JAGGAER understands the traditional roadblocks to spend management and how important it is to gain insight into operational ineffectiveness in order to improve your sourcing success. A spend analysis allows you to do just that.
Here, we’ve outlined the seven steps necessary to conducting a proper spend analysis.
Step One: Identify
Identify all the sources available for your spend data, from all of your departments, plants and business units. This includes accounts payable, general ledger, pCard, eProcurement systems, etc.
Step Two: Gather
Gather and consolidate all of your spend data into one central database. This can be difficult if your data is in different formats, different languages and different currencies, however there are programs available specifically designed to accomplish this.
Step Three: Cleanse
Cleanse your data. This includes finding and correcting errors in descriptions and transactions, as well as standardizing the spend data for easy viewing.
Step Four: Group
Group, or link, your suppliers for better supplier management. Purchases made from IBM, IBM Corp., or Cognos should all be grouped together, since they’re the same supplier.
Step Five: Categorize
Categorize your spend. Whether you use UNSPSC, eClass, or your own company-specific categories, you need to be able to determine where your money is being spent. Office supplies, marketing travel, legal, direct and indirect spend should all be categorized appropriately.
Step Six: Analyze
Analyze your spend data. Ensure that you have negotiated the best contract deals per supplier now that all of your spend is identified per supplier. Ensure that all of your buyers are purchasing from preferred suppliers. Reduce the number of suppliers per category.
Step Seven: Repeat
Repeat. Performing a spend analysis once is a great start to identifying savings, however you need to continually update your data to ensure that contract terms are being adhered to, that buyers are purchasing from preferred suppliers and that savings opportunities are being identified.
Can you complete your spend analysis in seven steps?
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