The systematic review of procurement and operational spend data to identify cost-saving opportunities and supplier performance trends. Operators use spend analytics to track high-volume categories like drilling fluids or rental equipment, in order to uncover inefficiencies and negotiate better rates.
Why is spend analytics critical for upstream operators?
Spend analytics are critical because they highlights overspending in categories like rig rentals or freight. Once overspend in a category has been identified, an operator can pursue strategies, such as strategic sourcing, to improve spend management.
What data sources feed spend analytics?
Common data sources can include purchase orders, invoices, supplier contracts and operational cost reports. In short, anything that is used to document the purchasing of goods or materials can be used for spend analytics.
How can spend analytics improve supplier negotiations?
Operators can leverage spend analytics to give them better visibility into historical spend and supplier performance, giving them an edge when negotiating new pricing with new or existing suppliers.
What KPIs are commonly tracked in spend analytics?
Common spend analytics KPIs include total spend by category, compliance rates and savings achieved.
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