Here are some of the most common sources of procurement spend data. Spend visibility goes beyond tracking spending, as it gives both a detailed and holistic picture of how money is moving through your company. Having spend visibility allows for analyzing past spend which can be utilized for planning future direction. Spend data management is the process of collecting, sorting, and managing that spend data.
Key takeaways from spend analysis examples
Once you have narrowed the scope down, you can capture your spend data and consolidate it into one central database. Data is usually in different formats, languages, and currencies, so collecting it into one source might be challenging. Ryan joined Expensify in 2013 and now manages all major financial activities at the company. As CFO, he’s led multiple equity buybacks from early shareholders, raised debt financing for the company, and served as the main liaison between investors and the business. In his free time, Ryan enjoys scuba diving and gardening in Maui, where he lives with his wife and their cat, Cornpop.
- Using an AI engine to process the data, completion time can shrink to a few weeks or even a few days.
- These analytical tools efficiently collect, cleanse, categorize, and analyze spending data from a variety of sources, such as invoices, contracts, and payment records.
- The benefit of a dashboard is an instant high-level view of spending.
- Now this may sound extremely simple if you work in a small company.
- This level of visibility ensures that cost-saving opportunities and potential risks are identified early, leading to more proactive and informed decision-making.
Key Components of Spend Analysis
This flexibility empowers teams to collaborate more effectively and take action faster—without getting buried in manual reviews or endless email chains. Direct spend is goods or services purchased directly related to making your end product or serving your end customers. Join our community to get finance, operations, and procurement resources straight to your inbox. Establish your data warehousing and data lake process efficiently such that your data pipeline is error free, manual reconciliation proof, and real-time. Sign up to receive latest insights & updates in technology, AI & data analytics, data science, & innovations from Polestar Analytics.
Payment Term spend analysis
They’re often delivered quarterly or monthly using pivot tables and customized reporting. Spend analysis can help you reduce costs, mitigate risks, improve sourcing, streamline processes, and build better supplier relationships. Explore spend analysis solutions to support faster, more confident strategic sourcing decisions. With the application of analytics and predictive modeling, you can quickly and more accurately identify trends, forecast future Online Accounting spend, and uncover opportunities for cost savings. Integrating external data with internal spend data provides a more comprehensive analysis.
Spend Analysis 101: Steps, Best Practices, KPIs & Benefits
- Spend analysis isn’t just turning data into dollars, its about empowerment.
- The primary goal of spend analysis process is to help your company identify opportunities to reduce costs, increase efficiency, and improve supplier relationships.
- And in today’s business world, where spend is distributed across departments, locations, and tools, visibility alone isn’t enough.
- You should choose “virtuosi analytics” that is the software specially made for the professionals of procurements.
This involves categorizing spend data based on different criteria such as suppliers, products, services, departments, or geographical locations. Strategic Procurement professionals know their Medical Billing Process team needs accurate, granular, high-quality data to analyze. They allow the procurement team to find more savings, to forecast future conditions, and to improve the sourcing process. Hence, spend analytics solutions apply serious engineering efforts to produce outstanding data. Spend Analysis depends on accurate information from all purchasing-related data sources to effectively measure sourcing variables that took place over a period of time.
Merge with external data
Data sets can be enriched by processing to create the KPIs and metrics that drive basic analysis – totals and averages, by supplier or category, trends, or year-over-year comparisons. Similar to normalization, classification tags items that are related. Using a taxonomy with a deep hierarchy for category management aids the data breakdown. KPIs and metrics for individual categories allow comparisons that drive savings insights. Both items and suppliers are classified to allow a narrow focus in the data. These SaaS solutions are using AI to expand from reports and visualization into forecasts and predictions.
Diverse Revenue Streams for Schools: Boost Financial Sustainability
- For example, the collected data can be used to identify potential areas of cost savings, spot overspending, track price variations between suppliers, and analyze potential price and strategy changes.
- On top of these, there are a few good rules of thumb to follow, as set out by other experts.
- Our expert consultants provide actionable strategies that no one else can offer.
- You will be amazed when you will get the number of features right there.
- These variety of sources may include procurement systems, financial systems, supplier databases, invoices, vendor contracts, and external sources.
Most procurement teams follow the following process to get the granular data needed for the most accurate results. It enables procurement professionals and business leaders to make informed decisions and take proactive measures to optimize spend management. Payment term spend analysis can help organizations identify opportunities to negotiate more favorable payment terms, such as longer or discounts for early invoice payment.
How can supplier spend analysis be used?
You should combine the supplier of two different categories like the Supplier X, Supplier Y, Z, and so on. Then they will act as the same supplier and the supplying management automated spend analysis of your company will groom. For Diarmuid O’Donoghue, Head of Digital Procurement at BT Sourced (British Telecom’s procurement branch), the goal wasn’t just gathering data. He wanted to transform it into actionable insights that drive meaningful change. You can include metrics on approval workflows, maverick spend alerts, and budget tracking. This drives accountability and collaboration between procurement and business units.
