The Importance of Spend Analysis

Sourcing initiatives start with a spend analysis for a simple reason: You can’t improve what you don’t measure. But we shouldn't think of spend analysis as only a component of strategic sourcing. Your company shouldn't only be doing a spend analysis when trying to justify something or decide on a course of action – just like you shouldn't go to the doctor ONLY when you’re sick. Think of a spend analysis as preventive maintenance for your ledger.

But, if you’re not using the right tools for this maintenance, you won’t be effective. The process can end up taking too long, won’t be repeatable, and can ultimately give you un-actionable results. Bringing together disparate, decentralized data through cleansing, standardizing, and enhancing to get to the right level of detail within and across all applicable categories? To do this requires discipline, time, and resources that companies don’t always have to spare.

Suppose you do manage to pull off a good spend analysis in your time of need. What about when you need to do it again? Repeat analysis helps you identify spend changes across suppliers and products/services, incorporate forecasts as well as past data, and audit your contracts to make sure you’re getting the value you expect.

Spend Analysis expert and Source One Associate Director, Jennifer Ulrich, will be speaking at LaSalle University this week. Speaking for LaSalle’s Business Systems and Analytics program, which educates students on the methods of capturing data and producing decision-ready information, Ulrich will provide insight into the application of spend analysis for continuous program optimization.