardwired to create spend analyses that serves procurement with fresh data that gets you where you want to go.
Our proprietary database analyzes every purchase, so you’re getting the kind of support that goes beyond grabbing the low-hanging fruit, reaching for everything on the tree.
CenterPoint is here to help your procurement department shine. Contact us.