SCM PRELIM PDF

The Lord’s Prayer Our Father, Who art in heaven, hallowed be Thy name; Thy kingdom come; Thy will be done on earth as it is in heaven. Give us this day our daily bread; and forgive us our trespasses as we forgive those who trespass against us; and lead us not into temptation, but de...

The Lord’s Prayer Our Father, Who art in heaven, hallowed be Thy name; Thy kingdom come; Thy will be done on earth as it is in heaven. Give us this day our daily bread; and forgive us our trespasses as we forgive those who trespass against us; and lead us not into temptation, but deliver us from evil. Amen.  CONSTRUCTIVE ALIGNMENT OF GRADUATE ATTRIBUTES, INSTITUTIONAL INTENDED LEARNING OUTCOMES (IILO), PROGRAM OUTCOMES (PO), AND COURSE INTENDED LEARNING OUTCOMES (CILO) CILO GRADUATE ATTRIBUTES IILO After completing this course, students must be able to: A glocally competent leader Develop leadership in one’s field of study 1. Discuss the different concepts and strategies in supply chain management. A critical thinker Adopt a multi-level view of the world 2. Understand the important supply chain metrics, primary trade-offs in A technically skilled and innovative worker Exhibit skills in solving real-life problems making supply chain decisions. A sensible communicator Articulate arguments clearly and sensibly 3. Apply basic tools for effective and efficient supply chain management, production planning and inventory control, order fulfilment and supply chain A lifelong learner Engage in research and continuous coordination. learning An ethical and responsible citizen Act prudently on matters affecting one’s 4. Apply acquired knowledge in several supply chain innovations such as life global supply chain design, logistics, and outsourcing. A reflective steward of God’s creation Show Dominican values in caring for the earth  INSTITUTIONAL PHILOSOPHY AND OBJECTIVES IDENTITY Colegio de San Juan de Letran Calamba, a Dominican institution of teaching and learning, research, and community services, founded in 1979, under the patronage of Our Lady of the Rosary. VISION MISSION In a culture of Conscience, Discipline, and Excellence, we envision Letran Calamba as a leading We, the Colegio de San Juan de Letran Calamba, a Catholic educational institution, commit Catholic academic institution, a hub of educational technology and innovation, and a vital ourselves to the total human development and better quality of life of our stakeholders, and formation center in the religious and sustainable socio-economic developments in the Asia- the promotion of a socially-responsive community through a global and innovative Pacific region by 2029. education that is Dominican in orientation. INSTITUTIONAL QUALITY POLICY SDA-BASED QUALITY OBJECTIVE To realize the institutional vision and fulfill the mission of Letran Calamba, the Colegio commits To provide and sustain excellent academic programs characterized by quality and itself to deliver consistently quality education to its students and quality service to its stakeholders innovative teaching and learning practices. through a relevant outcomes-based instruction, sustained research and community extension culture, and continually improved quality management systems. INSTITUTIONAL CORE VALUES Based on the Supreme Ideals of Deus, Patria, Letran, the Colegio embraces the following core values: 1. Delivering results; 6. Promoting customer-driven excellence; 2. Espousing a sense of community 7. Doing what is right; 3. Valuing and respecting others; 8. Observing continual improvement; and 4. Being adaptable and agile; 9. Maintaining a deep affection for life. 5. Executing a visionary leadership;  DEPARTMENTAL PHILOSOPHY AND OBJECTIVES Departmental Vision Departmental Mission We envision Letran Calamba School of Engineering and Architecture as a dynamic We commit ourselves to produce GOD-centered, loyal to the country, locally and school and center of excellence in engineering and architecture education and globally (glocally) competitive Letranite engineers and architects through quality technology. curricular programs and facilities, competent and committed personnel. PROGRAM and COURSE/SUBJECT-BASED PHILOSOPHY AND OBJECTIVES Program Educational Objectives (PEO) Program Outcomes (PO) Three to five years after graduation, the BS Industrial Engineering (BSIE) alumni shall: 1. Advance their practice in the field of industrial engineering; A graduate of the Bachelor of Science in Industrial Engineering (BSIE) program 2. Assume at least a supervisory position in the same or related field of endeavor; must attain : 3. Manifest proper ethical principles and values founded in Filipino, Dominican and Christian orientation; PO7. Design a system, component, or process to meet 4. Contribute goodwill in the country and other nations; and desired needs within realistic constraints, in accordance with Pursue advance education and professional training activities to become world class standards professionals. PO16. Apply knowledge of engineering and management principles as a member and leader of a team, and to manage projects in a multi-disciplinary environment INTENDED LEARNING OUTCOME 1: ILO1: Understanding supply chain, definition and importance. Introduction 1. Understanding Supply Chain Supply Chain A sequence of organization, their facilities, functions, and activities that are involved in producing and delivering a product or service. Typical Manufacturing Supply Chain Supply Chain A sequence of