Last part of the blog series; in this one we will discuss key benefits of spend data analysis. (Click here to read part 1, part 2, part 3, part 4 and part 5 of the series.)
There are number of advantages to spend data analysis in the areas of costs of materials and services, compliance with contractual conditions, vendor management, meeting the regulatory requirements, effective inventory management, reduction of the process cycle, and better management of product.
Few of the findings of a study carried out by Aberdeen Group in 2004 are shown below.
|
Areas |
Performance |
|
Reduction in cost of material / services |
2 – 12% through strategic sourcing |
|
Compliance with contractual conditions |
Improvement in compliance by 55% |
|
Effective Inventory Management |
Reduction in inventory costs 5 – 50% |
|
Process cycle reduction |
30%- 50% reduction by refocusing on sourcing and strategic tasking. |
|
Better management of product. |
20% reduction in unnecessary parts. Increased reuse of parts. |
The change in the business approach from local operations to global operations forced the companies to deal with big data in various activities and areas of procurement, both inside the enterprise as well as outside the enterprise.
Business applications of big data analytics will continue to expand from demand-related sales, marketing, customer service and manufacturing into more supply side areas, such as procurement, inventory management and supply risk management. Implementation and the impact on the supply chains will be slow, yet steady this year.
Without collection of big data, systematic analysis and evolving appropriate strategies as well as correct decision making, enterprises find it difficult to meet competitive challenges, especially in international and global markets.
Today, spend analysis has become a necessity to remain competitive and grow the business.
Learn More: Vendor Management Guide
