Spend analysis in procurement has always been an imperative, playing a vital role both in procurement management and the supply chain. So, what is it? It is a process that identifies, gathers, cleanses, groups, categorizes, and analyzes your company’s spend data that leads to obvious benefits, such as saving money and boosting ROI, but the right technology is needed to make the process more efficient and effective.
“Spend analysis technology” and “spend analysis software” are parallel terms, and automates the entire spending analysis system. The right technology offers a more precise spend cube but also increases supplier compliance, severely reducing procurement costs. Read on to learn about the benefits about how it can streamline your procurement process.
1. Full Visibility with a Spend Analysis
You’ll have complete transparency into all your procurement (and rogue) spend, allowing you to make better spend decisions. For example, reports can offer features such as tail spend analysis, which is something often overlooked during less robust methods.
2. Risk Management
The right software can help you identify potential risks before supplier negotiations. Spend analysis software helps you keep track of vendor compliance, reliability, and past transactions. Since you are dependent on your suppliers, you want to mitigate any potential risk before making decisions.
3. Supplier Performance Evaluation
Supplier spend analysis is an important piece of your technology. There are features that allow you to see which suppliers you use most and see who’s been reliable. This also heavily ties in with mitigating risk—with this information, you can employ strategies to consolidate spend where appropriate, using eSourcing. Spend analysis technology also helps improve relationships with your suppliers, allowing for greater transparency throughout the process.
Many companies use analysis technology to measure and monitor their impact on Environmental, Social, and Governance (ESG) issues. The best solutions can layer in important factors such as diversity, environmental or social impact. In today’s consumer conscious world, these factors highly influence your spend, not to mention your brand reputation.
5. Identify Opportunities for Savings
One of the most obvious benefits of using spend analysis technology is finding ways to save money. The right software will help you find and reduce rogue spend. As previously mentioned, rogue spend can get easily overlooked, and spend analytics offers transparency in these areas. Your overall goal is to be more efficient while spending less money, which is something spend analysis technology can easily achieve while helping to evaluate and choose suppliers that better fit your needs.
6. Spend Forecasting
Forecasting future spending is an important piece of procurement. For example, with this software, you can analyze long-term contracts, and recurring vendor spending to try to forecast even several years into the future.
Ready to realize the many benefits of spend analysis? Contact Simfoni today for a consultation.