organization, their facilities, functions, and activities that are involved in producing and delivering a product or service. Typical Service Supply Chain  Flow of Goods & Services Clockwise movement - Ensuring that products are efficiently produced and delivered to the end customer in the right quantity, quality, and time. Counterclockwise movement -Facilitating the exchange of value for goods and services, ensuring that each entity in the supply chain gets paid for its contribution. -Managing reverse logistics to handle defective or unwanted goods. -Enhancing product quality, customer satisfaction, and overall supply chain performance thru feedback. Supply Chain Management The strategic coordination of the supply chain for the purpose of integrating supply and demand management. Supply chain managers are people at various levels of the organization who are responsible for managing supply and demand both within and across business organizations. They are involved with planning and coordinating activities that include sourcing and procurement of materials and services, transformation activities, and logistics. Farm to Market Supply Chain Logistics It is the part of a supply chain involved with the forward and reverse flow of goods, services, cash, and information. Logistics management includes management of inbound and outbound transportation, material handling, warehousing, inventory, order fulfillment and distribution, third-party logistics, and reverse logistics (the return of goods from customers). Inbound vs. Outbound Logistics It is the part of a supply chain involved with the forward and reverse flow of goods, services, cash, and information. Logistics management includes management of inbound and outbound transportation, material handling, warehousing, inventory, order fulfillment and distribution, third-party logistics, and reverse logistics (the return of goods from customers). Trends in Supply Chain Management Measuring supply chain ROI. Greening” the supply chain. Reevaluating outsourcing. Integrating IT. Adopting lean principles. Managing risks. Questions 1. Give one (1) example of logistics disruptions. 2. How to manage logistics disruptions in supply chain management in its proactive way? Activity #1-Answer and submit it in the google drive provided. A global food and beverage company uses a just-in-time (JIT) inventory system to minimize storage costs. However, they recently experienced a supply shortage due to transportation strikes in their supplier's country. As the logistics manager, how would you revise their supply chain strategy to reduce the risk of future shortages while maintaining cost- efficiency? a. Propose at least two strategies and explain their benefits. (max of 3 sentences) b. Design a supply chain diagram that addresses the issue. References Print 1. Didanda, P. (2023). Maynard's industrial and systems engineering handbook. McGraw-Hill E-books (EBSCO) 1. Mamun Habib. (2022). What to Know About Supply Chain Management. Nova. 2. Syed Abdul Rehman Khan, Adeel Shah, & Zhang Yu. (2022). Leagile Supply Chain Strategy in Asian Automotive Production. Trans Tech Publications Ltd. 3. Mohiuddin Ahmed, E. (2020). Blockchain in Data Analytics. Cambridge Scholars Publishing. E-book (ProQuest) 1. Dwivedi, R. (2022). Recent advances in iot and blockchain technology. Bentham Science Publishers. 2. Blanchard, D. (2021). Supply chain management best practices. John Wiley & Sons, Incorporated. 3. 3. Cokins, G., Pohlen, T., & Klammer, T. (2021). Supply chain costing and performance management. John Wiley & Sons, Incorporated. References E-book (EmeraldInsight) 1. Istimaroh, I., Abu Seman, N.A., Setiaji, B. and Mhd Nor, N. (2022), "The Key Practices of Lean Supply Chain Management Towards Sustainable Performance: A Review", Din, M.F.M., Alias, N.E., Hussein, N. and Zaidi, N.S. (Ed.) Sustainability Management Strategies and Impact in Developing Countries (Community, Environment and Disaster Risk Management, Vol. 26), Emerald Publishing Limited, Leeds, pp. 61-74. https://doi.org/10.1108/S2040-726220220000026006 2. 2. Kaleli, S.S. and Baygin, M. (2022), "Supply Chain Management Reshaped with Industry 4.0: A Review", Grima, S., Özen, E. and Romānova, I. (Ed.) Managing Risk and Decision Making in Times of Economic Distress, Part A (Contemporary Studies in Economic and Financial Analysis, Vol. 108A), Emerald Publishing Limited, Leeds, pp. 69-93. https://doi.org/10.1108/S1569-37592022000108A033 INTENDED LEARNING OUTCOME 1: ILO1: Continuation of understanding supply chain. Discuss porter’s value chain and SCM Drivers 1.2 Porter’s Value Chain 1.3. SCM Drivers  Value Chain A value chain is the series of steps or actions that a business enacts to create a product and deliver it to a customer. Taken from start to finish, it is the series of systems that the business uses to make money. The idea of a value chain was first described by Michael Porter, an academic in the fields of business management and economics, in his 1985 book "Competitive Advantage: Creating and Sustaining Superior Performance."  Components of a Value Chain Primary Activities 1.Inbound logistics 2.Operations 3.Outbound logistics 4.Marketing and sales 5.Service Support Activities 1.Procurement 2.Technology development 3.Human resources (HR) management 4.Firm Infrastructure  Components of a Value Chain Primary Activities 1.Inbound logistics - Inbound logistics include the receiving, warehousing, and inventory control of a company's raw materials. This also covers all relationships with suppliers. 