Spend Analysis – a concise guide

Why to do Spend Analysis?

Following are the few main reasons for doing spend analysis for our business:

1. To prepare more detailed and accurate financial and annual reports for our company
2. To find opportunities to cut costs across all sped category
3. To create budget and forecast for as procurement
4. To spot fraudulent or unacceptable maverick spending
5. To identify supply risk, make risk management plan and implement

How to do spend analysis – a 6 steps procedure

1. Identify and Set your goals – What you want to achieve, obviously one from above list or anything extra
2. Find the source of spend data – company’s ERP, procurement tools, invoicing software or spread sheets!
3. Gather data in one place and clean and compile
4. Categories and group the spending
5. Analyse the data, top items, top suppliers etc.
6. Implement changes & Report back – Implement the changes those you can. Prepare a clear, concise, and actionable report and share with your team leaders and senior management.

A YouTube video that describes Spend Analysis – Introduction – Procurement training – Purchasing skills