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Why are some data analysis skills and thinking so important to spend analysis? Can’t software applications be used to generate the information needed automatically?

Data analysis is very important because it helps the manager to organize random data which is in bulk to a regular pattern so that it can be easily interpreted. By organizing data properly, the consumer of the data can access information, interpret and make an informed decision out of it. Spend analysis, a subset of data analysis. It saves the time and energy required to analyze data.

In addition, data analysis skills and thinking are important because it helps in the collection of data from different departments as well as other programs and stores it in a single application where it can be found easily by consumers (Adams, Gupta & Charles, 2003).

Data analysis is also important because it helps researchers to store information properly so that it can be found in the future by those who want to use it.

Spend analysis is therefore a process of identifying how much the organization is paying to suppliers, how much each supplier is given as well as the number and quantity of goods the organization receives for every amount paid.

The software application cannot be used to generate information automatically because it is very complex and unless users are trained on how to use the application, they might not be able to access and use the information.

In addition, software applications are costly in terms of time and money. It is hard to make a flawless script and even if it is created, it is very expensive. Even after the script is created, more time is even required to test as well as debug it.

How might a structured process such as Six Sigma Methodology be useful?

A structured process like Six Sigma Methodology could be useful because it provides features that raise the ability of the data analysis process. By raising the performance and reducing the variation of the process, someone working with the method can complete the task quickly; improving morale and productivity. A structured process gets rid of defects, wastes, and variability. Sigma Six Methodology is simply a way of enhancing a data-driven approach, methodology as well as discipline to the method of data analysis (De Fea & Barnad, 2005).

In addition, a structured process like Six Sigma Methodology offers more opportunities for organizations with a lot of data and keeps increasing. The reason for this is that Sigma Six Methodology does not need to adapt like other standard approaches.

Why it is important to get other functional areas, notably finance involved in Send Analysis efforts. Can you think of some other functional areas that should be involved?

Letting other functional areas like finance be involved in Spend Analysis is crucial because Spend Analysis shows total money used, amount spend on each supplier, and whether the buyer is getting value for money paid to suppliers. With such information, managers can guarantee that money is being used for activities highlighted in the budget. Managers can also use such information to bargain for discounts from suppliers.

The customer service department should also be involved because it is the first point of contact with the customer hence the department should have the information on Spend Analysis to be able to advise potential customers properly.


Adams, C., Gupta, P. & Charles W. (2003). Sigma Deployment. Burlington, MA: Heinemann.

De Fea, J. & Barnad W. (2005). Implementing Sigma Six: Smarter Solutions Using Statistical Methods. New York, NY: John Wiley & Sons.

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