2.Operations - Operations include procedures for converting raw materials into a finished product or service. This includes changing all inputs to ready them as outputs. In the above e-commerce example, this would include adding labels or branding or packaging several products as a bundle to add value to the product. 3.Outbound logistics - All activities to distribute a final product to a consumer are considered outbound logistics. This includes delivery of the product but also includes storage and distribution systems and can be external or internal. 4.Marketing and sales - Strategies to enhance visibility and target appropriate customers—such as advertising, promotion, and pricing—are included in marketing and sales. 5.Service - This includes activities to maintain products and enhance consumer experience— customer service, maintenance, repair, refund, and exchange.  Components of a Value Chain Support Activities 1.Procurement - is the acquisition of inputs, or resources, for the firm. This is how a company obtains raw materials thus it includes finding and negotiating prices with suppliers and vendors. 2.Human Resource Management - Hiring and retaining employees who will fulfill business strategy, as well as help design, market, and sell the product. 3.Firm Infrastructure - covers a company's support systems and the functions that allow it to maintain operations. This includes all accounting, legal, and administrative functions. A solid infrastructure is necessary for all primary functions. 4. Technology development - is used during research and development and can include designing and developing manufacturing techniques and automating processes. This includes equipment, hardware, software, procedures, and technical knowledge. What's the Difference Between Value Chain and Supply Chain? The supply chain focuses on sourcing materials and delivering goods to the customer. Value chain emphasizes goes beyond the selling of goods and products – it's about on offering value throughout the customer journey from marketing to after-sales support. SCM Drivers Efficient VS Responsive Supply Chain An efficient supply chain strives to do more with less. A responsive supply chain is more flexible and operates with the ability to change and adapt to changes in the surrounding environment.  Drivers of a Supply Chain A company’s supply chain should achieve the balance between responsiveness and efficiency that best supports the company’s competitive strategy. A supply chain’s performance in terms of responsiveness and efficiency is based on the interaction between the following logistical and cross-functional drivers of supply chain performance: facilities, inventory, transportation, information, sourcing, and pricing.  Drivers of a Supply Chain 1. Facilities Facilities are the actual physical locations in the supply chain network where product is stored, assembled, or fabricated. Flexibility, location and capacity are the main components of facilities decisions. Facility-related metrics Capacity- measures the maximum amount a facility can process. Utilization- measures the fraction of capacity that is currently being used in the facility. Processing/setup/down/idle time - measures the fraction of time that the facility was processing units, being set up to process units, unavailable because it was down, or idle.  Drivers of a Supply Chain Facility-related metrics Production cost per unit - measures the average cost to produce a unit of output. Quality losses - measure the fraction of production lost as a result of defects. Flow time - the time needed to produce one unit of product. Product variety - is the number of different products which are available for the customers. Stock Keeping Unit (SKU) - is a kind of product having its own barcode. Average production batch size - measures the average amount produced in each production batch. Production service level - measures the fraction of production orders completed on time and in full.  Drivers of a Supply Chain 2. Inventory A supply chain’s inventory consists of all different kinds of raw materials and finished commodities. Inventory-related metrics Cycle Inventory: is the average amount of inventory used to satisfy demand between receipts of supplier shipments. Important decision: cost of holding larger lots of inventory (when cycle inventory is high) versus the cost of ordering more frequently. Safety Inventory: inventory held in case demand exceeds expectation. Important decision: how much safety inventory to hold.  Drivers of a Supply Chain Inventory-related metrics Seasonal Inventory: is built up to counter predictable seasonal variability in demand. Level of Product Availability: is the fraction of demand that is served on time from product held in inventory. Average Inventory: measures the average amount of inventory carried. It can be expressed in day and/or in financial value. Products with more than a specified number of days of inventory: identifies the products for which the firm is carrying a high level of inventory. Average replenishment batch size: is the average size order in natural units.  Drivers of a Supply Chain 3. Transportation In the supply chain, the transporter moves the inventory from point A to point B. Transport utilizes a variety of routes and modes, each with unique performance requirements, such as full truck, courier, part load, quick mode, etc. Air, truck, rail, sea, and pipeline are modes of transport for products. Transportation-related metrics Average inbound transportation cost : measures the cost of bringing product into a facility. Average incoming shipment size: measures the average number of units or dollars in each incoming shipment at a facility.  