Spend Matters welcomes this guest post by Michelle Perkins at SciQuest.
Data analytics has been a hot topic this year, but is all the hype worth the business value it provides? In short, it can be, but you need to look at the right things. Luckily, there are spend analysis tools available to help make sense of all this information.
When done right, spend analysis can help you get an accurate view of your organization’s spending, your suppliers, and opportunities for improving your sourcing and procurement activities. There are a number of solutions available to help you collect, cleanse and classify your spend data, but most fall short of actually helping you analyze your business and make more informed decisions about your spending.
Every organization has different data and business needs, so we believe a spend analysis solution should take that into consideration. By tailoring the solution for the customer and your unique requirements, an organization will be able to truly gain visibility into the data they need to develop a strategic, forward-thinking sourcing plan. For example, Wendy’s QSCC probably won’t want to look at their spend analysis the same way as The University of Pennsylvania – nor should they. Advanced spend intelligence involves looking at everything related to spend to get the most visibility possible and, in turn, leverage that information. The key is to economically collect all spend-related data – a difficult challenge without the right tools. A truly business-driven solution will collect data on market trends, contracts, forecasts, KPIs, real-time commodity indexes and any number of other different data points to give your organization access to the full spend picture.
Once you have collected and classified the data that’s important to your organization, you can then start making decisions based on the information. In this scenario, we’ll talk about using the data to develop a sourcing roadmap. A good place to start is by determining a baseline and what amount of the budget is untouchable spend, which will vary based on the respective company strategy. Next, it’s time to evaluate the suppliers – is pricing the same for each transaction? How critical is this item to your business operations? Is there room for savings or discounts? Looking at your recurring spend with all of your suppliers over time empowers your organization to forecast and build a strategic sourcing plan for the future.
Arming yourself with clean and accurate data on your suppliers, costs, risks and other important criteria is absolutely crucial in understanding where to focus your sourcing efforts, but additional analysis of your organization’s goals, market conditions and spending patterns can help you develop a sourcing roadmap that generates the greatest results.
To learn more about how making sense of data with spend analysis tools can help you gain greater visibility into your procurement efforts, check out SciQuest’s new whitepaper, “Using Spend Analysis to Build Your Sourcing Roadmap,” or listen to the corresponding webinar, featuring Brett Cornell, vice president of value consulting at SciQuest, Nila LaVanaway, account manager, commercial, at SciQuest and Russell Goodman, editor-in-chief of SupplyChainBrain.