Spend Analytics

Need a comprehensive analysis of your current organisational spend and it’s ROI? Look no further. At Arrowhead we are experts in fulfilling spend analytics capabilities for clients. With 30 years of combined experience in procurement, our team have worked on cost analytics for a large range of clients – from SMEs to global fortune 500 listed organisations.

Read on to find out about: 

What is Spend Analytics in procurement?

Why is spend analytics beneficial for your business?

Why is spend analytics beneficial for your business?

How spend analytics is implemented 

Why choose Arrowhead as your trusted spend analytics experts?

Spend analysis consulting

What is Spend Analytics in procurement?

Spend analytics refers to the practice of collecting and analysing the historical purchasing data of an organisation. The process is used to shed light on the business’ buying patterns and to review the relative value of spend across different suppliers or services. The findings uncovered by spend analysis are used to inform future procurement strategies – helping businesses to identify excessive spending in given areas and to readdress their existing suppliers. The process is often undertaken as part of a wider initiative to align the business’ procurement strategy with their overall competitive strategy.

As a detailed and lengthy process, spend analytics is usually undertaken by expert spend analysis companies, such as Arrowhead, on behalf of organisations.

Why is Spend Analytics beneficial for your business?

Spend analysis often involves aggregating purchase data across all of an organisation’s departments. As such, the findings can offer business stakeholders a comprehensive and definitive overview of the strengths and weaknesses across all of its divisions.

Even companies who are exhibiting positive growth will often find significant room for improvement within some of its purchasing activities. In essence, spend analytics can be invaluable in driving profit margins simply by readdressing existing suppliers and improving internal processes.

Spend analysis can benefit businesses in the following ways:

Stronger visibility on supplier expenditure:

Businesses gain a stronger overview of which suppliers they are heavily reliant on and can weigh up the relative value of these relationships.

Better awareness of existing company processes:

Understanding current business processes helps to highlight weaknesses or inefficiencies and the coinciding opportunities for businesses to improve ROI. For example, introducing consolidated invoices for contractors who provide multiple services or supplies.

Better risk management:

Stronger visibility of supplier expenditure can help businesses to assess where they are overly reliant on some suppliers – which could pose a risk should the supplier ever become unable to fulfil their usual services.

Future savings on procurement activities:

The overall process of spend analytics aims to improve efficiency and drive down costs. Stakeholder involvement in the process helps to raise internal organisation awareness of how procurement activities directly impact business growth, which will also impact procurement decisions going forward.

Category-level analysis:

Helps organisations to go through each department with a fine-tooth comb and identify any areas that need greater focus in order to improve efficiency. This also puts more onus on specific stakeholders within the organisation to ensure their division of the business is performing as well as other areas of the business. 

Better relationship management with suppliers:

By emphasising areas for improvement, a spend analysis inevitably results in organisations readjusting supplier contracts – creating more clarity between both parties which can help to improve interparty relations. Further to this, organisations are able to identify which suppliers are offering them the greatest ROI and may look to source further supplies from these contractors – further solidifying any existing relationships.

Does your business need spend analytics?

So, you’ve understood the value of undertaking a spend analysis, but does your business need one? The short answer is yes.

The majority of organisations are continually looking for ways to reduce costs and increase profitability. A strategic and well managed procurement process can help to reduce thousands, or even millions of pounds in savings every year. However, in order to develop an effective procurement strategy, it is important that stakeholders have a clear understanding of which aspects of the business are working, and which areas still need some work.

How is spend analytics implemented?

Though usually managed and acted upon by procurement experts, the initial stages of spend analysis involves using a spend analytics software that amalgamates company-wide data, cleans it for accuracy and sorts it into relevant categories or divisions. These spend analytics tools also show relevant spending patterns and can highlight opportunities for future savings. 

The process usually looks something like this: 

Amalgamation of procurement data

Validation and cleansing of data

Data sorting and classification

Benchmarking and analysis

Identification of strengths, weaknesses and opportunities

The rise of AI-lead SaaS spend analytics software has now made the above a swift and hassle-free process for businesses to undertake – making what used to be a very arduous task a simple, automated process that organisations can undertake on a regular basis. For businesses that use such spend analysis services, the ability to respond swiftly to weaknesses and opportunities has transformed the concept of business development. Firms can now take steps to evolve overnight rather than waiting for their annual report to exercise significant changes.

Why choose Arrowhead as your trusted spend analytics experts?

With an ethos that is firmly rooted in transparency and openness, it is unsurprising that spend analytics is a service that we are deeply passionate about offering to our clients. Our procurement and spend analytics experts offer clients a comprehensive breakdown of their purchasing habits, using our state of the art spend analytics technology and best practices. 

Beyond just presenting you with the data, our spend analysis services include reports on spending patterns and procedural inefficiencies. Our aim is to demystify the procurement process, eradicate unnecessary hidden costs in your business operations and to leave you with a clear strategy on how to improve your procurement process going forward. It’s that simple.

Spend Analysis Consulting

We know that for most businesses, cost reduction and business growth will be ongoing priorities for stakeholders. As such, we also offer spend analysis consulting to teach spend analytics best practices to your team.

Our consultancy includes educating your team on the best procurement spend management software available on the market – including procurement software for small businesses – as well as how to create and analyse spend analysis dashboards in excel. Our procurement consultancy services are an excellent way to ensure long-term development and growth for your organisation, creating a work-culture geared towards strategic development. 

Contact Us

Get in touch with our friendly team of procurement experts today to find out how we can help you optimise your procurement process through spend analytics services.

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