A business's purchasing is a significant outflow of money, and what it spends, on what, with whom, is worth understanding. This piece is about purchase spend analysis and reporting in Odoo.
What purchase spend analysis is
Purchase spend analysis is the understanding of a business's purchasing through the data the Purchase app holds. It answers questions about the business's spend: how much is being spent, on what products or categories, with which vendors, over what periods, and how that is trending. Odoo provides reporting on purchasing, so a business can analyse its spend rather than just spending.
Why understanding spend matters
Understanding purchase spend matters because purchasing is a major use of the business's money, and money spent is worth managing. Spend analysis reveals things a business should know. It reveals where the money goes, which products, categories, and vendors account for the most spend, so the business knows where its purchasing money is genuinely going. It reveals the business's reliance on particular vendors, how much of its spend is with each. It reveals trends, whether spend in some area is rising. And it gives a basis for managing purchasing better, the areas of biggest spend are the areas where better purchasing, better prices, better terms, would make the biggest difference. A business that analyses its spend can manage its purchasing; one that does not is spending without understanding.
What spend analysis reveals about vendors
A particularly useful part of spend analysis is what it reveals about vendors. It shows how much the business spends with each vendor, which tells the business which vendor relationships are most significant, where it has concentration of spend, and where it might have a strong position to negotiate, given how much it buys. A business that understands its spend by vendor can manage its vendor relationships deliberately, rather than treating all vendors the same regardless of how much it buys from each.
Spend analysis directs improvement effort
The point of purchase spend analysis is to act on it, and the most useful way is that it directs improvement effort. Purchasing improvement, getting better prices, better terms, better vendor arrangements, pays off most where the spend is biggest. Spend analysis identifies where the spend is biggest, the products, categories, and vendors accounting for the most money, and that is where purchasing improvement effort should go. Improving the purchasing of a small spend area achieves little; improving a big one is significant. Spend analysis is what tells a business where to focus.
Spend analysis depends on the purchasing data
An honest point. Purchase spend analysis is only as good as the underlying purchasing data, which means it depends on purchasing being genuinely run through Odoo, the purchases recorded, so the data the analysis draws on is complete. A business whose purchasing is partly run in Odoo and partly outside it has incomplete spend data and a partial analysis. Spend analysis works best when the business's purchasing genuinely runs through the system, so the spend data is the whole picture.
The takeaway
Purchase spend analysis and reporting in Odoo turn the record of purchasing into an understanding of the business's spend: how much, on what, with which vendors, and how it is trending. This matters because purchasing is a major outflow of money, and spend analysis reveals where the money goes, the business's vendor concentrations, and trends. Most usefully, it directs purchasing improvement effort to where spend is biggest. It depends on the business's purchasing genuinely running through the system. For how we approach Odoo, see our ERP practice.