Spend Analysis: Meaning and Importance
Spend Analysis is defined as the process of analyzing data related to spending in an organization to reduce costs, improve efficiency, and enhance supplier relationships.
Another way to understand spend analysis in procurement is the collection, classification, and analysis of spending data to enhance control over purchase costs to boost operational efficiency.
Spend data analysis is, in fact, a branch under spend management wherein it helps with operational aspects like contract management, supplier management, product development, planning and budgeting, and inventory management. Through procurement spend analysis, organizations attempt to identify untapped areas to boost savings.
Sometimes under spend analysis definition, it is confused with another organizational function, spend analytics. But in fact, there are two different functions wherein spend analytics generates the data required, and spend analysis helps understand what to do with that data.
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