In 2022, food prices reached their highest level since the 1990s. With some commodity prices falling, should suppliers be passing on the cost benefit?
Are you getting the most out of your spend analysis reports?
When it comes to any kind of business analysis, detailed reporting is invaluable. It allows you to make sense of your data and convert it more easily into tangible insights.
The aim should always be to use your data and reporting to drive sustainable and widespread change. However, there are times when you may need to produce some quick wins, and often this is an effective first step in a wider spend reduction project, as it demonstrates the benefits the project will deliver early.
In this article, we look at 4 areas of a spend analysis reports that can highlight some potential quick wins, and how best to action them.
When it comes to your sourcing and procurement strategies, there are a lot of ways to cut costs, but one quick win can be comparing your spend data against industry benchmarks, to see if you generally over or under pay for different assets.
It’s also important to consider any external factors that may affect the price of different assets in particular time frames, and it can be useful here to speak to cost reduction specialists who understand your wider market and any supply issues.
2. Payment terms
Identifying suppliers with shorter than average payment terms and engaging with them to discuss extending these terms can be a great first step to optimising your working capital. While you don’t want to damage any of your supplier relationships in these negotiations, when handled in the right way they can lead to an outcome that can make a big difference to your cash flow.
3. Large one-off payments
Looking back at previous large payments can be a good way to identify any maverick spend across the business and reviewing if the proper process is being followed when different areas of the business are committing to spend.
There may be areas where spend was authorised, but a review may highlight that this spend was unnecessary or that the goods or services being purchased were overpriced.
4. Recurring payments and subscriptions
The majority of companies have many ongoing subscriptions and there are usually a few that are redundant or even duplicated, with different departments paying separate subscriptions for the same tools or services.
Reviewing your spend reports for duplicate or redundant subscriptions can be an easy way to quickly cut out spend that has built up overtime.
It’s also a good idea to review any upcoming renewals so that you can avoid renewing for any services that you no longer need, as trying to cancel after the renewal date can often be more complicated and may mean you incur cancellation fees.
Your spend analysis reports can be a fantastic tool for cost reduction, but if you feel like your current reporting software isn’t delivering, or you’re unable to drive maximum value from the data you do have, we can help.
Our cost reduction consultants regularly use spend analysis reports to help clients drive quick wins, meet targets and implement lasting transformation in their organisations. In addition, our proprietary Spend Analytics platform ensures that all the data you need is at your fingertips and acts as an intuitive and detailed tool for analysing this data.
Get in touch to find out more about how we can support you with cost reductions or subscribe to our insights to receive more content like this.
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