How can spend analysis reduce maverick spending?

1 What is spend analysis?

Spend analysis is a method of examining and understanding how much and where an organization spends its money. It involves gathering data from various sources, such as invoices, purchase orders, contracts, and budgets, and organizing it into categories, such as suppliers, products, services, departments, and regions. By analyzing the data, you can gain insights into your spending patterns, trends, opportunities, and challenges. You can also benchmark your performance against industry standards and best practices.

2 Why is spend analysis important?

Spend analysis is a key component to improving your procurement strategy and decision-making. You can identify and eliminate maverick spending, negotiate better prices with suppliers, optimize your supplier base, enhance supplier relationship management, align spending with organizational goals, and increase transparency and accountability. Additionally, spend analysis can help you leverage your buying power, reduce complexity and costs, evaluate performance, and comply with regulatory and ethical standards.

3 How can spend analysis reduce maverick spending?

Spend analysis can reduce maverick spending by providing you with the tools and information to detect and prevent it. For example, it can help identify the sources and causes of maverick spending, such as lack of awareness or convenience. Additionally, spend analysis can measure the impact and cost of maverick spending, like higher prices or lower quality. It can also monitor and track spending and compliance levels across the organization, as well as educate and communicate with stakeholders about the importance of following procurement processes and contracts. Moreover, it can enforce corrective actions and incentives to discourage maverick spending, as well as review and update procurement processes and contracts to make them more user-friendly and efficient.

4 What are the best practices for spend analysis?

In order to conduct a successful spend analysis, it is important to define the scope and objectives of the analysis and align them with organizational goals and priorities. One must also collect and cleanse spending data from various sources, ensuring its accuracy, completeness, and consistency. Furthermore, the data should be categorized and classified according to a standard or customized taxonomy, such as UNSPSC or eCl@ss. Once this is done, analysis and visualization of the spending data can be done using various tools and techniques like dashboards, reports, charts, and graphs. Finally, insights should be extracted and shared with stakeholders and decision-makers for feedback and input. Additionally, action plans should be implemented and monitored in order to measure results and outcomes.

5 How can you improve your spend analysis skills?

If you want to improve your spend analysis skills, you can draw from the experts and best practices in your industry and sector, and make use of available resources such as books, blogs, podcasts, webinars, and software. Additionally, joining relevant communities and networks, such as associations, forums, and groups can be beneficial. Seeking feedback and guidance from your peers and mentors is also recommended. Ultimately, practice and apply your skills in real-world scenarios and projects to hone your spend analysis capabilities. Spend analysis is a powerful tool to reduce maverick spending and optimize procurement performance. By conducting regular and thorough analysis, you can gain more visibility, control, and savings over your spending while achieving more efficiency, compliance, and value for your organization.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?