Tag: Tail spend analytics

marketing analytics

A Definitive Guide to Spend Analytics

What is spend analytics?

Spend analytics is the process of identifying, collecting, categorizing and analyzing the spend data of an organization. The goal of spend analytics is to decrease procurement costs and improve efficiencies. Spend analytics help businesses to gain clear visibility and dive deeper into spend data to understand the spending patterns and the supply base, to track the matrices of procurement performance, and to gain actionable insights for spend consolidation to reduce the procurement cost. Also, spend analytics solutions can aid businesses in identifying cost arbitrages, benchmarking internal performances and improving delivery performance.

Identifying opportunities for consolidation of spend and reduce procurement costs is a daunting task for businesses. But we are here to help. Get in touch with our experts now!

Why is spend analytics important?

In today’s complex business environment where leading players are leaving no stone unturned in the quest for cost reduction, spend analytics is considered to be the best way to optimize spend.

Following are the reasons why spend analytics is important for businesses today:

  • Spend analytics can be helpful for gaining visibility on spend data and suppliers
  • Spend analytics has the ability to streamline procurement processes
  • Spend analytics can help in better risk and spend management
  • Spend analytics can help significantly in category level analysis.
  • Spend analytics can be helpful in building an effective relationship with suppliers
  • It can help manage the tail spend in a much better way

How can you control your spend with spend analytics?

Costs are skyrocketing in many industries but that does not imply that companies should raise rates to keep up with current levels of profit. The consistent growth of any business is, of course, important but there is more that can be done on the operational side to keep your profits increasing despite growing industry costs. The formula to succeed here is optimizing the process to contain costs throughout the supply chain. Also, companies can leverage spend analytics to gain spend data visibility across the departments and various business locations. This visibility can help businesses make significant improvements to the bottom line without putting more efforts into customer acquisition. Furthermore, spend analytics helps companies to gain visibility into how their spending impacts business operations.

Here is a list of various ways in which spend analytics solutions can help in controlling costs:

Find potential savings

Spend analytics helps in identifying the specific areas of spend in business and segment the procurement spend data to decrease costs and boost efficiency. This can further help in analyzing the sources that provide the best savings opportunities. Also, such data can be used to negotiate cost savings with suppliers.

Quantzig’s spend management solutions can help businesses in streamlining their procure-to-pay operations. Want to know how? Request a FREE proposal now.

Understand aggregate spend

With the help of spend analytics solutions, companies can gain an understanding of how their spend affects the overall performance of the business. Furthermore, this data can assist in strategic planning and can increase visibility into supply chain operations. The increased visibility allows businesses to gain useful insights into their current procurement processes and then streamline their operations.

Evaluate supplier performance

By leveraging spend analytics solutions, businesses can evaluate their supply chain and can identify dependencies, risks and quality issues in the overall supply chain network. Also, through spend analysis services businesses can identify and rank key performance indicators (KPIs) that are most important to their organizations, and then use this as measurement against their supply chain to determine the performance of the suppliers. Consequently, this can lead to better supplier performance management.

Request a FREE demo below to know how our customized spend analytics dashboards can help you reduce maverick expenditures and capitalize on new opportunities.

Challenges businesses face while implementing spend analytics

Lack of understanding

Spend data is usually incomplete, not updated, or isn’t accurate to make strategic decisions based on it. Companies need to understand that they need to collect accurate data for better decision making. Also, they need to classify and segregate the spend data through automated programs to avoid manual errors.

Lack of resources

Traditional spend analysis systems were developed to provide local opportunities and simple strategic programs. Such systems were not able to deal with complex data sources. So, companies need to leverage spend analytics solutions today to understand and analyze complex data sets and institute intelligent spend management strategies to reduce maverick spend.

Lack of capabilities

Companies tend to miss opportunities for savings due to the lack of capabilities to gain 360-degree visibility into their supply chain networks. But by leveraging spend analytics solutions, companies can have better data visualization and can implement the best practices to streamline sourcing and procurement processes.

Manual classification of data

Companies across industries face challenges in data classification. Datasets for each and every company is stored and structured differently. Manually classifying data can be subjective as well as inconsistent. Also, manual data classification is a complex and expensive task for businesses. Businesses following the manual process of data classification tend to miss essential information stored in unstructured data sets. As a result, businesses can leave their most critical assets vulnerable based on incorrect information. 

