EnglishSpend Analysis to Spend Management. Where are You on the Spend Meter?
There are different levels of analyzing your spend, ranging from basic spend analysis to advanced spend management.
Consider the following scenarios:
Company A:
The procurement department reviews and analyzes their general ledger spend for 2019, compares prices, compares department spend totals against forecast, and finalizes the budget for 2020.
Company B:
The procurement department collects their spend data from pre-determined departments within the company and maintains that information in one central database.
Data is refreshed quarterly and the procurement executive reports on departmental spending.
Company C:
The procurement department collects all their spend data, from all their sources, in different formats, different languages and different currencies, and maintains that information in one central database.
Data is cleansed, fixing errors in descriptions and transactions and duplicates are removed.
Suppliers are grouped under parent suppliers.
Transactions are categorized using UNSPSC.
Data is refreshed quarterly and the procurement executive reports on departmental spending.
By the way, I recently released a video on how to measure the accuracy of your Spend Analysis data. It might help:
Company D:
The procurement department collects all their spend data, from all their sources, in different formats, different languages and different currencies, and maintains that information in one central database.
Data is cleansed, fixing errors in descriptions and transactions and duplicates are removed.
Suppliers are grouped under parent suppliers.
Transactions are categorized using UNSPSC and assigned to a company-specific sourcing category.
Data is refreshed monthly and the procurement executive reports on departmental spending.
Maverick spend is identified and a program is put in place to decrease maverick spend.
Contracts are reviewed and new terms are negotiated based on total spend.
Sourcing activities are conducted based on review of category spend.
Company E:
The procurement department collects all their spend data, from all their sources, in different formats, different languages and different currencies, and maintains that information in one central database.
Data is cleansed, fixing errors in descriptions and transactions and duplicates are removed.
Suppliers are grouped under parent suppliers.
Transactions are categorized using UNSPSC and assigned to a company-specific sourcing category.
The number of suppliers per category is carefully monitored, with external data provided for each supplier.
Low-performing and/or high risk suppliers are removed from the allowed list of suppliers.
Data is refreshed weekly and the procurement executive reports on departmental spending.
Maverick spend is identified and a program is put in place to decrease maverick spend.
Contracts are reviewed and new terms are negotiated based on total spend.
Purchases from each supplier are compared to contracts and terms with alerts created to monitor spend against contracts.
Sourcing activities are conducted based on review of category spend.
Year-end savings are allocated back to departments and are tied to executive bonuses.
For a more detailed approach of a State-of-the-art Spend Analysis you should definitely watch our last webinar here:
Where does your spend analysis initiative fit in the previous scenarios?
