What is Spend Analytics?
Spend analysis is the process of reviewing current and historic corporate spending with the goal of identifying cost reduction opportunities, improving strategic sourcing, and reducing procurement costs.
- Spend analytics is one of the key tools that procurement organizations use to proactively identify savings opportunities, manage risks and optimize their organization’s buying power.
- It is often regarded as the fundamental foundation of sourcing. It is a tool that sourcing executives can utilize to engineer superior performance.
- Data from spend analysis can improve visibility into corporate spend, as well as drive performance improvement, contract compliance, and most importantly, cost savings.
Here are some of the most common sources of procurement spend analysis data.
- Enterprise resource planning (ERP) tools
- General ledger information i.e. an organization’s financial data
- Purchase orders
- Data shared by suppliers
- Other internal systems