software that lets you follow
the money

THE CLICHÉ “A PENNY SAVED IS A PENNY EARNED” STILL HAS relevance for companies looking to cut costs in these lean times. That’s why more businesses are weighing the use of “spend analysis” or “spend management” software to sift through their expense data for opportunities to save a few pennies. As the name implies, this type of software is designed to collect and classify data that companies can use to compare prices and drill down into the details of their expenditures.

Spend analysis software has been around for at least a decade, but up to now, it’s been used mainly in the procurement area. For the most part, businesses have used these apps to analyze the cost of supplies, specifically bills of material, as well as services.

But that’s starting to change. Companies have recently begun using these apps to analyze their distribution- and transportation-related expenditures. One of the areas being targeted is distribution center spending. For example, Jason Hekl, vice president of marketing at software developer Coupa Software Inc., says one of Coupa’s retailer clients is using the software to track “non-merchandise” DC expenditures like cleaning supplies, plastic bags, lighting fixtures, and window-washing services. Software vendor Ketera reports that its customers are using its spend analysis program to scrutinize DC capital equipment expenses.

It’s not just DC expenditures that are coming under the microscope. Transportation spending is being examined as well. For example, Ketera says several of its clients are using the software to look at what they’re spending on cargo movements and logistics services as well as on customs and port fees.

Another vendor of spend management software, Ariba, reports that customers are using that company’s app to manage their transportation costs. The software developer says its clients typically use its tools to make “apples to oranges” comparisons—meaning they’re comparing different carriers and modes on the basis of both price and non-price criteria.

Other companies are using spend analysis software to help answer
the age-old question of whether a retailer could save money by taking
control of its inbound transportation. (Typically, manufacturers roll
the cost of freight into their prices, but retailers sometimes find it’s
cheaper to make their own arrangements.) Bravo Solutions says sev-
eral of its retail and consumer packaged goods (CPG) clients are
using its spend analysis applications to build a business case for tak-
ing over the management of their inbound transportation—for
instance, using the app to quantify their aggregate freight volume to
use as leverage when negotiating with carriers.