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Crossing the Spend Chasm
Addressing the Spend Visibility Gap
Crossing the Spend ChasmAddressing the Spend Visibility Gap
Steven King
Source to Contract Improvement Manager
Corporate Procurement, Sony Europe Ltd
What is Spend Analysis?• The foundation for successful sourcing activity
• Ongoing process applied to Spend Data to:• Aggregate• Classify• Leverage
• Outcome – gain visibility to enable: • Cost Reduction• Contract Compliance• Supplier rationalization
• More than just reporting:• Good Spend Analysis should drive reports & enable you to dig deeper in a more
insightful & flexible way• Drive new questions & answers• Ongoing intelligence to apply, evolve and transform sourcing activity
Background• Based in Surrey, UK is a subsidiary of Sony Corporation
headquartered in Tokyo• Sony Europe’s role is to manage and develop Sony’s
electronics business across Europe:• Manufacturing, R&D, design, sales and marketing of consumer and
business products across Europe
New Team. New Analytics• Newly formed team:• Consolidation of legal entities into one European presence • Newly established Indirect Procurement team across Europe • Need for spend visibility
Key Issues• Visibility
• No prior understanding of spend across Europe• P2P roll-out required thorough understanding of spend• Historic spend is not stored against newly introduced purchasing taxonomy
• Categorization• Newly established purchasing taxonomy
• Spend Savings• Immediate need to gain traction within the business and identify savings opportunities
• Cross-department collaboration• Ensure latest spend information is available to whole purchasing team
• Data Quality and Accuracy• Mis-coding of spend leads to inaccurate reporting
• Compliance / auditing• Need for complete & measurable audit trail• Contract compliance
Key Functional Requirements• Collaboration• Easy-to-distribute reports• Ability for simultaneous access to dataset & reports
• Usability• Clear user Interface• System is easy to use for both technical and non-technical users
• Flexible & trackable categorization• Ability to be dynamic & Controlled • System allows re-categorization requests to be issued and
approved/ rejected by controller• Include complete audit trail
• Flexibility in data refresh• Ability to choose refresh frequency to suit preferences
Project Timeline
- Map historic spend to new purchasing taxonomy- Validate categorization with buyers
February
Agree Project Implementation Plan with Rosslyn
- Create rules in system- Load data- UAT
- Training- GO LIVE
- Launch to procurement team- Training- BAU
March
April
May
June
The importance of users• User Adoption vs Compliance
RAPid Strengths• Simple Reporting (Data Mining)• Dashboard Reports (Business Intelligence)• Category Audit Trail• Increased compliance
• Usability• Saving/Bookmarking Reports• Area ownership for each spend manager• Accurately and confidently assess spend under management
• Enables fast response to ad-hoc requests
Simple Reporting (Data Mining)
N.B. Test data used in examples
Simple Reporting (Data Mining)
N.B. Test data used in examples
N.B. Test data used in examples
Simple Reporting (Data Mining)
N.B. Test data used in examples
Simple Reporting (Data Mining)
N.B. Test data used in examples
Simple Reporting (Data Mining)
N.B. Test data used in examples
Simple Reporting (Data Mining)
N.B. Test data used in examples
Simple Reporting (Data Mining)
Visibility / Usability
N.B. Test data used in examples
Categorization
N.B. Test data used in examples
Category Audit Trail• Spend with PO, will pull through PO category• Rules created to map non-PO spend• Rules can also exist to correct mis-coded POs• Rules will be applied to data on each load• Procurement will always have the correct view of
spend per commodity• All rules are managed through the Category Audit Trail•Workflow allows approval/ rejection of new rules
Category Audit Trail
N.B. Test data used in examples
Category Audit Trail
N.B. Test data used in examples
Category Audit Trail
N.B. Test data used in examples
Category Audit Trail
N.B. Test data used in examples
Category Audit Trail
N.B. Test data used in examples
Category Audit Trail
N.B. Test data used in examples
Dashboard Report - KPIs
N.B. Test data used in examples
Dashboard Report
N.B. Test data used in examples
Key Results
• Easy identification of demand management activities – one project alone delivered €2 million• Reduce the tail (27% decrease in vendor base)• Supported savings delivery of ~€20 million in 2013• Enabled tracking and compliance of contracted spend
(increased from 68% to 91% since introduction of spend analysis)• Enabled Procurement insight to be introduced during
Budget setting meetings & procurement to become seen as more strategic within the organization
Procurement Empowerment• Sourcing Managers have the data they need when they
want• They have the ability to correct category mapping• Procurement can support the whole business with
spend information• Common reports;• Number of vendors per category/ region• Spend Trend by supplier per category/ region• Monthly invoice line report for key vendors• Inactive vendors• New vendors
Q&A
Thank YouFor more information, please contact: