What Spend Analysis Can't Do
If you've never seen your purchasing data in a spend
analysis system — i.e., cleansed and properly classified
by commodity — then you're in for a treat, because you
can find savings just by drilling around.
However, once this low-hanging fruit is harvested,
spend analysis starts for real. A professional "opportunity
assessment" process requires a deep dive into specific commodity areas.
BIQ can help to structure the information for this deep dive better
Spend analysis is a prerequisite to any sourcing activity,
but it won't create a savings initiative for you.
than any other system available; but it can't tell you what to do next.
Your commodity managers may have the expertise necessary to
perform this next level of analysis — computing vendor density,
benchmarking your company's performance against industry norms,
and so forth — but if they are lacking knowledge in a specific
commodity area, you may want to retain a sourcing consultant to help.
BIQ is a popular tool among sourcing consultants, because it
makes their job enormously easier, and it helps them to isolate
opportunity quickly. We can connect you, for example, with
consultants who will perform a full opportunity assessment,
and build a BIQ spending cube, for free — if you're willing
to let them source one commodity on a gain-share basis. You
will know whether that's a good plan or a bad plan for your
organization; it depends, of course, to what extent your on-staff
resources have the time and/or skill to exploit savings opportunities.
Spend analysis is a prerequisite to any sourcing activity — and,
it's a way to monitor the performance of the spend initiatives that
you've put into place. But it won't create a savings initiative for you, and it won't
save you money (beyond the initial cherry-picking) unless you use the
information it provides as the basis for an ongoing program of spend
control and demand reduction.
