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Unlocking spend analysis myth

Topics

Definition of spend analysis

Why its important

Benefits of analyzing spend

Why you should do it?

Ways of analyzing spend.

How to do it?

Deliverables

How to measure the outcome?

Solutions

Who can help me?

Why The Need to Manage Your Spend Data?

Can you answer these questions?

Which is the most critical categories for your business?

Which supplier supplied for maximum contract value?

What was your unplanned or maverick spend?

How many suppliers were active in past 6 months?

What other geographies are acquiring?

For how many categories you have a global contract and shortlisted suppliers?

Which categories represent the most spend reduction opportunities?

What is your direct/indirect classification?

What is the percentage of quality issues you had with individual suppliers?

To discover maverick spend, find

out the items which were

procured by specific units of your

organizations and the orders

were placed with unlisted

suppliers and without contracts.

Decision Making in spend analysis

Using Maverick spending as a KPI.

Key Spend analysis Opportunities

Three key reasons for planning and implementing best practices in spend management are:

Compliance and

Process improvement

Visiblity

Business Drivers for spend analysis

Strategic Sourcing Procurement

1. Identify non-preferred

spend

2. Identify disparate

terms and conditions

3. Identify potentially

over-represented

categories.

4. Identify unplanned

and over-budgeted

spends.

1. Identify spend

volume with

contracted suppliers.

2. Identify quality

issues with

contracted suppliers.

Supplier Management

1. Evaluate supplier

performance via

financial and

operational metrics

2. Collect and manage

key supplier

documents in order to

meet contractual and

social obligations

3. Evaluate supply base

for risk

(denied/debarred

parties)

Spend Analysis Steps

• Standardize, Normalize, and Enrich your spend information

• Identify Exceptions

Extract, Cleanup and Validate the

Data

• Get all the supplier spend linked to the corporate parent

• Categorize supplier spend

• Understand supply base risk, dependencies, and socio-economic breakdown

Rationalize your Suppliers

• Categorize spend data to a sourceable commodity structure

• Does your system capture good descriptions?

• Do you use them to allocate to the right category?

Code for Insight & Assess the

Details

• Uncover strategic sourcing opportunities for immediate savings

• Improve internal controls

• Comply with government controlsIdentify and Act

• Standardize on commodity framework across the company

• Capture intelligence closer to the transaction for higher compliance

• Supplier on-boarding & detail coding

Implement Process

Improvement

What spend analysis delivers?

Data Quality

• Standardized – consistent formatting

• Cleansed – identify duplicates, fix errors

• Consistent – data represented in the same manner

• Current – ongoing updates to manage business change

• Grouped – categorized and classified

• Granular – detailed data available

Knowledge Enrichment

• Completeness – fill in missing data for master information, hierarchies, demographics, relationships

• Expand – provide new insight

• Risk – identify possible disruption in supply or supplier support

Process Improvement

• Spend Visibility – access to enterprise view of corporate expenditures

• Supplier Evaluation and On-boarding – pre-qualification of suppliers

• Policy Compliance – exception handling, workflow and monitoring

Spend Analysis Benefits

Baseline for strategic sourcing initiatives

Enabler for process improvement

Measurement device for cost reduction programs

Comprehensive spend visibility across direct and

indirect commodities and services

Significant cost-savings opportunities through

supplier and commodity consolidation

Enhanced compliance through effective spend and

supplier monitoring

Thanks

Visit Procurepack.com for more

information on e-procurement/

e-sourcing.