The importance of spend analysis

The ability to track spending accurately and efficiently is critical to the success of a procurement organization. Throughout different phases of strategic sourcing, a company must be able to identify sourcing opportunities, provide negotiating leverage for sourcing teams, and monitor and report compliance, including spend with diversity suppliers, across the enterprise. However, the average enterprise has multiple transaction systems and lacks the tools to track and monitor spend with suppliers.

Quick view

Our quick view service means a quick screening of the company spending.

During this, we look at the most significant purchases according to the Pareto principle and look for areas where the company may reduce its purchasing costs the most quickly. In the first phase, we look for opportunities to reduce purchase prices according to the Total Cost of Ownership model, then in the second phase we focus on transaction costs.

Portfolio analysis

The goal of this approach is to analyse purchases of a company from the aspect of prices and to compare the prices of the company with market prices.

Within this screening, we do not only obtain information related to prices but we also identify which products may be procured using auctions, and express savings and efficiency improvement opportunities in figures.

During this screening, appropriateness of purchases (product and service groups) for auctions is established and they are set in a priority and implementation order, and the type of auction and tactics to be used to purchase each product is also determined.

Total corporate spend analysis

We perform full spend analyses for companies in order to discover savings opportunities. Spend analysis enables companies to summarise, examine and analyse expenses and purchases from the aspect of purchasing. This inspection fundamentally contributes to discovering the reasonable use of electronic procurement systems (sourcing, auction, market place) within the organisation. This screening indicates, among others, how many transactions occur, what raw materials a company orders and from how many suppliers. Inspections of this character are substantial as practical experience shows that screening itself means a cost reduction by 5% because the company becomes aware of its spends. Complexity of the analysis results from the fact that company management systems support this kind of data reporting only to a limited extent.

Scorecard Report - We spend quality time interviewing the client's key procurement stakeholders, reviewing acquisition processes, and understanding sourcing history. With this information, coupled with the results of the Enterprise Expenditure Analysis, we prepare a report that summarizes the client's growth potential in the following areas of performance: (1) Supply Strategy, (2) Organizational Effectiveness, (3) Expense Base Impact, (4) Meaningful Metrics, (5) Sourcing Practices, (6) Supplier Management, (7) Internal Customer Relationships, (8) Professional Skill Development, and (9) Technology Tools. This report benchmarks the client's performance in each area, against "best practices" utilized by other supply-management organizations. The information is arranged to provide the client with a "menu" of meaningful concepts they can implement.

Category Sourcing Identification - This portion of our analysis is often of most interest to senior executives. Based upon our findings in the Enterprise Expenditure Analysis and Scorecard Report stages, our team works with the client to identify the opportunities for strategic sourcing that will yield the most impressive savings to their organization. In selecting opportunity categories, factors we consider include: Dollars spent, Transactional volume, Supplier fragmentation, Known information about current suppliers, History of sourcing, Methods & strategies, Dollars under "sourced" contracts, Volume trending, and Process efficiencies. We then provide the client with a basic strategy for each targeted commodity grouping, an estimated savings target, and coaching on how to initiate the process. Of course we're happy to assist the client in leading their sourcing efforts, but our deliverables will provide them a strategic roadmap to perform projects themselves, if so desired.