Spend analysis and savings opportunities

Purpose

Turn AP transactions into a reconciled spend cube that identifies supplier concentration, category leakage, contract coverage, price dispersion, and defensible opportunity ranges.

Scope

Analyze transaction date, supplier, category, PO, contract, quantity, unit price, net amount, currency, business unit, and payment status for the selected period; compare with supplier master, taxonomy, contracts, POs, and approved benchmarks.

Excluded: changing supplier master data, negotiating prices, approving purchases, posting entries, and promising savings.

Data basis

• AP transaction table with invoice_id, supplier_id, category, quantity, unit_price, net_amount, currency, date, PO, and contract_id.
• Supplier master, category taxonomy, contract register, PO table, and benchmark price table.
• Prior-period spend cube and procurement policy.

Result

A spend cube and savings memo with supplier/category totals, top-10 concentration, contract and PO coverage, duplicate suppliers, price variance, opportunity formula, confidence, and source rows.

Quality criteria

• Spend totals reconcile by currency and period to the AP population.
• Supplier normalization preserves supplier_id and records each alias mapping.
• Contract and PO coverage distinguishes “not found” from “not required”.
• Savings use quantity times benchmark-minus-paid price and never use negative opportunity.
• Every opportunity names its benchmark, affected rows, and implementation assumption.

Instructions

Normalize supplier names only beside the original value. Convert currencies only with the supplied rate and rate date. Use weighted average unit price when comparing categories and show the denominator. Flag concentration with the configured share threshold. Separate addressable, contingent, and unquantified opportunities; do not sum overlapping opportunities. Treat missing quantity or benchmark as unquantified.

Adapt before use

Opportunity values are scenarios for procurement review and are not booked savings or approved budget reductions.

• Map AP, supplier, taxonomy, contract, PO, and benchmark columns.
• Define reporting period, currency rates, concentration share, price tolerance, and savings formula.
• Add procurement policy, prior cube, and category owner terminology.