Good Spend Analysis

Spend analysis is the process of collecting, cleansing, classifying and analyzing expenditure data with the purpose of reducing procurement costs, improving efficiency and monitoring compliance. It can also be leveraged in other areas of business such as inventory management, budgeting and planning, and product development. There are three core areas of spend analysis - visibility, analysis and process. By leveraging all three, companies can generate answers to the crucial questions affecting their spending, including:

▪ What am I really spending?

▪ With whom am I spending it?

▪ Am I getting what’s been promised for that spend?

Spend analysis is often viewed as part of a larger domain known as spend management which incorporates spend analysis, commodity management and strategic sourcing. Companies perform spend analysis for several reasons. The core business driver for most organizations is profitability however, in my organization it is the effectiveness and efficient of money spent by integrating common non-clinical service. In addition to improving compliance and reducing cycle times, performing detailed spend analysis helps companies find new areas of savings that previously untapped, and hold onto past areas of savings that have already negotiated.

Goods spend Analysis consists of both direct and indirect spend; my organization deals with both. I will be discussing the various steps I use in conducting goods spend analysis in my organization. The first step is to identify the system containing spend data in my organization; there are many systems and sub-systems such as accounts payable, invoicing systems, purchase order management, expense report data, agreements and contracts, policies, purchasing card data, business application etc. The second step is collecting the spend data from identified sources; because of the complexity of the organizations accounting systems, there are multiple processes and financial databases containing data associated with...