Here are the steps that can help you conduct your Spend Analysis in a better way.
“Without big data analytics, companies are blind and deaf, wandering out onto the web… like deer on a freeway.” –Geoffrey Moore
Identify all the sources available for your spend data, from all of your spend analysis departments, plants and business units. This includes accounts payable, general ledger, pcard, eprocurement systems, etc.
Consolidate your data
Gather and consolidate all of your spend data in to one central database. This can be difficult if your data is in different formats, different languages and different currencies, however there are programs available specifically designed to accomplish this.
Do some cleanup
Cleanse your data. This includes finding and correcting errors in descriptions and transactions, as well as standardizing the data for easy viewing.
Organize your suppliers
Group, or link, your suppliers. Purchases made from IBM, IBM Corp., or Cognos should all be grouped together, since they’re the same supplier.
Categorize your Spend
Whether you use UNSPSC, eClass, or your own company-specific categories, you need to be able to determine where your money is being spent. Office supplies, marketing travel, legal, direct and indirect spend should all be categorized appropriately.
Analyze your Spend
Ensure that you have negotiated the best contract deals per supplier now that all of your spend is identified per supplier. Ensure that all of your buyers are purchasing from preferred suppliers. Reduce the number of suppliers per category.
Performing a spend analysis once is a great start to identifying savings, however you need to continually update your data to ensure that contract terms are being adhered to, that buyers are purchasing from preferred suppliers and that savings opportunities are being identified.