Procurement spend analysis is the structured review and categorisation of all spend across an organisation to identify inefficiencies, reduce costs, and prove value for money. For contracting authorities, this means turning invoices and purchase orders into actionable intelligence. The outcome is not just savings, but better supplier management, stronger compliance with procurement law, and evidence that public funds are being used effectively.
At Thornton & Lowe, we provide procurement spend analysis as part of our wider procurement consultancy services, helping organisations across local government, housing, healthcare and education achieve immediate efficiencies and long-term improvements.
What is procurement spend analysis?
Procurement spend analysis is the process of collecting, cleaning, and reviewing all expenditure to show not only what was spent, but whether it delivered value. Done properly, it uncovers price variations, framework leakage, supplier duplication, and hidden cost drivers that traditional budget reports obscure.
Think of it as forensic accounting for procurement. Instead of simply reporting what happened, spend analysis shows what should change. It allows organisations to see exactly where money is being lost, and what action will deliver savings without reducing service quality.
Where spend analysis sits in the procurement process
Spend analysis is not a standalone task. It runs throughout the procurement cycle - shaping category strategies, informing sourcing decisions, strengthening contract management, and underpinning value for money reporting.
Stage of procurement | How spend analysis adds value |
|---|---|
Planning | Provides the evidence base for budgets and procurement options appraisal, showing which routes to market or contract models offer best value. |
Market research | Benchmarks rates and supplier performance, ensuring specifications and evaluation criteria reflect market reality. |
Sourcing | Identifies which frameworks or dynamic purchasing systems will deliver compliance and best value, while reducing the risk of leakage. |
Contract award | Ensures rate cards, catalogues and variations are transparent, with costs locked into systems from day one. |
Contract management | Provides ongoing data to challenge price drift, monitor variations, and track delivery against commitments. |
Value for money reporting | Demonstrates economy, efficiency and effectiveness to Boards, regulators and stakeholders. |
At Thornton & Lowe, we integrate spend analysis into our buyer services, meaning you can see evidence of performance in every stage of the cycle, not just at year-end.
Need support?
Contact us todayImportance of procurement spend analysis - social housing example
Responsive repairs and planned works account for some of the largest budgets within housing associations and social housing providers. They are also the areas where spend analysis delivers the most immediate impact.
Take responsive repairs. A housing provider may record millions spent on emergency callouts. Spend analysis digs deeper, revealing patterns such as specific build years driving the majority of emergencies. In one case, over half of reactive spend related to properties built in the 1960s and 70s, highlighting predictable component failures. With this knowledge, the organisation could shift spend into planned replacement programmes. Planned programmes delivered the same outcomes at up to 40% lower cost per property, reduced tenant disruption, and allowed the repairs team to focus on quality rather than firefighting.
Planned works show similar opportunities. Detailed analysis of invoices, variations and supplier rates revealed:
Issue highlighted | Impact before analysis | Change enabled by analysis |
|---|---|---|
Wide variation in trade rates | Hourly rates ranged from £45 to £95 depending on who placed the order | Standardisation to £65 per hour, saving £180,000 annually |
Framework leakage | Around 40% of works were placed outside agreed contracts | Re-routing spend through frameworks, cutting costs by over £800,000 |
Variation orders | Contractors offset low day rates with inflated material charges and add-ons | Tighter variation governance and use of transparent catalogues |
Supplier duplication | Dozens of contractors engaged for the same service | Supplier consolidation, improving consistency and contract management |
The impact was not simply financial. There was stronger compliance with procurement law, a clearer line of sight for Boards, and improved service for tenants. This is why spend analysis is central to any modern value for money strategy in the housing sector.
For organisations working in this space, we also provide wider social housing consultancy services, including procurement reviews, insourcing support, and VfM strategy development.
How to carry out procurement spend analysis
Public bodies can make progress even without external help. The process typically follows five steps:
- Data gathering: extract 18–24 months of accounts payable records.
- Data cleaning: standardise supplier names, remove duplicates, and categorise spend.
- Analysis: compare supplier rates, track framework leakage, and examine variation order patterns.
- Quick wins: fix rate disparities, enforce frameworks, consolidate suppliers.
- Strategic actions: develop category strategies, renegotiate contracts, and embed continuous monitoring.
In practice, this can be resource-intensive for internal teams. Our clients often choose Thornton & Lowe’s outsourced procurement consultancy when they need expert delivery capacity as well as analysis.
Procurement trends shaping spend analysis
The environment is changing, and spend analysis must reflect this. Public sector organisations are increasingly required to show that procurement spend is not only cost-effective, but socially and environmentally responsible.
Procurement trend | Why it matters | How spend analysis responds |
|---|---|---|
Social value | Contracts must deliver community benefits such as apprenticeships, local jobs and supply chain resilience | Tracks delivery of commitments, reports outcomes to Boards |
Environmental impact | Procurement decisions must consider carbon, transport and material choices | Analyses supplier location, logistics, and lifecycle costs |
Technology | AI and modern systems are being adopted across public procurement | Automates anomaly detection, predicts trends, improves reporting |
Benchmarking | Regulators and Boards expect comparison to peers | Provides evidence of whether costs and performance are above or below market norms |
At Thornton & Lowe, we bring together procurement market research and spend analysis so contracting authorities can make decisions based on both internal evidence and external benchmarks.
Frequently asked questions
What exactly is procurement spend analysis?
It is the structured review of all spend data to identify cost inefficiencies, leakage, duplication and hidden drivers, then using those findings to make changes in procurement, contract management and supplier performance.
Is it only about cost savings?
No. It is also about compliance, social value, and providing assurance to regulators and Boards. Done properly, it strengthens governance as much as budgets.
How quickly will we see benefits?
Most organisations see immediate wins in the first three months from rate standardisation, supplier consolidation, and improved framework usage. Strategic benefits follow as contracts are renegotiated and category strategies implemented.
Do you provide procurement consultancy as well as analysis?
Yes. Our team provides full procurement consultancy, including sourcing, contract management and implementation. We also offer capacity support through our buyer services.
What if our data is poor?
You do not need perfect data to start. We help clean, categorise and benchmark what you have, then set up processes so ongoing monitoring is easier and more reliable.
Can this apply to charities or housing providers funded by public money?
Yes. Third sector bodies that spend public funds face the same compliance and value requirements as contracting authorities. The method is the same, scaled to your spend and risk.
