Exp Iso
Aberdeen Group's research shows that only 44% of organizations worldwide use spend analysis and even those that do are rarely discussed 50% of its total expenditure.
So why use more non-expenditure analysis if the benefits are significant?
There is a number of reasons, the main ones are: –
 • Many data sources. The data you need may be considered in the general ledger, accounts payable, purchase ledger, statements from the acquisition card and even Excel spreadsheets. If you are part of a purchasing consortium, the data may be held even outside your organization. Without software that can pull all this data together can meet a lot of intensive manual effort.
 • inaccurate or incomplete data. Many systems were designed to process transactions efficiently and not reporting and analysis. As a result of data that useful for the acquisition is often missing or inaccurate. The details of the supplier or the product are often incomplete. Bought-in services (as opposed to products physical) is rarely sufficient data on the nature of the service.
 • Multiple ways to identify the supplier or product. For example, ACME explosives can enroll in a system like ACME ACME ACME or Exp or explosives. The systems are incapable of recognizing these different names as the same organization.
 • Labor intensive systems analysis. Many organizations rely on spreadsheets to analyze data and provide information. The sheer volume of data generated by acquisitions transactions makes it difficult to stay on top of everything.
There are two steps you must take to overcome these problems.
The first step is to form a spend analysis team with the task of identifying all sources of data you need and building a data warehouse of these data so you can access it easily.
The second step is to clean the data by searching for inconsistencies (eg, entry errors data when, for example, 123 may have been entered by mistake in 1223) and adding the missing attributes as codes or descriptions.
Do you want to learn more about effective procurement?
If so, download my brand new free ebook “The 5 Keys to Breakthrough Sourcing Strategies” here:
http://www.SourcingStrategyWizard.com/Sourcing.htm.
Steve Carter is an experienced procurement practitioner and published author and runs online training and coaching courses.
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