Recent Posts
- Click, click, click, was the sound of the typewriter.
- Even with insurance, buyers may still be at risk
- Market Intelligence, does your company have an employee or department involved?
- The Ins and Outs of Intellectual Property
- Giving Financial Presentations with PowerPoint
- What do you do for Personal Development?
- What you can learn from Aesop’s Fables
- Tips on Traveling
- Companies Cope with the High Cost of Gas, Continued
- Train the Trainer: A Review of the CPSM Instructor Program
Recent Comments
- Mary Walker on Certificate or Certification?
- Alan Michaels on Market Intelligence, does your company have an employee or department involved?
- LAL on Certificate or Certification?
- Mary on Train the Trainer: A Review of the CPSM Instructor Program
- James on Train the Trainer: A Review of the CPSM Instructor Program
Most Commented On
- Certificate or Certification? (18)
- Who does what? A Look at Procurement's Role in the Supply Chain (9)
- Generation Gap: Go Easy on the Millennial Group (4)
- The Bored Employee (4)
- Train the Trainer: A Review of the CPSM Instructor Program (4)
Archives
- September 2008
- August 2008
- July 2008
- June 2008
- May 2008
- April 2008
- March 2008
- February 2008
- January 2008
- December 2007
- November 2007
- October 2007
- September 2007
- August 2007
- July 2007
- June 2007
- May 2007
- April 2007
- March 2007
Blog
Review of “The ABCs of Spend Analysis:Change the way you source”
May 22, 2007
Review of “The ABCs of Spend Analysis:Change the way you source”
The key point I took away from Change the way you source was this: “You never know what you might learn in a spend-analysis exercise – or what your suppliers might learn.But the lessons can prompt changes that improve supplier relations and supply chain-management.”
Benefits noted in the article are cost savings, stronger supplier relationships and decreasing lead times. Traditionally purchasing staffs think of spend analysis as a way to consolidate their own spend. Collected data is allowing commodity teams to redesign their sourcing practices.
Charles Dominick with Next Level Purchasing states, “The primary reason for conducting spend analysis is to identify opportunities for cost savings.When you look at the output of spend analysis, there are at least four indicators that are opportunities for cost savings.”
- Indirect # 1 – A large amount of spend in categories for which enterprise-wide contracts do not exist
- Indicator # 2 - A significant Purchase Price Variance (PPV) for a high-spend item or category
- Indicator # 3 – An unusually large number of suppliers for the money spent in that category
- Indicator # 4 – Rising prices over time
If you are currently doing spend analysis or plan to, you should read “The ABCs of Spend Analysis.” You need to get the full benefit of the article, as they say the whole picture. You will read about cost savings that you never thought about.Remember spend analysis is not just for saving money, it is used to improve processes.
Try this on your personal income. You would be surprised how much money you spend on gas, how much money goes for eating out, how much for entertainment and just how much it takes to maintain that life style you like and enjoy.
Posted by Mary Walker on May 22, 2007 | Comments (0)