Why spend analysis should be part of your training
Spend analysis should be a core component of every procurement strategy. When it is conducted effectively, costs are lowered, supplier relationships are improved, and levels of efficiency increase.
However, to conduct spend analysis properly, you require a team who have the robust knowledge to execute it correctly. However, the Global Cheif Procurement Officer Survey (GCPO) found that over half (51%) of the surveyed procurement leaders do not think that their teams have the right skills to deliver on their procurement strategy.
This doesn’t sound too reassuring, especially when businesses could be doing so much more to train their procurement teams to be effective in their roles.
Read ahead to find out more about spend analysis and what it can do for your business. If you simply want to find out more about the benefits of procurement training, click here.
What is spend analysis
Spend analysis is where the procurement team analyses its company’s spend data. By doing this, they get a full picture of where the company spend is going, and whether there are opportunities to cut costs or improve contracts.
Additionally, any risks relating to spend can quickly be identified and dealt with. The result is a more secure business with more buying power.
Why spend analysis needs to be included in training
Reducing spend is usually one of the central goals for any procurement team. In fact, the same GCPO survey found that it’s the top priority for 78% of procurement leaders. This is hardly surprising, after all, there’s little worse than a business spending far more money than they need to when it could be investing in innovation and process improvement.
However, reducing spend is not the only benefit of spend analysis training.
Other areas that can be improved include:
- Greater visibility of suppliers- read more here
- Improve overall processes
- Manage risk- read more here
- Adopt leaner procurement functions- read more here
- Get down to category-level analysis- read more here
- Improve supplier relationship management (SRM)- read more here
- Create a preferred category spend system
Spend analysis is also a great tool to use as a form of goal setting and aligning your business goals with your spending goals.
The procurement team can monitor and identify where the business is now, where it needs to be, and areas of spending that are holding you back.
On that basis, the procurement team can progress in refining the spend so that cost is optimised and processes are as efficient as possible, delivering a fantastic ROI for your business.
Consulting an expert
Even with the obvious benefits, some procurement teams are already working at capacity while other businesses may be too small to have a procurement team. If this is the case, outsourcing to an expert who can conduct your spend analysis for you is a good alternative solution.
Despite this, it’s worth mentioning that if your team is working at capacity, delivering spend analysis training will eventually improve processes so that less time is spent chasing spend spreadsheets retrospectively.
Overall, the evidence is clear and points to the fact that including spend analysis in staff training is a vital component of optimising costs, improving processes and achieving the business’s goals. The potential ROI strongly outweighs the initial investment of delivering staff training, so give your spend analysis the attention it deserves and by investing in procurement training.
At Bromley Wood Associates we have considerable experience in helping businesses to run spend analysis training so that you can not only manage risk and compliance but, more importantly, optimise the cost of your procurement to help grow your business. If you would like to speak to us more about your procurement and how you can improve it in your business, contact us today.