Spend Analysis - Not Just for Targets of Opportunity
I was recently communicating with Robert Gleason, Chief Procurement Officer at Commonwealth of Virginia - General Services regarding spend analysis.
He mentioned that spend analysis is too often used for “targets of opportunity” rather than any planned, systematic, and comprehensive methodology and that too often this limited success is considered “good enough” as it provides a large enough ROI (savings, cost reduction, etc.) that deals with opportunities that beg the greatest attention. Such targets of opportunity may include office supplies, MRO, and logistics.
How do we overcome this perception that these one-time, targeted savings and cost reductions are “good enough?” How do we persuade the skeptics that an ongoing, advanced spend management project provides the biggest benefit to the company’s bottom line? With the data of course.
One company we’re now working with viewed print as a quick target of opportunity. They manually analyzed their print spend from one location and found $4 million dollars in savings. But after engaging us to provide their spend analysis, we collected their print spend from all 75 of their US locations and the client was able to find another $7 million dollars in savings. In addition, they identified 325 separate print suppliers they had been using. Based on our analysis and reports, the client was able to bring rationalize the number down to 15 suppliers.
Was $4 million dollars in savings good enough? At first glance it sounds like it was more than good enough, but after a more advanced spend analysis, the client found much more in savings – and were able to reduce the number of preferred suppliers. By leveraging Spend Radar to collect, cleanse and classify data from 75 different U.S. locations the client was able to increase savings in one category by 275%. The next wave will include all of their global data, and Spend Radar will continue to provide refreshes and updated analyses on an on-going basis. And print is only one category!
Do you use spend analysis for quick, targets of opportunity? Is your spend analysis “good enough”?
Joy McCaffrey, Senior Product Marketing Manager, Spend Radar