Many companies struggle with spend analysis. The presentations answers the basics of spend analysis, where to start from, what benefits to expect from spend analysis etc.

1. 1
Unlocking spend analysis myth

2. Topics
 Definition of spend analysis
 Why its important
 Benefits of analyzing spend
 Why you should do it?
 Ways of analyzing spend.
 How to do it?
 Deliverables
 How to measure the outcome?
 Solutions
 Who can help me?

3. Why The Need to Manage Your Spend Data?

4. Can you answer these questions?
 Which is the most critical categories for your business?
 Which supplier supplied for maximum contract value?
 What was your unplanned or maverick spend?
 How many suppliers were active in past 6 months?
 What other geographies are acquiring?
 For how many categories you have a global contract
and shortlisted suppliers?
 Which categories represent the most spend reduction
opportunities?
 What is your direct/indirect classification?
 What is the percentage of quality issues you had with
individual suppliers?

5. Decision Making in spend analysis
Using Maverick spending as a KPI.
To discover maverick spend, find
out the items which were
procured by specific units of your
organizations and the orders
were placed with unlisted
suppliers and without contracts.

6. Key Spend analysis Opportunities
Three key reasons for planning and implementing
best practices in spend management are:
Compliance and
Process improvement
Visiblity

7. Business Drivers for spend analysis
Strategic Sourcing Procurement
1. Identify non-preferred
spend
2. Identify disparate
terms and conditions
3. Identify potentially
over-represented
categories.
4. Identify unplanned
and over-budgeted
spends.
1. Identify spend
volume with
contracted suppliers.
2. Identify quality
issues with
contracted suppliers.
Supplier Management
1. Evaluate supplier
performance via
financial and
operational metrics
2. Collect and manage
key supplier
documents in order to
meet contractual and
social obligations
3. Evaluate supply base
for risk
(denied/debarred
parties)

8. Spend Analysis Steps
• Standardize, Normalize, and Enrich your spend information
• Identify Exceptions
Extract, Cleanup
and Validate the
Data
• Get all the supplier spend linked to the corporate parent
• Categorize supplier spend
• Understand supply base risk, dependencies, and socio-economic
breakdown
Rationalize your
Suppliers
• Categorize spend data to a sourceable commodity structure
• Does your system capture good descriptions?
• Do you use them to allocate to the right category?
Code for Insight
& Assess the
Details
• Uncover strategic sourcing opportunities for immediate savings
• Improve internal controls
• Comply with government controls
Identify and Act
• Standardize on commodity framework across the company
• Capture intelligence closer to the transaction for higher compliance
• Supplier on-boarding & detail coding
Implement
Process
Improvement

9. What spend analysis delivers?
Data Quality
• Standardized – consistent formatting
• Cleansed – identify duplicates, fix errors
• Consistent – data represented in the same manner
• Current – ongoing updates to manage business change
• Grouped – categorized and classified
• Granular – detailed data available
Knowledge Enrichment
• Completeness – fill in missing data for master information, hierarchies, demographics,
relationships
• Expand – provide new insight
• Risk – identify possible disruption in supply or supplier support
Process Improvement
• Spend Visibility – access to enterprise view of corporate expenditures
• Supplier Evaluation and On-boarding – pre-qualification of suppliers
• Policy Compliance – exception handling, workflow and monitoring

10. Spend Analysis Benefits
 Baseline for strategic sourcing initiatives
 Enabler for process improvement
 Measurement device for cost reduction programs
 Comprehensive spend visibility across direct and
indirect commodities and services
 Significant cost-savings opportunities through
supplier and commodity consolidation
 Enhanced compliance through effective spend and
supplier monitoring

11. Thanks
Visit Procurepack.com for more
information on e-procurement/
e-sourcing.