Do you have access to spend data to find opportunities to cut costs? If not, why not?
As a Procurement Director, I have had the privilege to understand the workings of a number of public and private sector organisations across multiple industries, and what frequently strikes me is the lack of visibility of spend and supplier data. Often key spend and supplier data is buried within financial or procurement systems and can be hard to access. We have found, repeatedly, that high performing organisations with a cost effective supply base, have access to good quality spend and supply data and use such information regularly to inform business decisions.
The Supplier Management article “Any Google employee is a Buyer” detailed how one of the world’s largest organisations is embracing machine learning and taxonomies to classify huge volumes of data to support enhanced analysis and predicative modelling to support informed purchasing decisions.
Sadly, we do not all have the resources of an organisation like Google, so, whether you use Microsoft Excel or a business intelligence tool to analyse, share and act on your data, the benefits of procurement analytics can be significant and can include:
- Allowing the business to identify historical spend trends, predicting future spend patterns and alignments to budgets
- Helping the business to identify operational efficiencies and cost savings
- Supporting information -sharing and collaborative projects across the business
- Supporting business development and sales opportunities
- Enabling businesses to identify and track supply chain utilisation and process improvements
- Underpinning benefits realisation by tracking actual vs forecast cost savings
- Providing key supplier information; spend data, payment and invoicing details, financial stability, vetting checks, ethical checks etc.
Understanding spend and supplier data holistically is extremely important, particularly given that most spend and supplier data is retrospective. Key therefore is to determine the level of spend which is addressable. Basic steps needed to start using spend and supplier analytics/data include:
- Extract the data, de-duplicate common entries, merge data, (sometimes from different sources), categorise data into a chart of accounts with common spend category descriptions, cleanse the data, analyse and then interpret the data to create actionable next steps.
- Validate spend regularly with key stakeholders to understand the historical spend versus future forecasts and budgets
- Consider trends over a minimum of 24 months rather than just last 12 months
- Validate findings by working with your key operational stakeholders who truly understand the spend category
- Create an auditable benefit from the data analytics process; this creates enthusiasm and buy-in to doing more data analytics work
At Marr Procurement we employ a team of highly skilled Analysts, which include Mathematicians and Chartered Accountants, to work closely with you to quickly and accurately create an Opportunity Assessment Review (OAR), informed by your spend data. The OAR is a phased sourcing plan which prioritises areas of spend to maximise savings quickly. Our Analytics team also deliver savings tracking and reporting, benchmarking, tender analytics and the publication of regular performance dashboards so that you can easily establish forecast savings v’s actual savings, all of which can then be easily aligned to your budget planning cycle.
Our analytics services include:
- In-depth total spend data analysis – cleansing categorisation and visualisation
- Cost reduction opportunity assessments and reporting packs (OAR)
- Maturity assessments – benchmarking your existing Procurement function by cost and capability
- Market benchmarking activities – including Make vs Buy assessments
- Supply chain analytics – optimising inventory management
- Tracking of actual vs forecast savings
- Supplier invoicing audits – identifying and delivering bottom-line benefits
If you’d like to talk about analytical or procurement support for your business, please get in touch with me, email@example.com and I will be delighted to help.
James Ball – Procurement Director