What is Spend Analysis?
Spend analysis is the process of identifying, gathering, cleansing, grouping, categorizing and analyzing your organizations spend data with a goal of decreasing procurement costs and improving efficiencies. Using real-time data and analytics will give you the insight you need you to save money and gain efficiency. Spend analysis is a branch of the much larger field of spend management. It is used to visualize all of your data so you can make better sourcing and supplier decisions. Additionally, it can also lead to improving compliance, reducing cycle times, and uncovering maverick spend. Once your data is cleansed and organized into relevant categories, you are ready to start analyzing. Look for trends and verify you are leveraging supplier data to get competitive pricing. Use this pool of aggregated spend information to understand where you spend is going and whom is it with. Your resulting data can be used by your CPO or CFO to gain insights and spot trends in your current spend.
What is procurement spend analytics?
Oracle
Procurement and Spend Analytics also integrate with the other applications in Oracle Business Intelligence Applications product line. They deliver this insight across the organization to increase the company's effectiveness in managing its customers, suppliers, and financial decisions.
Spend analysis is the practice of reviewing
procurement spend data to decrease costs, increase efficiency or improve supplier relationships.
Procurement spend analytics is the process to collect, cleanse, classify and analyze
spend data through either dedicated software or one-off
spend cubes.
What is a spend category?
Spend Category. Goods or services with similar characteristics that are grouped together for planning and management purposes. For instance, furniture could be a
spend category for a business, and have sub
categories consisting of the desks, chairs, tables and cabinets purchased by the company during the year. Goods or services with similar characteristics that are grouped together for planning and management purposes. For instance, furniture could be a spend category for a business, and have sub categories consisting of the desks, chairs, tables and cabinets purchased by the company during the year. Some organizations classify spend using their own unique categories, others rely on more standard taxonomies like the United Nations Standard Products and Service the North American Industry Classification System. A discussion of various methods for creating spend categories and classifying spend and suppliers according to those categories can be found in this SIG Member Peer2Peer.
What is a spend cube?
The
spend cube is a review of
spend data presented as a multidimensional
cube. The dimensions usually reviewed include: sub-categories or variants purchased across the organization, stakeholders or departments buying the category and comparative
spend with different suppliers. The spend cube is a unique way of taking a look at spend data because it is projected in a multidimensional cube. It refers to the three dimensions of the cube – Suppliers, Corporate business units, and Category of item. The dimensions could include subcategories of the different units across the organization, from suppliers, categories, and cost centers. The spend cube is typically the final output of the spend analysis process. It allows you to look at all of the analyzed data from a variety of angles. A spend cube is usually needed if a company is not managing the full percentage of expenditures across all business units.
What is procurement spend analysis?
Spend Analysis is the process of collecting, cleansing, classifying and analyzing expenditure data with the purpose of decreasing
procurement costs, improving efficiency, and monitoring controls and compliance. There are three core areas of
spend analysis - visibility,
analysis, and process. Oracle
Procurement and Spend Analytics also integrate with the other applications in Oracle Business Intelligence Applications product line. They deliver this insight across the organization to increase the company's effectiveness in managing its customers, suppliers, and financial decisions. Oracle Procurement and Spend Analytics enable organizations to optimize their supply chain performance by integrating data from across the enterprise supply chain and enabling executives, managers, and frontline employees to make more informed and actionable decisions. Organizations using Oracle Procurement and Spend Analytics benefit from increased visibility into the complete Procurement and Spend process, including comprehensive supplier performance analysis and supplier payables analysis. Through complete end-to-end insight into the factors that impact Procurement and Spend performance, organizations can significantly reduce costs, enhance profitability, increase customer satisfaction, and gain competitive advantage. Oracle Procurement and Spend Analytics also integrate with the other applications in Oracle Business Intelligence Applications product line. They deliver this insight across the organization to increase the company's effectiveness in managing its customers, suppliers, and financial decisions.
Why spend analysis is important?
Because
spend analysis provides knowledge into an organization's procurement activities and expenditures, it allows the organization to identify areas for cost reduction and process improvement. One of the most
important steps in
spend analysis is to get down to category level
analysis. This is the percentage of CPOs who is focusing on cost reduction as a strong business priority according to the Deloitte 2016 Global Chief Procurement Officer (CPO) study. Most organizations aim at optimizing cost and increasing profitability. Indeed, a cost-effective procurement process would help generate millions of dollars of savings every year. However, before getting involved into cutting unnecessary costs, one must analyze where the money is being spent. To bring more visibility into spend patterns; many organizations have turn to spend analysis for long-term savings without impacting the company’s productivity. Spend analysis is the process of assessing the ‘who, what, when, where, why and how’ of an organization’s expenditures. APQC’s research indicates numerous areas in which organizations engaging in spend analysis perform better than organizations without spend analysis programs. The data from APQC’s Open Standards Benchmarking in procurement indicates that organizations with these programs perform better in the key areas of cost effectiveness, cycle time, process efficiency, and staff productivity. While the survey results do not provide direct causes for the performance differences, they give valuable insight into the more mature procurement processes and robust supplier relationships possessed by organizations that use spend analysis.
