Spend Analysis

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Procurement and Supply management team use the system every time when they have a supplier meeting. Supply Chain guy does not need to ask the supplier anymore and press a button and get all the information he or she needs now, it has helped them to do better negotiations and get better deals.

The company has seen suppliers offer 5% to 25% reductions to become more strategic partners with Mobilicity and the company is “on track” to reach its goals, achieving a return on its investment within 24 months.

The Spending Analysis System (SAS) also provides qualitative benefits include general information visibility into its supply base to determine risk assessment and partnership opportunities. An unexpected benefit has been the fact that financial controllers in the company can use the system for weekly cash flow and payment term compliance checks.

- Show the steps you would use to conduct a goods spend analysis for your organization.

Goods spend Analysis consists of both direct and indirect spend and my organization deals with both. I will be discussing the various steps I will use in conducting goods spend analysis in my organization.

The first step is to identify the system containing spend data in my organization; there are many systems and sub-systems such as accounts payable, invoicing systems, purchase order management, expense report data, agreements and contracts, purchasing card data etc.

The second step is collecting the spend data from identified sources, because of the complexity of the organizations accounting systems, there are multiple processes and financial databases containing data associated with purchasing.

In the third step, I will do validate and ensure spending data files are accurate and complete.

In the fourth step, I will do to cleanse the data to eliminate error and discrepancies and then classify the data with standard schema.

In the step of five, the cleansing spending data will further be enhanced with complimentary, business information including existing contract terms, alternative items reference, supplier’s financial status and performance information, etc.

Finally, the spend data will make available in specific report format so that stakeholders can analyze it to make business decisions.

- Describe specific key triggers and why chose them

The following key business drivers are making spend data management a corporate priority:

• Continued pressures to reduce costs in the face of increasing energy, transportation,

and supply prices and new supply constraints.

• Pressures to ensure compliance with negotiated contracts.

• New regulations – require companies to establish and document business controls,

procedures for tracking and reporting material business information.

• Goals to improve product development and inventory management operations

through elimination of waste and redundant or unnecessary parts.

In Mobilicity, the specific key trigger for strategic outsourcing is high percentage of sole source for the commodities and services. The reason is the more we buy from a single supplier, the better discount we will qualify for. If we are buying from too many suppliers, we are not leveraging the volume and likely not maximizing the discounts. Seeing a large number of suppliers in a category can tip-off that supplier consolidation can deliver savings to the organization through price reduction and also through the more advanced benefits of an optimized supply base.

- Describe how spend analysis would fit within your current procurement strategy.

Spend Analysis is actually the first step in Spend Management workflow. When organizations begin implementing Spend Management they typically start with some form of strategic sourcing, choosing an obvious commodity based on highly visible factors such as quantity purchased, number of suppliers, or widely varying price points. Eventually organizations run through low hanging fruit and realize that in order to manage their costs they must understand where they are spending their resources: what goods and services they are purchasing, how often, at what cost, and from which suppliers. The process of collecting and classifying this information is Spend Analysis.

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Mobilicity’s current business analytics software (SAS) is delivering strategic value to all levels in the organization. Supplier relationship management enables supply chain professionals to make better decisions throughout the strategic sourcing process. Using this comprehensive solution, Mobilicity can now reduce its enterprise spends and consolidate its supply base, reduce supplier risk and align procurement strategy with corporate goal.