Spend data analysis is the process of collecting, cleansing, classifying and analyzing spend data with the purpose of reducing procurement costs, improving efficiency and monitoring supplier compliance. It can also be leveraged in other areas of business such as inventory management, budgeting and planning, and product development.
Spend analysis is the initial step in the Strategic Sourcing process.
A thorough data analysis across your entire organizations spend can answer critical questions that are at the heart of efficient procurement.
ProcurePort provides spend analysis services and our process consists of a 6 step approach.
The first step in any analysis process is to identify and collect all the data that needs to be analyzed. Typically in an organization looking to achieve cost savings as well as implement best practice sourcing, the data required is the Accounts Payable (AP) Data, P-Card, Travel Expenses, etc. It is best to have this data available in EXCEL/CSV/XML Format so that it is easy to manipulate and feed into the data analysis software. ProcurePort accepts data from multiple sources in any format, providing flexibility in the way data is collected and classified
Once all the data has been made available in an EXCEL/CSV/XML format (from various divisions/departments/sources), the next step is to merge all the data files from various sources into one single file while keeping the original data references intact.
In disparate systems, there are occasions where duplicate data entries exist between multiple systems. Removal of duplicate records ensures that spend is not counted multiple times during analysis.
One of the biggest challenges in spend analysis is the cleanliness of the data to be analyzed. Misspelt supplier/vendor names create unnecessary unique entries that skew the final analysis results. Mapping vendor names against standard vendor name database is very crucial.
The step of utmost importance in the entire process is the proper categorization of the vendors into a structured taxonomy. A generally available taxonomy is UNSPSC, however a custom taxonomy is more suitable in achieving the specific goals desired by the organization. Improper categorization can lead to a failure of the analysis process thereby affecting the decision making process of defining the final eSourcing strategies.
The spend cube is the final output of a spend analysis process. The spend cube allows stakeholders to look at all the analyzed data from various angles. Supplier density in specific categories, Spend volumes across categories, addressable vs. non-addressable spend, etc. are some of the key value outputs derived from the spend cube.
Gather business-changing insights to improve your procurement process
Research from Aberdeen states that “Organizations leveraging a fully-automated system for spend analysis experience an average savings of 11% from strategic sourcing efforts.”
ProcurePort’s comprehensive Spend Management solution provides:
The ProcurePort cloud hosted analysis software offers an easy-to-use graphical user interface for all of your organization’s spend analytics. Populated with standard, pre-built reports as well as customer-specific reports, ProcurePort’s Reporting and Analysis features provide you with accurate and complete spend-related data, allowing you to make business decisions based on the most complete and up-to-date spend
ProcurePort consultants cleanse and classify all data based on your organization’s unique classification requirements, whether it be UNSPSC or Custom Taxonomy. ProcurePort also provides data enrichment services to enhance your supplier profile data, thereby providing a higher level of data quality and analysis reliability. Once your data has been classified, our team makes it available via our cloud hosted software for real-time data analysis and reporting.
Learn how ProcurePort’s Spend Analysis Service can help your business with your Spend Management. Contact us today to for a free demo and consultation.
ProcurePort is a global leader in providing spend management solutions. Our experienced team of sourcing processionals can assist with successfully executing your spend management project. Identify cost saving opportunities by leveraging ProcurePort’s On Demand software and services.