Question

WK 3 ASS- BUS 307

Data Analysis Skills and Thinking

Submit a paper of at least four pages in length, excluding the title and reference pages, that includes at least three sources, including a minimum of two scholarly sources and the text. Explain in detail why data analysis skills are so important to Spend Analysis. Describe how a structured process such as Six Sigma methodology (Chapter 4) can be useful to identify spending patterns and identify opportunities for improvement. Recommend which functional areas of the business, such as finance, should be involved in Spend Analysis efforts and justify the rationale for your choices.

Answer 1

The process by which various goals can possibly be achieved with the aid of inspecting, transforming, modeling and maintaining a given data set is normally referred to as data analysis. Currently, it is clear that the process has helped a number of organizations and even in spends analysis. It is important to point out that not all data that is presented to an organization is crucial and important for making strategic decisions. This data is basically raw in its current form and does not make any sense at all. For this data to be useful to the organization, analytical skills must be put into place to rearrange the data in a form that is easily understandable to both the skilled analyst and the normal user. The different data analysis skills help one to identify the meaningful information and also understand the different patterns of the data .. Data analysis also allows for the analyst to determine the consistencies and irregularities that may be possibly existent in the data so that he is able to make decisions that are sound and credible.

For one to be able to assist the internal clients of an organization in a much better way on how to plan their sending strategies, he must be able to understand the supplier’s cost proposals. Data analysis is important because it provides the information needed unlike the automatically generated results. This makes the data more meaningful and easier to understand it meaning and application in the real world. Data analysis is important in spend analysis of an organization in several ways. Firstly, it is a crucial tool in the delivery of the savings of an individual or an organization. Organizations are able to get insight over their spend data and also identify any available opportunities that they did not know that they existed.

Secondly, data analysis allows individuals and organizations to make decisions that are well informed on the manner in which processes within an organization can be improved. The resulted obtained from the spend analysis process can give the required direction in the implementation of the new system in terms of configuration and the identification of the relevant departments and people within the organization. Another reason why data analysis in spend analysis process is important is because it helps in managing relationships with suppliers. Spend analysis will help correct any imbalance that may be existent and tip it in your favor .. When it comes to negotiations, one has an upper hand as he understands the fundamentals of the business than the suppliers.

Data analysis is also important in managing any possible risks that may occur. When an organization has worked with a given supplier for quite long, there is a tendency for the spend to rise over the intended limit. Spending too much on one supplier can be risky in a number of ways and can even end up pushing the organization out of business. Through a proper spend analysis an organization is able to reduce its dependency on a given supplier and diversify thus avoiding possible risks of collaps.

Data analysis also helps organizations recover overpayments as they are able to determine any possible error margins in any purchases made. Procurements are also made more cooperatively. Different organizations can consolidate their data and hence make more collaborative and informed procurements. In the end organizations can be able to properly quantify their savings.

The use of structured processes such as the six sigma methodology can be very crucial in the description of the spending patterns and the identification of the different opportunities for improvement that are available. The six sigma is an important tool in business ventures since it helps to minimize the number of mistakes at a stringently high level. If this methodology is followed correctly, it can be very in the spend analysis process of a given organization ..

Firstly, it will be important in the identification of any process flaws and inefficiencies within the system. It is a known fact that defective processes cost the organization more money and the higher the level of deficiencies, the higher the cost incurred by an organization .. An understanding of the spend pattern of an organization will help to measure the framework using the five steps: Define, Measure, Analyze, Implement and control. Statistics have shown that this process reduces the defects by 3.4 defects per million.

The six sigma methodology can also be used in the delivery of quality service and also the achievement of more consistent good results in an organization. The quality of service determines the performance of a company in the market and the revenue that the compact collects in profits .. Six sigma methodologiesrecognize the fact that the existence of too many variables within the procedures involving customers is a back end process and can be detrimental. This methodology will help to identify those procedures that can be standardized so that the performance of a given organization is improved. The data obtained from this analysis can be used in marketing strategies.

This methodology is important in the reduction of waste through the analysis of the patterns of performance within an organization. Waste is related to a number of things including time, cost, materials and labor. Using the six sigma methodology, any unnecessary movement of these resources can be identified and any processes that add no value to the organization can be eliminated. This way, the six sigma methodology would be a good complement for the lean production system ..

In business, there are quite a number of functional areas in which spend analysis can be applied. To start with financial analysis can make use of the six sigma methodology. This will involve the analysis of the business income, the amount of money that is spent on suppliers, elimination of any defects within the financial system and reduction of waste in the whole financial structure. This will improve the profitability of the company ..

Another area in which the six sigma process can be applied in a business is the procurement process. This will involve the analysis of the invoice system data in order to obtain the spend information as well as the purchased orders. Analysis of this data can be important in determining the effectiveness of the procurement system and on whether there is need to take a more collaborative approach when procuring for supplies.

The six sigma process can also be used in the analysis of the market performance. Through the analysis of the profit margins made by a business. This process allows the operators to calculate how far or close a process is from a six sigma. Improvements in the profit margins will help companies improve their productivity and hence their market shares within the target area. Any issues identified within the market can be identified and addressed in time. The increase in productivity is closely related to customer satisfaction and this gives the business a competitive edge