A supply management department is looking to standardize purchases across the entire organization and leverage spend with fewer suppliers. Which of the following will be MOST useful for determining historical baseline costs?
Conduct Spend Analysis: Spend analysis involves the collection, cleansing, classification, and analysis of expenditure data to understand spending patterns.
Identify Historical Costs: By analyzing past spending data, the supply management department can identify historical baseline costs for various categories.
Leverage Data: This data can then be used to negotiate better terms with suppliers, streamline purchasing processes, and reduce costs.
Standardization: Spend analysis helps in identifying opportunities for standardizing purchases, thus leveraging spend with fewer suppliers and achieving economies of scale.
References:
CIPS: "Spend Analysis and Cost Reduction"
ISM: "Spend Analysis: The Key to Strategic Sourcing"
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