Post on 08-Jul-2018
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An Introduction
to Spend Analysisand Spend Management
Optimizing Your Spend
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Spend Analysis and SpendManagement
•What are they?
• Who uses them? Who are theyrelevant to?
• Why bother?
• How are they done?
• What does the Spend Analysis processlook like?
• What spend management projectscould undertake a!ter a spendanalysis to identi!y savings?
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In the name of transparency…
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Let’s agree on a few thingsrst…
You already have the rawdata in your A"# $%S# &'"
systems
What do you call spendoutside o! contract?
(o you trust your
current data to answerprocurement
)uestions?
Ask )uestions
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Spend Analysis*What you do to the
data+
Spend %anagement*
What you do with thedata+
What are they?
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Spend Analysis
Enhance
lassify
l e a n
s e
Spend!ata
pard
!ata
A"!ata
"#!ata
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Spend Management
Spend!ata
!eli$erSa$ings
Impro$e"rocesse
s
ManageMa$eric%
Spend
Manage
Supplier&elationship
Manage&is%
&eco$er
#$er'payments
"rocureo'
operati$ely
&educe!isparity
SourceMore
Locally
EnsureLegal
ompliance
(enchmar%
&elati$e"osition
)uantifySa$ings
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Spend Analysis
,-.-
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Spend Management
SpendData
(uyers"rocurem
entManagers
ontractManagers
*inance!epartme
nt
Accounts"aya+le
En$ironmental
#,cers
E-uality#,cers
Economic!e$elopm
ent
Legal!epartme
nt
Audit!epartme
nt
(udget.olders
Spend!ata
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Why +other?
0hallenges
0ut spending butnot services
0ollaborate within andacross sectors
1ocal2 Small2(iverse2
SustainableSuppliers
3e transparent
Obstaclesncomplete andpoor )uality data
%ultiple poorlyintegratedsystems
4o standard $%Simplementation
5ime and support
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Why +other?
SolutionsSo!twar
e
A" systemtools
&6"rocuremen
t
Analytics2 3tools
(ata
Spend
Analysis"rovider
Hire a (ata
Analyst 2&7cel orAccess&7pert
8uidance
0ustomizedconsultancy
project
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.ow is spend analysis done?
9. Suppliername
:. Supplieraddress
;. nvoicenumber
-. nvoice date
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.ow is spend analysis done?
!I/
E0portfrom A"1
pard and"#
systems
Sensechec%
e0ports
Stitche0portstogether
Manuallyclassify
suppliers
Enhancedata ontop 23
suppliers
Manipulate in E0cel1
Accessetc4
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.ow is spend analysis done?
E0ternal
E0port
from A"5 pard5 "#
Systems
Standardi
6ee0ported
data
hec%
tness7accuracyof datae0port
8alidate$alue and
$olumewith
organi6ation
!e'duplicatesupplierrecords
lassifyto
commonta0onomy
Manually$alidate
classication
Enhancesupplierinformati
on
Lin% to amasterrecord
"ro$ide
MI toolsand
e0portfunction
Spend!ata
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ommon "itfalls
• Assuming classi=cation is easy• Assuming data can be stitched
together
• Assuming so!tware can do it !or you
• $inance or 5 teams too busy toe7tract
•
(ata e7tracted incorrectly and notchecked• 'elying on user entered
classi=cations• &7isting tools are designed !or
analysts
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9sing the results of spendanalysis
:In$oiceonsolidation
Long ;ailonsolidation
2
!uplicate"ayments
< Impro$ed;erms
=
ategoryE0tension
3 ategory&ationalisation
>
ompliance1ontracted
Suppliers
ooperation1ommon
Suppliers
@
"rice8ariance
ategory&eengineering
:B
;he :B "oint "lan
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E0ample Sa$ings #pportunity
! couldanswerthese
)uestions# could
=ndsavings+
! want toanswer those)uestions# this
is the data
need+
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In$oice &eduction
• Which suppliers should seek weekly2monthlyinvoices !rom?
