How Can Businesses Benefit from Spend Analytics?

Spend Analytics

Every organisation spends money on multiple areas regularly to keep the business running. From purchasing raw materials to availing of specialised services, your company takes a chunk out of its treasury to fund its operations and attain its objectives.

If you wish to boost your savings and control the funds going out of your company’s treasury, analysing these expenses through spend analytics becomes essential.

Spend analytics refers to the process of analysing the expenses incurred by your organisation across different cost categories. From assessing the procurement spend to identifying avoidable tail spend, it is an elaborate process that gives you complete visibility into your business spend, empowers you to take control of soaring expenses and helps your finance and procurement leaders make more informed spend decisions.

Spend analytics involves the categorisation of your company’s spend before it is analysed. This process involves consolidating your spend data from all sources, cleaning the data, standardising the data and then classifying the data into appropriate cost categories.

While a business may take several days to unify, clean and classify the data manually, spend analytics tools make it possible with a few simple clicks! Modern automated spend analytics platforms help organisations extract their spend data, clean it, standardise it, and analyse it without spending hours. 

If you still haven’t made up your mind about implementing a robust spend analytics solution, here are a few benefits companies can obtain with spend analytics:

Complete Spend Data Visibility

Your finance and procurement leaders cannot make holistic decisions based on fragmented data. They need a complete picture of your organisation’s spend habits and trends to implement radical measures that boost your bottom-line savings.

Spend analytics gives you a holistic view of your organizations spend and visibility into metrics for better supply chain performance, improved savings, and enhanced operational efficiency.

Spend analytics lets you go beyond merely tracking your company’s spend and gives you detailed insights into historical spending patterns across your organisation that helps you make better decisions for the future. With a spend analytics solution, you can view all relevant details about your company’s spend on a centralised platform.

Discovering Savings Opportunities

In today’s times of business uncertainty, businesses must always be prepared to face any adversity and save for resilience and operational efficiency in case of future challenges. By helping you dive deep into your company’s spend habits across various categories, spend analytics lets you discover a host of savings opportunities.

For example, if a significant portion of your procurement budget is regularly channelled to a particular supplier while you have better cost-effective supplier alternatives, insights from spend analysis will help you clearly identify such buying patterns and prompt you to either renegotiate your existing contract or switch to a more profitable supplier

Improving Supplier Relationships

Supplier relationships play an essential role in spend analytics. Modern spend analytics tools help you classify your company’s spend according to the suppliers you work with. Moreover, these tools enable you to group all suppliers associated with a common parent supplier into a unified category, providing insights into the business relationship with each supplier.

Spend analytics also helps you track your supplier contracts and compare contractual terms. This capability, clubbed with deep insights into your organisation’s expenditure on procuring goods and services from diverse suppliers, provides better contract and pricing negotiation opportunities.

By monitoring your spend with each supplier continuously, spend analytics also helps you assess supplier efficiency, empowering finance and procurement leaders to route more business to efficient suppliers and eliminate the non-performing ones.

Risk Management

Spend analytics gives you complete information about every minor and significant expense incurred by your organisation. Companies often ignore the seemingly trivial spends that cost them a fortune in the future. A spend analytics solution helps you identify such leaks in your revenue and manage any potential risks that can arise from the same. 

When it comes to dealing with suppliers, modern spend analytics tools help you track supplier contracts. From the negotiated spend defined in the contracts to their expiration dates, dynamic dashboards inbuilt into spend analytics solutions help you identify non-contracted spend that might pose risks to your company’s financial health.

Such assessments help you streamline supplier contracts while validating all your spend.

Setting The Right Standards

Spend analytics can include more than finding gaps and overcoming inaccuracies in your company’s spend culture. It also helps you set the right benchmarks for your organisational spend across all your business units.

If a business unit is found to spend your company’s funds most wisely while maintaining healthy supplier relations, it can always act as a benchmark for other units to match in the days to come. 

An Organised Spend Management Approach

Finally, spend analytics gives an organised approach to spend management. Instead of dealing with isolated and scattered records that may or may not give you the proper context, a spend analytics solution lets you automatically consolidate, clean and categorise your data for further analysis. This improves the speed, efficiency, and accuracy of your spend management strategies.

Spend analytics provides a structured and organised way to handle spending data. Instead of dealing with scattered and isolated records, the data is aggregated, categorised, and presented coherently, making it easier to understand and interpret spending patterns.

Automate Spend Analytics While Adhering To The Latest Tech Trends With Spendkey

In the age of digitisation, the traditional way of assessing your company’s spend is no longer feasible. Spendkey helps you streamline spend analysis with the help of a software solution powered by artificial intelligence and machine learning.

Instead of spending several days segmenting and analysing your spend data, the spend analytics solution performs all cumbersome tasks in a few minutes, giving you a holistic view of your company’s spend habits on a single unified platform.

Article and permission to publish here provided by Reena Joves. Originally written for Supply Chain Game Changer and published on September 5, 2023.

Cover image by Yvette W from Pixabay

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