Spend Analysis? Who Cares?

Not everyone, according to Spend Analysis Lead Brian Seipel.

On this week's episode of the Source One Podcast, he separates organizations into two distinct groups. One group is made up of believers. They've seen the value a spend analysis can bring and, as a result, they've outlined clear processes for conducting them. The other group - an unfortunately large one - includes companies who rarely think about spend analysis at all.

It's hard to blame these organizations for taking a hands-off approach to managing their spend. "Let's face it," Seipel says, "you and your team have your collective hands full keeping the Procurement trains running each day." With an ever-evolving list of concerns and responsibilities, spend analysis can look like one task too many.

Seipel acknowledges that cleansing and classifying spend are often time-consuming processes. He's adamant, however, that the potential benefits of a thorough spend analysis far outweigh the costs.

These benefits also go far beyond cost savings. For example, a deep dive into historical purchasing might reveal hidden opportunities for supplier consolidation. Pursuing these opportunities won't just cut costs, but will provide for more efficient processes and a more easily managed supply base. Instances of maverick purchasing, too, might come to the surface following a spend analysis. By analyzing spend and comparing it to on-contract items Procurement groups can identify the source of off-contract purchases and address the issue before it becomes out-of-hand.

Simply put, organizations that disregard spend analysis are hampering their potential - at best. At worst, they could be closing their eyes to rampant non-compliance and process inefficiency.

"By performing our spend analysis," he concludes, the organization arms itself with a wealth of new insights and gains full visibility into its supplier relationships. "Only then, can we effectively manage our spend."