How to Conduct a Spend Analysis in Seven Steps
Posted by JAGGAER Staff in Spend Analysis on June 2, 2015
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.
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.
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.
Cleanse your data. This includes finding and correcting errors in descriptions and transactions, as well as standardizing the spend data for easy viewing.
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.
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.
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.
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?
To learn more from the experts about Spend Analysis, read our 10 Tips To Get The Most From Your Spend Analysis Solution white paper!
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