Having a robust spend analytics solution has a higher complexity than having a spend analysis because it involves having many sources of information from generally disparate systems, a labor intensive and complex data cleansing and classification process, as well as the selection of appropriate tools for processing.
The main problems of traditional expenditure analysis: observes past behaviors and is measured with KPI's that are not aligned with the business. However, there are a number of benefits that pay off exponentially from the effort.
The main objectives of its implementation are to identify opportunities, manage savings and control spending through access to intuitive visibility to relevant users with reliable and relevant data.
Advanced Spending Analytics Applications
Data Driven Decision Making
It generates transparency on global spend across all sources of information on suppliers, categories, business units, products, etc. Eliminates arbitrary decisions and reduces the possibilities of making decisions based on instinct and personal interests. Generates time reduction from purchase order to delivery of the good or service, from the moment the purchase order is placed to the delivery of the good or service.ecting low costs, improving supply chain efficiency and enhancing the supplier-customer relationship. The use of data-driven decision making promotes the long-term value of sustainable sourcing.
Key elements: quality, effectiveness and proper interpretation of the data.
Rationalization of Suppliers
It generates a channeling to a few suppliers, while identifying and categorizing the offer to the business need. This generates a focus of efforts on those suppliers that offer the best value. Thus, renegotiation activities or conflict resolution with particular suppliers are prioritized, understanding their cost and effort.
Key elements: Rationalization of the supplier portfolio to optimize performance.
Working Capital
Real-time visibility of payment timeliness, payment terms and accuracy of payment to suppliers allows you to understand opportunities for better contract negotiations. You can identify similar suppliers with different payment terms or opportunities to improve working capital due to high contract award amounts.
Internal benchmarking
Globally, it allows differentiation between heterogeneous business units, understanding how to achieve better prices and identify better suppliers faster. By measuring performance separately, it is possible to understand the organization's behavior in detail, as well as to identify immediate cutback opportunities.
Key elements: Intra-company goals can be set that are measurable and achievable.
Optimization of volatile categorization
It compares purchases in categories with market indexes, generating certainty as to whether the purchase was made at the right time and at the right price. Likewise, by incorporating predictive mechanisms, it enables the buyer to make a decision that directly impacts the return to the companies.
Key element: volatile categories that allow tracking against the market.
6. Compliance Monitoring
Deviations in contractual executions allow to generate early warnings and new negotiations and to generate a progressive synergy of better contractual conditions for the next negotiation. Identifying suppliers that have an uncontracted expense reduces the risk of having uncontrolled prices.
Key element: Identification of irregular spending to obtain lower prices.
7.Combining expenditure data with savings tracking
Moving from the identification of savings to the materialization of cost reductions requires speed. For this to happen, the purchasing team must ensure effective follow-up, which generates trust and credibility in the organization.
Key Element: Monitor progress and ensure success in reducing spending.