Drivers of a Supply Chain Transportation-related metrics Average outbound transportation cost: measures the cost of sending product out of a facility to the customer. Average outbound shipment size measures the average number of units or dollars on each outbound shipment at a facility  Drivers of a Supply Chain 4. Information Data on all sorts of facilities, inventory, transportation, costs, prices, and clients throughout the supply chain are analyzed. Push/Pull systems: The direction of the flow of information is the opposite Push systems start with forecasts for creating schedules for suppliers with part types, quantities, and delivery dates. Pull systems require information on actual demand to be transmitted extremely quickly throughout the entire chain so production and distribution of products can reflect the real demand accurately  Drivers of a Supply Chain Information-related metrics Forecast horizon: identifies how far in advance of the actual event a forecast is made. Frequency of update: identifies how frequently each forecast is updated. Forecast error: measures the difference between the forecast and actual demand.  Drivers of a Supply Chain 5. Sourcing Sourcing is the entire set of business processes required to purchase goods and services. Insourcing means that the product or service is produced within the supply chain. Outsourcing means that the product or service is bought. Sourcing-related metrics Days payable outstanding: measures the number of days between when a supplier performed a supply chain task and when it was paid for Average purchase price: measures the average price at which a good or service was purchased during the year.  Drivers of a Supply Chain Sourcing-related metrics Range of purchase price: measures the fluctuation in purchase price during a specified period. Supply quality: measures the quality of product supplied.  Drivers of a Supply Chain 6. Pricing Pricing is the determination of the prices of products and services. Pricing-related metrics Profit margin measures profit as a percentage of revenue Days sales outstanding measures the average time between when a sale is made and when the cash is collected. Incremental fixed cost per order any fixed cost which added to the price. Range of sale price measures the maximum and the minimum of sale price per unit over a specified time horizon.  Activity #2 Create a Value Chain for fast food company McDonalds, by identifying Primary Activities the correct value chain activity the statements and figures are.  Activity #2 Support Activities The restaurant has invested in touch kiosks to facilitate ordering and increase operational efficiency. The Mcdonald’s corporation has both C- suite executives and zone presidents who oversee the firms operations in various regions, with a general counsel overseeing legal matters. The firm Jaggaers, a digital procurement firm, to establish relationships with key suppliers across various regions of the world. It maintains a career page where job seekers can apply both corporate and restaurant roles. It promotes its tuition assistance program to attract talent. INTENDED LEARNING OUTCOME 1: ILO1: Introduce purchasing costs and how to appraise suppliers 2.3. Purchasing Costs, 2.4. Suppliers’ Appraisal INTENDED LEARNING OUTCOME 1: ILO1: Elaborate procurement strategies. Analyze and discuss supply chain market 3. Procurement Strategies 3.1. Analyzing the Supply Chain Market 3.2. Spend Management 3.3. Spend Analysis  What Is Procurement? Procurement is obtaining or purchasing goods or services, typically for business purposes. Procurement is most commonly associated with businesses because companies must solicit services or purchase goods, usually on a relatively large scale.  What Is Procurement Cost? A procurement cost is a type of expense during the procurement process. Procurement costs are the fees and added expenses associated with purchasing supplies and materials to run your business. These additional costs, often categorized as indirect spend, significantly reduce cash performance if not kept in check. Why is Procurement Cost important? Procurement cost enables you to easily understand your expenditures. A properly indicated procurement cost can help you make informed decisions, as the price allows you to calculate your spending. This can also help you with deciding how you will approach suppliers. Companies formulate their strategies depending on various procurement costs.  Direct vs. Indirect Procurement Costs There are two different kinds of procurement costs: Direct procurement costs cover the costs related to the product and sale of goods or the labor costs for contractors. Indirect procurement costs involve expenses that aren’t related to product production but are necessary for the business to function.  Type of Procurement Costs 1. Base Cost The cost of a good or service before the consideration of a price and sale. It allows the determination of whether there is profit or loss. 2. Transportation Cost The cost of the logistics operation transferring goods from one place to another. This already includes operating, fixed, and maintenance costs.  