A spend analysis may initially be conducted for one specific result in mind, whether it be maximize budget or just find a baseline for improvement, companies often don’t expect the amount of information a spend analysis may provide . In bringing all this spend data together your organization brings to light opportunities that otherwise would have been overlooked. The final result of a spend analysis offers the answers regarding areas for cost reduction along with additional supply management solutions in areas that might not have been considered for improvement earlier.

If you’re unsure of the benefits a spend analysis could have for your organization, here are three solutions the process will produce beyond cost saving opportunities.


Strengthen Supplier Relationships

An extensive spend analysis offers your organization more information about your spend with vendors individually. While this data may seem established already, because you have a general idea of where your finances are when it comes to suppliers, the further details provided by the spend analysis will make all the difference. You’ll become aware of not only how much and on what you spend with a specific vendor, but also how much you are spending with a vendor’s competitors, which the vendor doesn’t know. This information can be especially helpful when the time to negotiate a new contract arrives. In cases where your organization has worked with a certain supplier for a long term, and your spend has surpassed the initial intention or contract with that supplier, you’ll want to consider the dependency in the relationship. A spend analysis can help you see both the positive and negative effects of maintaining the relationship or switching to a different vendor.

Establishing Benchmarks

The advantages of substantial comparisons with other organizations of a related nature (both locally and around the country) include access to information on the average number of vendors or spend by category and recognizing what vendors are achieving the greatest accumulated revenues from other mutual associations. With the spend data of various organizations all in one place, the observations you make can lead to a greater understanding of industry standards and opportunities. This data can contribute to setting targets for practical and attainable development based on the average for organizations of similar type and size.


Enhance Processes

In some cases, even before a spend analysis is conducted, an organization may identify the need for improving procurement and supply management process when the existing system is inefficient or unorganized. In other situations, the opportunity for a revised system can be established during the spend analysis process. This could entail applying an eProcurement System, an improved approach to PCards, or centralizing invoices with individual suppliers. The results of the analysis can guide your choices when deciding where and how to implement new procurement systems in your organization. There may be the need to configure the system overall and determine what department and individuals can use the improved system to deliver a timely ROI on the project.

For more information on conducting a Spend Analysis and identifying opportunities within your procurement operations, contact Source One’s Spend Consultants.





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