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Updates from Enporion
Approaches to Spend Analysis and Sourcing with Immediate ROI That No One Told You About, Until Now
Introduction
According to Aberdeen Group, 38% of companies surveyed indicated that leveraging technology for spend analysis is a top strategy. And spend analysis is the foundation for strategic sourcing.
So, why isn’t everyone doing it? Many industry professionals have not had the resources nor the budget to invest in spend analysis and sourcing initiatives without immediate ROI.
This white paper has been written to give you the knowledge of how to use new and different approaches to spend analysis that will not only make better sense to you, but clearly show ways to reap savings benefits faster and with a lower upfront investment. Specifically, it draws the distinctions between the traditional approach used for spend analysis and strategic sourcing and alternative approaches that deliver comparable savings in a shorter time.
Take a look at the various approaches to spend analysis and strategic sourcing described in this white paper and look at the attached checklist to determine if your company is a candidate for any of the alternative strategies. By following the steps provided and starting with a select few of them, you’ll be on your way to more efficient and cost effective strategic sourcing that will yield quick and meaningful savings.
With benefits like these, can you afford not to improve Spend Visibility and Procurement efficiency through spend analysis?
Spend analysis is the foundation for strategic sourcing and one of the most proven means to achieve cost savings and procurement efficiencies. The intent of this white paper is to describe solutions that can result in a cost-effective path towards spend visibility and strategic sourcing that will yield significant savings and an immediate ROI.
Empirical evidence clearly demonstrates the many benefits of spend analysis and management, including reductions in material and services cost, inventory costs, decreased sourcing cycle times, and improved contract compliance.
According to Aberdeen’s 2007 Spend 
Analysis Report, the average savings from sourcing efforts after spend analysis is 11.7% for overall spend, and historical savings from indirect, direct, and other categories are shown in the table on the right. Most companies continue to analyze spend data on a sporadic basis, using labor-intensive and time-consuming procedures. Aberdeen research indicates that such activities account for 12% to 15% of the total sourcing cycle, on average, and constitute 30% to 50% of a typical commodity manager's time.1 (See table at right.) Using spend analysis, enterprises
have experienced a 22% reduction in sourcingcycle times overall.2
Spend analysis improves the ability to actively monitor contract compliance and maverick spending. Without visibility into spend data, it is difficult to ensure that suppliers provide correct pricing, rebates, and volume discounts. Spend data visibility also allows monitoring to ensure that buyers comply with corporate policies and contractual terms for use of preferred suppliers, pricing, payment, and purchase volume commitments. Spend analysis can also help reduce inventory levels and costs. Aberdeen research found that enterprises have been able to reduce total inventory by 20% to 30%, on average, by consolidating and organizing part and material masters. Such master data rationalization efforts helped these companies trim inventory costs by 5% to 50%.2
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