Free Essay

Spend Analysis

In: Business and Management

Submitted By birenpatel24
Words 260
Pages 2
Spend analysis is performed in an organization to manage the spend tactically and strategically. The main objective of performing spend analysis in Rexel Canada is to achieve cost savings and to determine with which vendors it will be beneficial to maintain long term relationship in order to get better pricing and to get maximum service. Rexel Canada is an electrical components distribution company dealing with around 3500-4000 vendors. Thus it becomes very necessary to do good spend analysis to monitor organization spending. Spend Analysis is also important for various business strategies such as budgeting, inventory management and spending patterns.
Steps used to conduct Goods Spend Analysis
• Procurement department coordinate closely with accounts payable department to collect the data on annual spend for products and services at divisional level and matches with our ERP.
• Gathered data is divided into Direct Spend and Indirect Spend
Direct Spend includes organizational spending on goods and services related to business.
Indirect spend includes spending on operational expenses such as stationeries, overhead expenditure etc.

• Data collected is cleansed to rectify the error of duplication such as supplier's names spelled differently and treated as different suppliers.
• Making sure the companies listed in our ERP recently merged with other listed vendor is not considered as separate vendor and thus considered as one vendor.
• Converting the amount spend into one common currency i.e. CAD. (Rexel Canada purchases its products from US vendor in US Dollars)
• Vendors are further divided into different category of product as Rexel stocks and sell one type of product from different vendors.

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