Type of Procurement Costs 3. Purchasing Cost The cost of a good or service from an external source. It includes shipping and handling fees. Examples of purchasing costs include: Data entry – As the name states, it is entering data into the company’s managing system, to ensure data clarity and accuracy. Oftentimes, individuals handle large amounts of information in doing this work. File Management – The organization of files to ensure data is accessible for the company’s use. It also involves the assessment and evaluation of the said files, to ensure minimal risks. Duty execution – Duty execution encompasses various labor tasks that involve purchasing itself. Paying labor is a must, as it is both ethical and establishes the socio-economic relation between a company and an employee.  Type of Procurement Costs 4. Contract Cost The cost involves vendor contract regulation, contract enforcement, and even as a part of the contract itself. It helps establish and secure contracts of the company with the suppliers. 5. Inventory Cost The Inventory cost involves the purchase and management of inventory within the procurement process. Basically, these costs necessitate the acquisition of inventory. 6. Taxes Taxes are mandatory costs that a company pays towards a governing entity.  Ways to Reduce Procurement Costs 1. Automate Procurement Processes Automation streamlines and secures workflows. Integrated systems share data, giving you real- time, accurate insights. 2. Reduce and Eliminate Tail Spend Tail spend tends to be high in organizations that lack visibility into their spending. Without that visibility, they’re unable to combine purchases or secure better deals with vendors. Over time, these expenses add up. 3. Navigate Taxes and Duties There are a few ways you can lower the taxes and duties associated with your procurement costs. One way is to try and source locally to avoid VAT or GST, if that’s an option. You can also work with states or countries that have lower sales tax.  Ways to Reduce Procurement Costs 4. Compare Vendors Reduce costs by shopping around and comparing vendors. Cost reduction should not take priority over value generation. Instead, you’re looking for a balance between the quality of your goods and services against your overall cost. 5. Evaluate Transportation Costs Look to see if you can consolidate orders and deliveries. Try alternative transportation methods. And explore different types of warehousing to keep your goods closer to your customers, reducing transportation expenses. 6. Reduce Overhead Reconsider the facilities your business uses to build and house products. Look for cheaper options that provide strategical advantages along with reduced costs. Evaluate the types of machinery you use to build products. Consider the cost of repairing against replacing. Ask yourself if you can purchase better quality machines to save costs in the long run.  Ways to Reduce Procurement Costs 7. Review Inventory Evaluating your inventory against current market and consumer trends is key to ensuring you have enough stock on hand without burning through your budget to store unnecessary goods needlessly. 8. Conduct Risk Management You need to regularly evaluate the resilience of your supply chain by conducting risk analysis to find potential weak points. 9. Minimize Administrative Costs Automating your procurement processes will centralize that data and make it easier for you to track and store the files you need to streamline procurement management tasks. 10. Streamline Negotiations Negotiation is part of the procurement process. It is not a zero-sum game, though. Instead, you need to be prepared to work with suppliers to build mutually beneficial relationships. Still, it’s hard to get the leverage you need in those negotiations without insights into your supply chain, specifically your vendors and their competition.  What is a Supplier Evaluation? Supplier evaluation is the process organizations use when choosing vendors and suppliers for their products or materials. During this process, a company might evaluate certain criteria to determine which vendor can best help it achieve its business goals.  Supplier Evaluation Criteria Price: Suppliers offer various price ranges for the same products. Monitoring prices frequently helps you identify changes in market demands or availability. Quality: Product quality provides a qualitative measurement of how durable or effective a supplier's product is. You might request samples to evaluate quantity before purchasing. Service: Consider evaluating the service a supplier provides before working with them. Service criteria might involve friendliness, responsiveness and an overall understanding of the company's needs. Social responsibility: Companies may value suppliers whose values and mission align with their own. Social responsibility can include a supplier's community involvement and contributions to charities.  Supplier Evaluation Criteria Convenience: For companies in need of frequent supplies, convenience matters. You might evaluate how easy it is to order products, how quickly you receive supplies and how willing a supplier accommodates your employer's needs. Flexibility: Flexibility shows a supplier's ability to scale deliveries up and down based on business needs. This can be an important criterion if productivity fluctuates throughout the year or if several locations require deliveries. Risk: As many businesses rely on their suppliers to provide their own customers' products, understanding the risk can help you determine if they're the right supplier.  