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Service: Spend Analysis
 

While many companies recognize opportunities to reduce supplier costs, most don't have reporting systems that provide visibility into spending patterns or details.  Without access to accurate, detailed spend data, organizations are unable to effectively source quality products and services at the best possible prices.  Using Spend Analysis technology and processes, organizations gain complete, clear insight into their spending, breaking down the spend by supplier, category, purchase order, and item, to the invoice level.   Our Spend Analysis service uses technologies to provide detailed analysis of a client’s entire spend across desired locations and divisions. We then develop a plan outlining forward-thinking cost savings opportunities, including strategic sourcing initiatives, supply chain process improvements, and other savings and cash flow opportunities.

Aberdeen Group's research recently uncovered a harsh truth: "few enterprises know what they spend, on which products, or with which suppliers." (1)  As a result, supply managers and business executives end up with strategies and decisions based on intuition rather than fact. All told, Aberdeen estimates that the industry is losing $260B each year due to a pervasive inability to organize and analyze spend data.
 

Some additional interesting findings from the Aberdeen Group's October 2008 Report: ”Spend Analysis: Pulling Back the Covers on Savings” (2) are as follows:

= For the 350-plus CPOs and other executives that participated in the CPO Rising: The CPO’s Agenda for 2008 report, spend analysis is viewed as the best mechanism to increase the amount of spend under management. (p. 6)
= Aberdeen research has shown that enterprises have been able to achieve a 5% to 20% cost savings for each new dollar of spend brought under management. (p. 6)
= Speed of data updates or refreshes, general accuracy, and analytical and reporting constraints are the typical criticisms leveled at the manual process. Additionally, manual processes are generally not repeatable and require a significant amount of re-work for each effort. (p. 7)
= Enterprises who actively leverage this [spend] data in their sourcing process have experienced 67% higher savings on their spend. Savings aren’t the only direct benefit of utilizing spend data in sourcing decisions; enterprises undertaking this process as part of their sourcing efforts have driven 25% more spend under management and 11% higher contract compliance. (p. 9)
 
Performance Metric

Incremental Benefit

Average savings achieved from a sourcing effort 93.0%
Spend under management 39.4%
Contract compliance rates 30.6%
Maverick spend reductions 16.3%
 (p.18)   
   
Paladin Associates Inc can help your company enjoy your piece of that pie!  
   
Source:
1. Aberdeen Group Report - “Spend Analysis: Working Too Hard for the Money”.  August 2007
2. Aberdeen Group Report - ”Spend Analysis: Pulling Back the Covers on Savings”  October 2008

   

   

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