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What is Spend Analysis and Importance

What is Spend Analysis ?
Spend analysis is an in-depth analysis of purchases, used to determine how much is spent, what it is spent on, from whom items are purchased, and who is doing the buying. The resulting analysis provides business intelligence that allows supply chain managers (SCMs) and sourcing teams to more effectively manage requirements by commodity group


Why it is Important ?

Company’s annual sales is $ 25,000,000 per year, corporate spend of 40% and the gross profit margin before taxes is 28%.

Then If spend is reduced by 15% through better procurement intelligence

Then $ 1,500.000 could be saved in cost and increasing the gross profit margin to 34%

That equates to increasing revenue by $ 5,300,000 and all of the cost to support that growth .

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