Procurement Spend Analysis Solution

Spend Analysis Service

In the financial realm, a spend analysis involves a detailed examination of where a company’s money is going. What is being purchased, from whom, and at what rates – all of these questions and more besides are covered by an in-depth spend analysis. Spend analysis remains a critical service for companies in the energy sector as well, but with a slightly different approach.

Here at UMC Solutions,we specialize in energy spend analysis:

How much energy does your company use?
Where is that energy going, and how could it be used more efficiently?

Our experience in the energy market gives us the insights necessary to help our clients manage their energy usage in the most efficient manner.

Spend Analysis – A Short Definition

As mentioned above, “spend analysis” refers to an examination of the purchasing done by a particular organization. A spend analysis is part of a much larger process or institutional control known as spend management. The latter attempts to direct the outflow of financial resources from a particular organization in the most efficient manner, ensuring that funds are being spent responsibly.
In the same manner, organizations can benefit from obtaining a clear picture of their energy use. UMC can help you get this information through an energy-oriented spend analysis.

Establishing Criteria

Energy usage does not occur in a vacuum; neither can an analysis of that use. You need to first establish useful parameters. Will your analysis be conducted across the entire company, or only a particular department? What period of time will the analysis need to cover in order to give the most accurate picture? Have there been recent organizational changes, such as department consolidations, leadership changes, or physical modifications to equipment which will make an accurate spend analysis more difficult?

Like an audit, a quality spend analysis depends at least partly on having the correct criteria, and good parameters help to ensure reliable information pertaining directly to a particular company or department. At UMC, our experience has taught us the right questions to ask to maximize the information gained from your spend analysis.

Conducting a Spend Analysis

Gathering information on expenses poses a challenge for both large and small organizations. Small companies may not have rigid policies or even guidelines to manage energy use, meaning that it may be difficult to see where and how a company’s power was spent. A quality energy analysis relies on more than a simple tracking of raw numbers. It requires assembling a profile of energy use from month-by-month, to hour-by-hour. Building that picture may be especially difficult for smaller, more informal operations, even though it is precisely those organizations which could see the greatest benefits from more efficient energy use.

On the other hand, larger companies may be too decentralized. One department may pay for its own energy, tracking usage and rates on a completely different system. Another department might use the latest software wedded to cutting-edge machinery, allowing for a dynamic and detailed picture of energy use. With the variety that occurs in a large company, much of the energy analysis might be occupied simply with bringing the raw data into alignment.

Once the raw numbers have been harvested, they must be sorted and processed. Here’s where the details of a spend analysis come into play. Energy use need to be categorized, and a variety of lenses applied to see beyond the information. Usage by month, by department, by category of equipment – even the energy requirements of a particular item over time, or the use at a certain time of day. All of these are points of analysis which will put the spend information into a useable form.

Why do a Spend Analysis?

The number-one reason to conduct an energy-based spend analysis is efficiency. Managing the energy your organization needs more effectively will in turn lead to financial savings. An energy analysis may be a general measure as part of a healthy management approach, or a specific remedy to perceived or potential problems.

Beyond simple cost reduction, a spend analysis can assist managers in identifying areas of improvement, from inefficient machinery to peak usage times.

Using a Spend Analysis

With the raw data gathered, information cleaned and categorized, and findings condensed, a spend analysis can finally leave the world of abstract numbers and start to have an effect on the day-to-day business.

Some of the uses of a spend analysis have been mentioned indirectly above: below is a simple list of some of the way to practically apply a spend analysis.

  • Simplify Energy Procurement. Knowing where and how your energy is being spent gives you a leg up in supplier negotiations. You may be able to negotiate for better rates, or a bigger discount for off-peak energy usage. Rather than bringing one data point to the table – overall usage – you can bring a whole suite of information, and use different points to procure better deals from your energy suppliers.
  • Risk Management. Where does your energy come from? An energy spend analysis provides the capability to mitigate risks of garnering energy from one source only. A good analysis can also help you to put your company’s energy supply and usage in the context of the broader energy market – knowing what percentage of your energy comes from which source, and how the market is likely to shift over the short-term future.
  • Adjust Usage. Another simple but effective application of an energy spend analysis from UMC Solutions. Spread energy usage out across peak times and slower times; upgrade machinery to more efficient models; detect and fix energy leaks. Managing a wide-spread company opens the door to waste energy in countless ways that are difficult to see but painful to the financial health of the company. Use an energy spend analysis as an internal health check.

At UMC, our overall VMS goal is to make your company more profitable by reducing its energy costs, improving product quality, and by ensuring the best overall service possible from your various suppliersThese are only some of the uses of a spend analysis. A well-run, properly organized spend analysis shaped by well-chosen parameters can prove invaluable for reining in runaway energy use and saving money. UMC would love to assist you in a spend analysis, and better guide you in current and future energy market opportunities.