We started writing about spend analytics http://faoblog.com/processes-ap-spend-analytics/
As the term denotes, this activity fundamentally covers an analysis of the spend done by the client / parent. Small components of this are done by back office / outsourced units while processing Invoices and T & E as well.
The simplest of activities in this area comprises of identifying and reporting the top vendors and analyzing the total spend on them. On the T & E side, it encompasses a grouping by the type of expense and also by the division / department, to understand how much and why is the money spent. Most of the back office units / outsourced units conduct this activity.
Looks simple, doesn’t it? Then why is “Spend Analytics” called a high ended activity? To be honest, there is a lot more to this activity that most of the organizations target.
Let’s look at a situation. You client buys goods for manufacturing from multiple vendors. The production units realizes that the raw material of the same specifications comes at different prices, and in an emergency situation sometimes, the prices are really high. So how do they manage the cost of production?
Well, they would resort to spend analytics.
Think about options till the next post. What all will the production unit try to analyze?
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