The document outlines a seven step process for conducting a spend analysis: 1) Identify all spend data sources, 2) Gather and consolidate spend data, 3) Cleanse the data by finding and correcting errors, 4) Group suppliers, 5) Categorize spend, 6) Analyze spend to ensure best contracts and preferred suppliers are used, and 7) Repeat the analysis continually to identify savings opportunities. The goal is to analyze an organization's spending to identify opportunities for savings.

1. November 2011 1
How to Conduct
a Spend Analysis
in Seven Steps Spend Radar
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1.Identify
2.Gather
3.Cleanse
4.Group
5.Categorize
6.Analyze
7.Repeat

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Identifyall the sources
available for your spend data,
from all of your
departments, plants and
business units.
This includes accounts payable,
general ledger, pcard,
eprocurement systems, etc.

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Gather and consolidate all of
your spend data into 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.

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Cleanseyour data.
This includes finding and
correcting errors in
descriptions and
transactions, as well as
standardizing the data for
easy viewing.

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Group, or link, your suppliers.
Purchases made from IBM, IBM Corp., or
Cognos should all be grouped together, since
they are the same supplier.

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Categorizeyour 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.

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Analyzeyour 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.

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Repeat.
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.

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Thank you!
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311 S. Wacker Drive
Suite 2270
Chicago, IL 60606
+1 312.262.9810
sales@spendradar.com
www.spendradar.com
www.spendradar.com/blog