Data analysis & spend transparency

Data management and transparency have an increasing importance across industries. In Procurement, an accurate data set enables Procurement professionals to have a clear view on what they are buying, from whom, with which amount and frequency & at which price level across the whole company.

Therefore, a thorough historical Procurement data analysis, together with real-time monitoring and predictive analytics build a robust basis for cost reduction measures, supplier monitoring and negotiations, early-stage risk mitigation, Procurement performance management, compliance and many other optimization initiatives.

Key challenge for many Procurement organizations is how to analyze an ever-increasing amount of data permanently with a best-fit long-term solution.

Insufficient data and poor data quality are common in companies across a lot of industries.

Historically grown organizational structures and lack of a cohesive methodology are the main reasons for insufficient data visibility. Unclean portfolios with redundant items or maverick buying are additional factors that lead to lacking data transparency. Unorganized structure and data evolve and make it difficult to segment and measure spend with the time. As a matter of fact, the inability to gather and anticipate Procurement data is causing significant challenges for all businesses.

Thus, world-class Procurement is built upon data to drive visibility, optimize leverages, make solid buying decisions, and align with internal stakeholders on major Procurement strategies.

A practical example for a historically grown data ‘mess’ that leads to not existing spend transparency is a company with 20 plus units across one continent.

Although all units belong to the same company, every single one of them has its own Procurement team – resulting in a huge number of redundant SKUs in the company’s data system and an overall insufficient supplier management.

In the first place, a decentralized Procurement organization like this causes zero scale effects, resulting in significant margin losses for the company. Secondly, this structure prevents the Procurement department from an effective supplier management as the company is not perceived as a nationwide/continental customer. Working with the same supplier on a local or regional basis in several units does not support scale effects. Working with the same supplier on a nationwide or continental scale will massively boost scale effects.

Our experience shows, bundling Procurement power in one central entity drives transparency in data, spend and supplier portfolio. Furthermore, it allows the Procurement team to access vendors on a nationwide scale rather than operating locally with less competitive prices.

Another key for performance-driven Procurement is a robust spend baseline.

Based on tangible purchasing and supplier data, the Procurement team must remain in the driver’s seat when building the spend baseline. Too often we see insufficient data management like scattered data throughout several departments with no clear structure regarding data handling, handovers of supplier information, meeting and call minutes, contracts, rebate agreements and many more important files and data sets.

This fragmented data frame leads very often to a significant lack in spend transparency. The reason is pretty simple: If there is no clear visibility of all contracts in place, rebate agreements and purchasing data, it is impossible to build a robust, transparent spend baseline. The dependency on supplier data, without the power to audit accuracy, increases. With this, as an unpleasant side effect, a company’s reputation in the market suffers. Nobody would like to be perceived as the ‘messy’ customer, that needs to ask its’ suppliers for relevant data.

Therefore, one of our first exercises in every Procurement initiative our clients trust us with, is to roll out our structured data analysis process:

  • Comparison of Procurement and Finance data (e.g. SAP MM, SAP FI data, incl. POs, contracts etc.)
  • Consolidate, validate/check, cleanse
  • Categorize and analyze
  • Build the spend baseline per category
  • Visualize/report
  • Build a tool-based sustainable data strategy

As a result, our clients will achieve full spend transparency of what they are buying, from whom, and with what prices. Starting from this point, we will support our clients to further leverage optimization initiatives enabling procurement to become a value driver for the whole organization.

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Tangible results at each mission
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