An organization’s spending, particularly in a decentralized organization, is highly obscured with limited visibility of how money is spent. This poses a challenge to identification of cost saving opportunities, which, in turn directly impacts an organization’s bottom line.
Spend analytics is the process of collecting, cleansing, classifying and analyzing data, helping to gain visibility and transparency into spend data, tracking procurement and financial performance metrics, and to providing actionable insights.
Companies perform spend analysis for several reasons, the core business driver for most organizations being profitability. In addition to improving compliance and reducing cycle times, performing detailed spend analytics helps companies find new areas of savings that previously went untapped, and hold on to past areas of savings previously captured.
BENEFITS BEYOND COST SAVINGS
The purpose of spend analytics is to decrease procurement costs, improve efficiency, and monitor compliance. When fully embraced, spend analysis brings multiple areas throughout the procurement process where organizations can benefit, such as overall data management and quality, improved supplier management or product categorization. In addition, spend analysis can support identification of business risks and trends, and help accelerate the planning and management of complex projects and contracts. Next to that, benefiting from a single source of truth, consolidating information and building insights across multiple data sources and systems, creates and provides organizations with consistent and reliable analyses, allowing stakeholders to make enlightened decisions and drive their spend more efficiency.
According to The Global Chief Procurement Officer Survey 2018, supply chain transparency remains poor, with 65% of procurement leaders having limited or no visibility beyond their tier one suppliers. Only 33% of the surveyed procurement leaders said that they believe their digital procurement strategy will enable them to deliver on their organizational objectives, which highlights that the extent to which modern technologies are used in procurement is low as only one third of respondents are taking advantage of technologies such as predictive analytics or collaboration networks. The survey identified that high performing organizations are delivering superior results through greater collaboration in supply chain costs and risk transparency. One of the most significant opportunities for procurement leaders is to improve digital and supplier leadership.
CONVERTING DATA INTO OPPORTUNITIES
At IMG, we developed a full suite of tools providing our clients with a wide range of services, from spend visibility and transparency to margin optimization, performance management, risk and compliance management and many others. This digital solution fits any organization as each of our tools is tailored to answer any specific client need.
Looking vertically, cascading down from a corporate level to a category, supplier or article level and horizontally, benchmarking your KPIs against market standards, competitors and other industries, our tool has shown to help our clients deliver significant value across all types of industries.
Using a balanced combination of AI and our expert’s knowledge, data are collated and cleansed before being enriched and segmented at invoice, supplier or SKU level. Once complete, the datasets are shaped and completed with market data, supplier insights or other additional information and finally displayed on tailor-made dashboards, providing easy understanding of opportunities, strategic recommendations and actionable levers for a key in hand implementation.
Prescriptive analysis can then convert data insights into actionable insights through a highly sophisticated algorithm, based on the circumstances of the business to identify potential gains and flag specific risks. Since value is only driven when we take action, prescriptive analytics can advise on savings levers to improve business performance. To confirm feasibility, the insights can be then put through a comprehensive validation process using a simple online feedback process to source information from the business and provide clear and actionable next steps.