Executive Briefings

Analyzing Spend Analytics Applications

The first and most obvious reason most people want to analyze spend is to find savings opportunities; figure out how to spend less and spend more wisely.

By correlating actual spend with contract terms and conditions, spend analytics can check that you are paying the actual contracted price, as well as to see how much is being bought off-contract, what is the reason for the off-contract purchase (e.g. contract expired), how much of that is non-compliant, rogue spending, who is approving purchases above their spending approval limits, and so forth.

You may also use spend analytics to find where suppliers are offering different terms to different business units or geographies. Then you can consolidate the spend on the most favorable terms being offered. Further, you can identify suppliers that don't provide early payment discounts or favorable terms. You could then negotiate better deals with them or switch those purchases onto p-cards.

A spend analytics system can also highlight where spend is above the maximum or below the minimum volume thresholds in the contract. It can analyze volume discounts to see if the company is missing out on any discount opportunities.  It can look for price variance across business units and sites, or compare today's price against historical prices. In this way you can identify further opportunities for savings.

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Keywords: Sourcing & Procurement Solutions, Supplier Relationship Management, Technology, ChainLink Research, Procurement Strategies, Sourcing Initiatives

By correlating actual spend with contract terms and conditions, spend analytics can check that you are paying the actual contracted price, as well as to see how much is being bought off-contract, what is the reason for the off-contract purchase (e.g. contract expired), how much of that is non-compliant, rogue spending, who is approving purchases above their spending approval limits, and so forth.

You may also use spend analytics to find where suppliers are offering different terms to different business units or geographies. Then you can consolidate the spend on the most favorable terms being offered. Further, you can identify suppliers that don't provide early payment discounts or favorable terms. You could then negotiate better deals with them or switch those purchases onto p-cards.

A spend analytics system can also highlight where spend is above the maximum or below the minimum volume thresholds in the contract. It can analyze volume discounts to see if the company is missing out on any discount opportunities.  It can look for price variance across business units and sites, or compare today's price against historical prices. In this way you can identify further opportunities for savings.

Read Full Article


Keywords: Sourcing & Procurement Solutions, Supplier Relationship Management, Technology, ChainLink Research, Procurement Strategies, Sourcing Initiatives