Want to know more about challenges in spend analytics implementation? Request for more information below.

spend analytics

A Beginner’s Guide to Spend Analytics

What is Spend Analytics?

Minimizing cost is the major cause of concern for many companies and this is the reason they spend more time in the process of spend management. Spend analytics can make this easier by optimizing the supply-side performance and consolidating the data from the supply chain. Spend analytics help companies to make data-driven decisions and identify better opportunities for savings by analyzing their spending patterns. Also, spend analytics can assist in examining the expenditure of an organization and offers significant visibility into the procurement spending of an organization. This can further help the organization to improve the supply chain operations and result in better returns.

Our spend analytics solution can help you in minimizing supply chain disruptions. Request a FREE proposal to learn more about our portfolio of services.

Benefits of Spend Analytics Solutions

spend analytics

Better visibility on suppliers and spending

By leveraging spend analytics solutions, any organization can yield valuable insights into its expenditure in real-time. This detailed information can be handy in improving the overall procurement process. Consequently,  organizations can adopt better practices for procurement that will be more helpful and efficient in managing the relationship with suppliers, improving supplier base and category management.

Spend analytics is the key to manage the tail spend of any organization. Request a FREE demo below to find out how it can help you unlock cost-saving opportunities.

Helps in the category level analysis

Spend analytics solution can help companies to analyze spend at the individual category level. This can assist in gaining visibility into the overall spending of the organization to control the cost-effectiveness. According to recent research results, organizations that leverage spend analytics develop a better relationship with preferred suppliers. Furthermore, spend analytics can help organizations to achieve bigger business objectives by making sourcing efficient and optimizing the supply base.

Assists in managing the risks

Working with the same suppliers for years can incur potential risks for organizations. A robust spend analytics solution can help organizations to innovate their supply chain and deliver new products and services to the customers. Also, by gaining actionable insights from analytics dashboards, companies can make capital improvements and deal with unforeseen challenges such as supply chain disruptions, cash-flow issues, and labour shortages. Spend analytics also provides an opportunity for procurement teams to contribute to wider business objectives and deliver unit cost savings and reduced maverick spend across buying centres.

Are you finding it difficult to improve your bottom-line due to inefficient spend management? Get in touch with our experts right away!

Quantzig’s Advantage

The fragmented, inaccurate, and unstructured data can lead to undesired outcomes for businesses and can charge heavily on their pockets. Quantzig’s spend analytics solution offers comprehensive category wise spend analysis based on commodities, suppliers, supplier locations, buying locations, business units, and cost centres. This helps businesses to enhance visibility into spending patterns for all indirect spend categories across an organization’s supply base. Our customized analytics dashboards deliver accurate results that instil confidence in sourcing and category teams regarding the spend data that can help them deliver value.

11.73% average savings achieved by leading technology firm through tail spend analysis

Business Challenge: Optimization of procurement spend.

A leading player in the technology sector wanted us to conduct MRO tail spend analysis and help them rationalize the supplier base.

Situation: Issues with optimizing spend across wide spread supplier base across categories.

The client had USD 80 million MRO category spend, spread over 200 suppliers across four different locations. They wanted to develop an exhaustive spend assessment of their MRO category, in order to rationalize supplier base, improve savings and streamline sourcing strategy.

Solution/Approach: MRO Category tail spend analysis solution for process improvement.

We took an 80/20 approach to target only those sub-categories which constituted less than 20% of total MRO spend. We then conducted data analysis and provided recommendations at category/sub-category level spend and also helped setup process improvement guidelines.

Impact: Achieved 11.73% average savings, up to 26% savings in a few select categories, and 57% reduction in supplier base.

We helped the client in devising a solution that assisted in formulation of short and medium term sourcing strategy and demand aggregation through framework agreements. The client was able to achieve 11.73% average savings, up to 26% savings in a few select categories, and 57% reduction in supplier base through demand consolidation and re-tendering consolidated global volumes.

Close
Quantzig Logo

Hello there!

Are you interested in Quantzig’s analytics solutions?

Contact us by submitting your details below and we will get in touch with you.

Cookie Policy

The Site uses cookies to record users' preferences in relation to the functionality of accessibility. Please refer to the help guide of your browser for further information on cookies, including how to disable them. Review our Privacy & Cookie Notice