Types of Supplier Evaluation Scorecards: You might create scorecards with a numerical rating system for each evaluation criterion. This provides measurable data about each vendor so you can compare suppliers. Questionnaires: Questionnaires can provide more qualitative data, like quality and communication effectiveness. You might also provide questions to suppliers to explain some of their processes. Discussions: Informal discussions allow leadership and teams familiar with products to discuss their options. Vendor visits: Some businesses meet with a supplier at their location to learn more about the company and its production methods.  What Is Procurement Strategy? Procurement strategies are an organization's plans and methods for acquiring goods and services efficiently and cost-effectively. Companies use procurement strategies to ensure they partner with trustworthy suppliers, take advantage of pricing benefits, lower their risk profile, and manage the overall procurement process.  Type of Strategies for Procurement Cost reduction This is a common strategy that businesses use to save money. You can reduce costs by negotiating with suppliers, looking for cheaper alternatives, and streamlining your purchasing process. Green purchasing Green purchasing is a strategy that focuses on buying goods and services with minimal environmental impact. Risk management Risk management is a strategy that focuses on mitigating risks associated with purchasing goods or services.  Type of Strategies for Procurement Global sourcing Global sourcing involves buying goods or services from suppliers around the world. This can be a good option for businesses that want to find the best possible purchase price. Total quality management Total quality management ensures that all products and services meet the highest possible standards. This can include setting quality standards, conducting inspections, and implementing quality control measures. Supplier management and optimization Supplier management and optimization focus on developing relationships with suppliers and working to improve their performance. This can include setting supplier performance standards, conducting audits, and providing training and support.  Supply Market Analysis A supply market analysis is a comprehensive assessment of the current market with the goal of gaining the valuable insight needed to develop effective procurement The four dimensions of a supply market analysis are:  Market Structure In this process, the various market segments of the particular product category are identified. Competitive Analysis In this process, the supply-demand trends are evaluated and analyzed to determine how the various suppliers in the market compete. Supply chains An analysis of the supply chain helps businesses understand the costs involved at different stages of the supply chain, the value of the various segments, and the risks involved. Alternate goods and services It is essential to analyze substitute goods and services. This helps determine how the demand can be met in the event that a supplier cannot meet your needs.  Spend Management Spend Management is a procurement function within an organization, and it involves managing how an organization spends money to most cost-effectively obtain the desired products and services. Spend Management often includes the processes of supplier outsourcing, procurement, and supply chain management. It also encompasses the analysis of supplier spending to understand current buying trends and behaviors and inform future purchasing decisions. A spend manager must understand all aspects of an organization’s spending habits and use such knowledge to negotiate terms with suppliers.  Spend Management Common challenges within manual spend management processes: Lack of visibility One challenge that financial professionals face is a need for more visibility into a company's day-to-day spending. Poor data capture Trying to manage to spend on paper leads to poor data capture. Inefficient manual processes Often companies that rely on paper handling must perform manual data entry multiple times into separate financial systems at different stages of the procurement and payment processes. Compliance Audits of financial records become a huge pain point when AP professionals are faced with rows of filing cabinets. Budget optimization Businesses that try to maintain outdated spending management end up with inefficient budgetary processes.  Spend Management Benefits of spend management software: Time and cost savings Better compliance Better supplier management Streamlined procurement process  Spend Analysis Spend analysis is the process of reviewing current and historical spending to reduce costs, increase efficiency and improve sourcing and supplier relationships. It involves identifying and gathering spending data from all sources, cleansing and classifying the data, then analyzing the information to understand how the organization is spending its money and where improvements can be made. Why Is Spend Analysis Important? Spend analysis is a key step toward improving the sourcing of materials, products and services. It’s often viewed as a key part of a broader spend management process that also encompasses spend control and automated procurement. By gathering insights that reveal who the company buys from and how much it pays, spend analysis can result in lower procurement costs for goods and services.