spend analysis spend management

8/19/2019 Spend Analysis Spend Management

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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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!I/

E0portfrom A"1

pard and"#

systems

Sensechec%

e0ports

Stitche0portstogether

Manuallyclassify

suppliers

Enhancedata ontop 23

suppliers

Manipulate in E0cel1

Accessetc4


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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


• 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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• 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

spend analysis spend management

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