How to Conduct a Spend Analysis in 7 Steps
A comprehensive checklist
Never before has preserving cash been a higher priority for companies around the globe. CEOs are mandating every area of the enterprise take a good hard look at company spend—analyzing their department’s balance sheet to identify key areas of cost reduction.
Spend analysis is one aspect of spend management that can have a profound effect on identifying areas of cost reduction. Spend analysis is the act of assessing the who, what, when, where, why, and how of an organization’s buying behavior. It provides critical visibility into an organization’s procurement spending, which in turn helps to manage risk, monitor contract compliance, and leverage buying power.
Industry research shows that organizations with spend analysis programs are more efficient and competitive. Furthermore, over 70% of procurement leaders deem cost reduction as a strong business priority and use it as a way to optimize procurement and increase profitability.
Besides the inherent cost savings, spend analysis also promises the benefits of increased performance through better prioritization and resource allocation, leaner processes, better risk management, and more effective supply chain.
There are many ways to perform a spend analysis. Spend analysis software providers, consulting firms and supply chain management firms all offer some variety of spend analysis.
Regardless of the method you chose, it’s procurement’s responsibility to understand the organization’s operational effectiveness in order to contribute to improved efficiency and identify savings opportunities.
Spend analysis allows you to do just that.
Whether you’re new to spend analysis or just need to brush up on the guiding principles, we’ve developed a checklist to help you get started. This tool provides the main activities involved in the spend analysis process and details the information needed in each step.
This checklist will help you to:
- Identify which spend sources are most important in your analysis
- Understand what it means to cleanse data to get the most reliable results
- Group spend data into categories so you know where your money is being spent
- Analyze data to fine tune performance
Download the free spend analytics checklist now!