Spend Analysis

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Spend Analysis |

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‘Spend Analysis’ is a tool that provides us knowledge about who are our buyers, who are our suppliers, how much is being spent for what goods and services, and where are the opportunities to leverage our buying power. Nowadays, many companies are using ‘Spend Analysis’ as a foundation for employing a strategic approach to procurement, and improving their procurement performances to catch up leading companies’ best practices. In the company I previously worked with, the ‘Spend Analysis’ methodology has been used to track diversity spending among different suppliers, isolate pricing discrepancies, quantify missed rebates, track corporate leakage across a supply base, and focus on duplicate vendors.

Our marketing operation team was running a project based ‘Spend Analysis’ every month to slimmed-down and re-organize all the raw data in our databases, and published a Spend Analysis report organization wide. Every Marketing managers and Supply Chain managers can utilize the report to further analyze cost saving strategies, highlight package buying opportunities, and enhance margin improvement actions. Compared with the processes a few years ago, our corporation achieved a better competitiveness and a more efficient distribution network. Because we have more than 300 suppliers and 50,000 line items, the big spends were quoting, purchasing, and delivering. For instance, an OEM may have a few projects; each of them may cover 50 suppliers and 100 line items. When we quote on those build-of-materials (BOM), we also need to provide cross brand line items, which has a same functionality as those were listing on the BOM, but made by different vendors. Salespersons, marketing teams, and supply chain management teams are all involving in the approving activities to ensure we are able to deliver the quantity of products at the right price and at the right time. The massive data processes were very sophisticated, and were always inaccurate....