What is Spend Cube Analysis?

The spend cube is a review of spend data presented as a multidimensional cube. The dimensions usually reviewed include subcategories or variants purchased across the organization, stakeholders or departments buying the category and comparative spend with different suppliers.

Spend cube analysis is a great business tool to help the procurement department keep track of expenses. Spend cube analysis provides a visual representation of the spending details of the organization in the form of a three-dimensional cube.

A spend cube has three dimensions – business units, suppliers, and item categories. The business units dimension details who demanded the materials. The item category represents the materials being bought, and the suppliers give data about where the items are purchased.

These three dimensions of the spend cube can be used to run a few different analyses. Businesses can utilize these reports to improve their purchasing function and reduce unnecessary procurement expenditure and material wastage.

Spend cubes can also be used for category analysis, where the company gets a comprehensive idea of what specific materials are procured from each supplier for each corporate business unit. On the other hand, supplier analysis clarifies what suppliers are being roped in for each product category for each business unit. The third type of spend cube analysis is business unit analysis. This analysis shows what each business unit requires per category from each supplier.

Spend cube analysis reports can also be generated through MS Excel, but it only works for small-scale organizations. For larger business entities with more complex procurement practices, there are dedicated spend cube analysis software that can fetch accurate and effective results.

Spend cube analysis helps businesses prioritize their inventory, maintain good relations with important suppliers and target specific corporate business units for product categories.