forsitis
BI Spend Analytics Services
Spend analysis is key for any company and sector, since it is the starting point to apply efficiency and control from the procurement area.
Measuring and controlling our costs systematically and periodically requires a lot of time and resources that sometimes we do not have. For this reason, a realistic alternative is to outsource to an external team that has the know-how and tools to do it quickly and effectively.
An external partner not only helps you to perform this analysis and cost control, but also allows you to:
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- Classify these expenses according to the type of cost and its relevance in our organization.
- Assess their potential savings.
- Identify superfluous costs without control (Tail Spend).
- Implement technology to automate expense management and control.
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Business Spend Management Providers
Spend analysis is a critical part of any company. It is the starting point for any decision making about our business, especially when it comes to optimizing our consumption and achieving the financial objectives we have set ourselves.
The number of suppliers in each category, their volume of expenditure and the possible impact on our activity are some of the key points to take into account when it comes to managing expenditure correctly. As a company we must be able to control each of our expenses at all times.
In forsitis we help you to identify each expense within your organization to be able to act on it later applying efficiency and control. With this analysis we should only be able to dedicate time and resources to optimize it, either by launching new tenders, renegotiating contracts, reducing suppliers, etc.
Benefits of a Spend Management strategies
More and more companies are seeking to apply control in the management of their expenses. Faced with situations of uncertainty or crisis such as those we have experienced, knowing where our spending is as a company is essential to be able to implement actions and, above all, align the strategy with that of the company.
Some of the advantages are:
- It allows us to know what we are buying at any given moment, at what price and from which supplier. Efficient expense management allows organizations to have useful information at any time about how they spend their money. Having this type of information at our fingertips greatly facilitates decision making towards optimization and efficiency. Technology is a great ally for this type of actions, since it saves us a lot of time that we can dedicate to other more valuable activities.
- It helps to quantify and establish an order according to their importance within our company. Knowing where our purchases are located, we can evaluate their importance within our company and establish an order.
- Mitigates uncertainty and risk. Working without an effective SRM strategy involves certain risks. In many cases this implies a progressive increase in our expenses.
- It favors the realization of an analysis by categories (CATMAN). One of the great advantages of analyzing and controlling costs is that we can group them by categories, performing what we call “Category Management” in purchasing. Having our purchases grouped by categories facilitates their organization, their division into subcategories and therefore their control. This grouped expenditure gives us a global vision of what we are consuming, its volume at a financial level and the number of suppliers.
- It improves purchasing processes. Having all the data on the table makes it much easier to make the best decisions. Implementing a Spend Analysys program helps enormously to identify new opportunities for continuous improvement to increase our EBITDA.
Category Management and Spend Analytics
When carrying out a Spend Analysis project we must take into account several factors. Firstly, the type of cost we are analyzing and how it influences our company, is it a direct or indirect cost?
Secondly, it is important to associate it to a category and apply a good Catman management. This will allow us to know in a simple way how all our purchases are distributed.
On the other hand, there are other factors that we must take into account when analyzing our consumption as a company. We are talking about the frequency of purchases, the impact of these costs on our profits, the possible risk of our suppliers, etc.
Relying on an external service such as forsitis allows you to speed up the analysis, improve cost control, and therefore the execution of your procurement projects.
forsitis
Tail Spend Management
The Tail Spend is one of the least discussed topics in purchasing and managing these scattered expenses is often a more than complicated task to which we must dedicate time and effort to optimize these costs.
From FORSITIS SOURCING EXPERTS we put the focus on this issue to help you understand it better and be able to act on it.
Often these types of low value expenses go completely unnoticed by our organization, however, with each passing day these costs are accumulating, making the ball of the expense more and more bulky. They usually account for 80% of a company’s suppliers, even though they only account for about 20% of total expenditure.
But, how can we identify that we have a Tail Spend problem in our company?
Here are some tips that we can give you from Forsitis to identify a Tail Spend problem in your organization.
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- There are many suppliers, some of which are small and it is difficult to categorize their spending. They are usually sporadic suppliers and in many occasions of a single purchase, that although they do not seem by themselves a large amount, they are when we accumulate several of these costs.
- The cost data allocated in the ERP does not match your purchasing reports by category.
- There is a high administrative commitment to posting invoices, with a lower level of control of small spend.
- We do not have catalog spending or we are not registered in any market place. We can rely on this type of platforms to better control our small and sporadic expenses. An example of a marketplace for companies is Amazon.
- Access to information on these low-value expenses is complicated because it is fragmented and not very homogenized. This part is fundamental to be able to act on it in the future.
Once we identify that we have a spending tail problem, it is important to focus on it and reduce its size. If we do not have the time or resources, the best thing to do is to rely on external partners such as forsitis with experience that can achieve savings in a shorter period of time.