Supply Chain Intelligence

New Initiatives & Guidance in Procurement

June 2019 - Spend Analytics | May 2019 - Contract Management

Issues on

Spend Analytics


for Public Agencies and Corporations

June 2019 – Vol 1. No. 2

THE REAL INSIGHT

BUSINESS INTELLIGENCE DRIVEN SPEND ANALYTICS


Supply Chain Intelligence
Published by Integratise Inc., Whitehouse Station, NJ

email: editorial@supplyintel.com
www.supplyintel.com

Data Graphic
In this Issue:
  • Spend Data with Visual Analytics – the real insight
  • Extracting and enhancing intelligent Spend Data from ERP system and Contracts
  • Spend Data Benchmarking – key to spend process improvement
  • Diversity utilization reporting with spend data
  • Spend compliance monitoring
  • Cost Savings from negotiation power with consolidated supplier spend data
   

Spend Data with Visual Analytics – the real insight

Spend Analytics 

Spend Analytics when combined with proper visual data representation and interaction can provide real insight into possible areas of cost savings through consolidation. Spend analytics can be useful for cost savings, diversity spend management, and monitoring spend compliance. None of that can be effective unless the summary data is presented with visual graphs and charts. For example, below is a data summary visualization based on supplier risk perception.

supplier risk perception 



Although the detailed data can be presented through tables, aggregate summary is best represented with graphs and charts.

Visualization of spend data works best when presented in a simple manner. Complex visualization rarely communicates business insight. Here is an example of simple visualization for spend data based on spend categories.

spend data based on spend categories

 

Related links:
  1. Visualizing Spend Data: http://spendmatters.com/2016/11/10/spend-analysis-3-lessons-visualizing-spend-data-lesson-2/
  2. Simple Techniques for Making Every Data Visualization Useful: www.dataplusscience.com/files/visual-analysis-guidebook.pdf
Banner AD
AD

Extracting and enhancing intelligent Spend Data from ERP system and Contracts

Professionally managed spend data normally has five sets of data components: Supplier, payments,contracts, employees, and commodity codes. Intelligent and well designed spend analytics systems are able to extract these data components from various different systems in the organization. Supplier data is rarely usable in its raw state from procurement portals or vendor registration systems. It needs to be enriched with careful data enhancement techniques to add verified intelligence to the vendor data. The techniques used for these are data imputation, data mining, and cross linking with external databases. If the supplier data is not enhanced and verified, the spend analytics can be ineffective.

Extracting data from various systems and real time smart enhancements is the key to efficient spend analytics systems. They are best achieved by Cloud based SaaS applications. PCard, PO, and other payment related data comes from payment systems. Contract data comes from Contract Management repository. Contract data needs to be synced with the payment, supplier, and employee data. That will allow drill down queries and real time deep insights into spend items.

Spend Data Benchmarking – key to spend process improvement

Spend data benchmarks provide a direct comparison of spend over time and with respect to other agencies and corporations. There are two types of spend data benchmarks:

  • Over time
  • With other comparable organizations

Below are examples of visual analytics driven spend data benchmarks over time in the same organization and with other comparable organizations

Spend Data Over Time

Spend Data with other comparable organizations

 

Banner2
AD

Diversity utilization reporting with spend data

Diversity utilization reporting and analysis are important functions for any public agency and NGO. The reporting and analysis can be at an aggregate level or at individual project level. Subcontract management, analysis, and reporting become an integral part of the diversity utilization analysis and reporting. Contract management systems should allow amendments, subcontract management, and possess a contract repository for related documents.

Below are some examples of visualization reports on diversity utilization:

Diversity Utilization


Diversity utilization can also be monitored for individual contracts with a prime and several subs. Normally a utilization goal is set and then payments are tracked to monitor actual utilization over time.

Diversity Utilization Tracked by Project

Spend compliance monitoring

When spend data is properly extracted, enhanced, and managed, it can be used to monitor compliance on spend items. Even a continuous internal audit mechanism can be put in place. Noncompliant spend can come from large spend items without contracts or POs. It can also be caused by date discrepancies like contract date is after PO date, PO date after invoice date and so on. Some public agencies are required to monitor spend compliance. Corporate governance, ethics, and compliance guidelines also mandate the same. Spend analytics systems can help with that immensely.

Banner 3
AD

Cost Savings from negotiation power with consolidated supplier spend data

Supplier spend data when consolidated and sorted can bring real cost saving from negotiation power. Listing top suppliers based on the number of transactions or actual dollar spend provides an insight to possible major cost saving through negotiations backed by real spend data.

 

Supplier Spend Data

The above chart shows 11 top suppliers (supplier names not shown) by number of transactions in a specific time period. This can be extremely useful in locating repeat vendors to consolidate spend and save money.

Similarly, suppliers can be sorted based on dollar transaction values. Combining risk and location of suppliers can also provide interesting spend insight as manifested.

Supplier Spend based on Location

In our next issue:

THE BEST VALUE FROM
RFP Proposal Evaluation

Cost Models, Upset Levels, BAFO, Evaluation Iterations, Combining Risk Factors, Individual and Consensus Rating, in-depth Reporting with World-class Visual Analytics and more.

Supply Chain Intelligence
Published by Integratise Inc., Whitehouse Station, NJ

email: editorial@supplyintel.com
www.supplyintel.com