Penny wise, Pound foolish
Remember how we used to be in college? At least I used to carelessly spend all my pocket money and used to end up being broke for the rest of the month. But then my mom gave me a challenge and asked me to journal every expense in a diary for a year. However, the challenge seemed very boring and mundane as I had to write and classify all expenditures, even the smallest ones (That included chocolates also!!!). After 6 months of doing so, I realized that it had not only become a practice for me, but I also had a full visibility on my spending.
Fortune 1000 and global 2000 companies spend hundreds of millions every year and it is really difficult for them to manually sit and analyze the savings. It is a waste of time and effort, along with less visibility on savings as there can be errors.
This is where a spend analysis solution becomes helpful. Spend Analysis classifies, analyzes and collects all the expense data by managing risks and procurement costs, improving efficiency and also by ensuring legal compliance. It encompasses all activities where savings could be realized. It comprises of 3 core areas like visibility, process and analysis.
Some of the benefits spend analysis provides are:
- Fast, flexible and repeatable spend data extraction:
Detailed spend data extraction helps companies look into those new areas which were over-looked or which went untapped.
- Global spend visibility:
The spend analysis solution basically gives visibility into your expenditure, promotes sourcing decisions and identifies cost saving opportunities. It also improves spend behaviors and increases spend under management when it is combined with sourcing, contract management and purchasing.
- Accurate, detailed timely views on spending:
It helps the procurement department identify the best savings opportunities available and also execute a plan to increase the savings rate. All this will ultimately place spend under management.
- Savings from sourcing:
Spend analysis provides insights on what a company buys and from whom by increasing the spend visibility. This insight provides savings opportunities from the sourcing activities carried out by the organization.
- Reduce maverick spend and increased contract compliance:
The maverick spending can be controlled by monitoring contract compliance, thus reducing procurement costs by driving more spend through preferred suppliers.
Spend analysis solutions are easier to use as they even show all data graphically. Every company, be it big or small must implement spend analysis as it helps curtail maverick spending thus improving the savings.
Isn’t it better to be precautious than crying over spilt milk???