• Which category o!suppliers are giving me
an invoice volumeproblem?
• Which suppliers wouldbe best to move order
and payment to p0ard?
• How much could saveby moving to p0ard?
C
SupplierDames
Aggregate num+er
ofin$oices
per
supplier
A$eragein$oice
$alue persupplier
In$oices+y $alue
rangeper
supplier
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=
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Long ;ail onsolidation
>
SupplierDame
Aggregate spend
per
supplier
Aggregatenum+er
ofin$oices
persupplier
ategoryof
supplier
!epartment
spendper
supplier
•
Which suppliers do spend less than >9per year with?
• Which suppliers do
only have onetransaction with peryear which could lose?
• Which departments areusing a lot o! @one time
suppliers?
• Which categories do wehave a lot o! smallsuppliers in?
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:@2 suppliers C:BBB
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;erms in the ;op ;ier
Identifying Sa$ingsF
• Which suppliers do spend the most with andhow many departmentsdo they supply?
• How many othersuppliers are in thesame category as mytop tier suppliers?
•
Are all o! mydepartments getting thesame @best rate?
• How much do my toptier suppliers rely on mybusiness?
CSupplierDame
Aggregate spend
persupplier
Gde'duplicate
dH
ategoryof
supplier
!epartment
spendper
supplier
#thersuppliers
in thesame
category "ercentage of
supplier’s
turno$errepresen
ted
ontracts alreadyin place
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@= suppliers C23B%
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ontract ompliance
C
SupplierDame
Aggregate spend
persupplier
ategory of
supplier
#thersuppliers in thesame
category
!ept4spend
persupplier urrent
contracts
ategories withno
contracts
Monthlyspend
information
Identifying Sa$ings
• Which departmentsarenBt using thepre!erred2 contractedsupplier in a givencategory?
• Which categories o!spend donBt have anycontracts in them?
• s my data source up todate enough to dealwith oC6contract spend)uickly?
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J a$erage with contractedsuppliers
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ategory &ationali6ation 7E0tension
C
SupplierDame
Aggregate spend
persupplier
ategory of
supplier
#thersuppliers in thesame
category !epartment
spendper
supplier
urrentcontracte0pirydate
Identifying Sa$ingsF
• Which suppliers enjoy arelative monopoly o!supply to myorganization?
• Which categories do have too manysuppliers in whereaggregation could drivecosts and prices down?
• What contracts arecoming up !or renewalwhere couldrationalize or e7tendmy supplier base?
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== Sporting KoodsSuppliers
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Identifying Sa$ingsF
• Which suppliers does mygroup already share andhow much is spent withthose suppliers?
• Which categories doesthe group have thegreatest spend2 greatestnumber o! suppliers?
•
When are the currentcontracts !or members o!the group e7piring so thatwe can collaborate?
C
Standardi6ed
supplier
name7num+er
Standardi6ed pu+lic
sector+ody
name7num+er
Aggregatespend persupplierH
ategoryof supplier
tocommon
classication
urrentcontracte0pirydate
entrallyhosted
andmaintaine
ddata+ase
ommontools that
all
contri+utors can use
+where are the opportunities tocollaborate with other public sector
bodies?
Aggregation with otherorgani6ations
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De0t StepsF• Spend Analysis really is the =rst step
• 8et the data in shape =rst
• nternal or &7ternal• Start thinking about problem areas• 1et the data guide your projects
• Analytical2business intelligence tools
are step two.
• A Spend %anagement plan is stepthree.
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?
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Spend Analysis and SpendManagement
5he images# charts# and graphs in this presentation
were e7ported directly !rom the 48" Observatory. $ormore in!ormation about how the 48" Observatorycould help your agency to identi!y real savings#collaborate more eCectively# increase contract
compliance# and record your success# please contact
Spikes 0avell# 48"Bs strategic partner*
Donathan White*E