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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.