Spend analysis, sometimes Spend Analytics, is the process of collecting, categorizing, and analyzing an organization's spend data to gain insights into its purchasing patterns and identify opportunities for cost savings and process improvements. Spend analysis is essential to procurement and supply chain management, providing critical information for decision-making and strategic planning.
The spend analysis process typically involves collecting data from various sources, such as purchase orders, invoices, and payment records. The data is then cleaned, consolidated, and categorized to provide a comprehensive view of the organization's spending across different categories, suppliers, and locations.
Once the data is analyzed, spend analysis can help organizations to identify areas of excessive spending, negotiate better pricing with suppliers, optimize their procurement processes, and improve their overall efficiency and performance. Spend analysis can also help organizations to monitor compliance with purchasing policies and regulations and identify potential risks and opportunities for innovation.