The concept of Spend Analysis could be quite ethereal for many who are immersed in the world of purchases and difficult to materialize into a tangible exercise that really allows valuable input for decision making.
Within an organization, in the supply area, and as a good practice, resources must be allocated to carry out this work periodically, in such a way as to create discipline in the team so that the information is available and visible to customers. buyers.
These types of exercises create culture and awareness in the purchasing team so that decision-making is based on real and analyzable data. This behavior must permeate to convert the analysis of expenditure into the formation of the control tower.
How to implement Spend Analysis?
Aggregation of demand and future needs
The best of all worlds is when you have a centralized purchasing area and the needs of a certain category are channeled to a single category manager, in such a way that, independent of the requester, the buyer can view the company’s total demand.
However, this is not always implemented and we work on the availability of resources by purchasing in multiple categories. In this case, the recommendation is to hold daily meetings (dailys) where the requests to be attended to during the day by each buyer are socialized . This allows you to give visibility and redirect responsibilities and obtain contributions from specific knowledge buyers that are incredible.
Normally, future needs are complicated to obtain because there are no judicious purchasing planning exercises. In these cases, the best alternative is to be able to have purchase history at hand in equal periods and present it to the requesting area for the respective validation. This information will generate important input in conversations with suppliers and will increase negotiating power.
Historical graphs of related variables
Having historical purchase data for long periods will allow you to understand phenomena such as seasonality, market behavior, etc. It is very important to separate unit prices from quantities to be able to see issues such as economies of scale. It is also relevant to have external variables graphed when a certain relationship of dependency is perceived, such as the exchange rate, the share price of the dominant supplier. , international prices of oil or other commodities, inflation, minimum wage, are data that are normally public and are tabulated that can be graphed very easily and allow visibility of correlation between variables.
A highly recommended practice is to publish a summary of relevant information on a dashboard that is easy to view and understand by the team . Having an exposed screen connected to graphics generates a lot of curiosity and encourages suggestions of information that the team would like to have constantly available. that helps you make decisions.
Link Classifications
Being able to classify data and relate different sources is quite a challenge and, normally, you have to start with existing classification parameters such as the activities of each company. If they do not exist, you should start with standard classifications such as UNSPSC, UNICLASS or those that are closest to the company’s operating sector . This will allow for more global information results, going from the general to the particular.
Another way to carry out the Spend Analysis exercise is through Category Management , who normally handle a lot of information in their comparative tables, such as the historical purchase prices of each item, the hidden costs of each offer, the different considerations of the bidders in terms of purchase history, among others. The best way to take advantage of this knowledge is to have a new buyer in this category, either through structured knowledge transfer plans or simply due to the absence of the Category Manager, they really become less difficult purchases to execute since there is all the information available. information available for decision making.
