Spend Analytics is the study of the amount of money a company spends on products and services. Many companies spend a decent amount of money to ensure they provide their customers with the best possible product or service. However, the costs incurred are often overlooked, making it difficult for companies to manage their profit and investments.
Forward-thinking companies are already investing (or planning to invest) in a spend analytics tool to help them manage spend, but some still don’t realize the true value of spend analytics due to a lack of information in the market. Here we have outlined some benefits to help you understand what spend analytics can bring to your organization.
Spend Analytics / Analysis is the process of identifying, gathering, cleansing, grouping, categorizing, and analyzing your organizations spend data with a goal of decreasing procurement costs and improving efficiencies.
Improve Data Quality
As with any systematic process, the better your input data, the better (and more actionable), your output data will be. Understanding what you spend (or need to spend) to get a specific outcome is key to successful spend analysis. Even if you don’t currently track this data, a spend analytics program will start by identifying, categorizing, and cleansing your spend in order to collect reliable data that can be used to find cost savings and other opportunities.
Increases Working Capital
Enhancing your working capital is one of the fastest gains from spend analysis. Distinguishing classifications and providers with lower-than-arranged installment terms usually give a company a huge win by freeing up working capital immediately.
Often, companies are unable to take advantage of profitable spend opportunities due to a lack of working capital or savings. With the ability to collect reliable data, you’ll get a clear picture of where spend is going, and where you could be wasting resources. You can then reallocate these resources to seize upon purchasing opportunities that will save your company even more money down the line.
Supply chain issues are a common problem for most companies—disturbing profit margin and forecasting. Spend Analytics Dashboards will give you greater visibility into your supply chain, allowing for proper risk mitigation and management. With Spend Analytics Software, companies can enhance profit and consciously manage their supply chain to the advantage of the company.
Identifies Cost Arbitrage
By identifying arbitrage opportunities with spend analytics, it’s possible to uncover areas where you can cut costs without sacrificing any quality. Simfoni’s spend analytics incorporates machine learning and AI (Artificial Intelligence) that analyze data variables and offer outcomes that can deliver significant returns.
Benchmarks Internal Performance
You can also benchmark internal performance across any number of business units in separate locations. For example, the amount you spend on office administration per square foot, or office supplies per employee.
Access to Affordable and Local Sourcing
Sourcing opportunity is a huge benefit of spend analysis. Locally sourced materials are likely cheaper and easier to acquire. And by purchasing locally, you’re supporting the community and lowering your carbon footprint. Spend analytics gives you visibility into just how much you can save from locally sourced materials and gives you the access to purchase them. Read More: – What is Source to Pay – A Guide to Source-to-Pay (S2P) Process
Improves Delivery Performance
With greater insight into delivery cycles, the data extracted from your spend analytics program can be used to improve delivery performance, leading to happier customers.
Spend Analytics can be a powerful tool for any company seeking greater efficiency, profitability, and sustainability. When selecting an analytics tool for your company, make sure you are working with experts who will partner with you and guide you through the process. Spend Analytics tools should be easy to implement and provide an easy user experience.