Global Best Practice - Spend Analysis

Spend analysis is the first step procurement can take to develop and achieve an overall strategic procurement strategy for the organization. The phrase "spend analysis" refers to the process of collecting and analyzing data about how much money has been spent from all sources within an organization. This is an important process because it analyzes current, past, and forecasted expenditures. This creates data visibility by supplier, commodity, or service and by department. This allows those within the organization to have an accurate understanding of how much money has been spent and how much is expected to be spent. Specifically, spend analysis can be used to make future management decisions by offering clear answers for questions such as, what was bought; where was it bought; how many suppliers were used for this purchase; and how much was paid for the item or service. This practice outlines best practices for spend analysis, including identifying and collecting spend data, grouping and categorizing spend data, creating an automated process for spend analysis, and analyzing spend data. Once put into place, spend analysis should be a recurring process based on updated data to support procurement management and strategic sourcing for the organization.