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Austin-Tetra, Inc.
Monday, May 9th
10:40 11:40
Topics
Spend Management Defined
Why does enterprise spend analysis matter?
Benefits
What are the reasons for doing it?
Approach
How do I do it?
Results
What are the deliverables/output to expect?
Solutions
Who can help me?
The Opportunity
Three key reasons for planning and implementing best
practices in spend management are:
Baseline spend to establish visibility to current enterprise
purchasing and identify cost savings and sourcing
opportunities
Support compliance initiatives to meet internal savings
targets, Federal government regulations, SOX 404, and socioeconomic initiatives
Implement process improvement to meet the dual goals of
sourcing savings and best practices in compliance
Procurement
Identify spend with
contracted suppliers at
various locations to
establish transaction
counts and consider
restructuring payment
plans
Combine A/P and
P-Card transactions to
identify opportunities to
migrate PO spend to
P-Card where
appropriate
Supplier
Management
Evaluate supplier
performance via financial
and operational metrics
Collect and manage key
supplier documents in
order to meet contractual
and social obligations
Evaluate supply base
for risk (denied/debarred
parties)
Data extraction
Baseline spend visibility
Sourcing group definition
Sourcing Steps
2. Sourcing Strategy
3. Supplier Portfolio
4. Selection of
Implementation Path
5. Competitive Supplier
Selection
6. Operational Integration
with Suppliers
7. Continuous Benchmarking
of Supply Market
2.
3.
5.
4.
Knowledge Enrichment
Completeness fill in missing data for master information, hierarchies,
demographics, relationships
Expand provide new insight
Risk identify possible disruption in supply or supplier support
Process Improvement
Spend Visibility access to enterprise view of corporate expenditures
Supplier Evaluation and On-boarding pre-qualification of suppliers
Policy Compliance exception handling, workflow and monitoring
Data
Preparation
Data
Management
Spend
Analysis
Categories
pl i
er
Strategic
Procurement
Database
Su
p
A/P
User
Manual
Data Entry
Analysis Tools
Analyzers
Drill Down 1
Drill Down ...
Queries
Reports
Spreadsheets
G/L
Extract
Master
Files
Data
Cleanse
Cleansed
and
Staged
Data
POs
Individual
RDBMS**
Intellectual
Capital
Desktop Tool
Others
If repeatable data capture processes and data cleansing capabilities are created,
the spend analysis solution can be maintained over time
P-Card Spend
% of Total Spend
~1-20% of Total
Data
Characteristics
Non-PO A/P
Spend
~30-40% of
Total
PO A/P
Spend
~50-70% of
Total
By Transaction
By Invoice
Unit Price
High Volume, Low $
Supplier Normalization
Link the same supplier, and customer, businesses to all representations of
that business.
Benefits:
AHS Corp
Main Street Ste 512
Memphis, TN
supplier ID 76620GFT
Spend $100,000
Source Eastern Legacy
American Home
Shield Corporation
123 Main Street
Suite 512
Memphis, TN
A-T #: 14000647
Sales: $1.27 B
Primary SIC: 6351
Surety Insurance
Supplier Name
Supplier Address
Supplier City
Supplie
r State
Supplier
ZIP
Spend
(2004)
602127
STERLING
MANUFACTURING
COMPANY
SOUTH
LANCASTER
MA
01561
$172,312.96
100768
STERLING
MANUFACTURING
COMPANY
ROUTE 62
SOUTH
LANCASTER
MA
01561
$33,110.48
100249
STERLING
MANUFACTURING
COMPANY
SOUTH
LANCASTER
MA
01561
$132,023.50
Purchasing
Org
P550
P560
P300
P450
Vendor
Number
Vendor Name
Account Group
Spend (2004)
100249
STERLING MANUFACTURING
COMPANY
ZINV
$2,724.25
100249
STERLING MANUFACTURING
COMPANY
ZINV
$107,568.86
100768
STERLING MANUFACTURING
COMPANY
ZINV
$24,082.98
602127
STERLING MANUFACTURING
COMPANY
ZRMT
$114,023.95
Supplier Name
Supplier Address
Supplier City
Supplie
r State
Supplier
ZIP
Spend
(2004)
602127
STERLING
MANUFACTURING
COMPANY
SOUTH
LANCASTER
MA
01561
$172,312.96
100768
STERLING
MANUFACTURING
COMPANY
ROUTE 62
SOUTH
LANCASTER
MA
01561
$33,110.48
100249
STERLING
MANUFACTURING
COMPANY
SOUTH
LANCASTER
MA
01561
$132,023.50
Corporate Linkage
Establishes supplier and customer parent and child ownership linkages.
Benefits:
Compare key terms extended by different
suppliers owned by the same company
Aggregates spend by supplier and parent
company to enhance sourcing leverage
and negotiating power
Consider balance-of-trade in customer
pricing and procurement sourcing
decisions
Enables dependency analysis
TruGreen-Chemlawn
Memphis, TN
A-T #: 03567354
Sales: $880M
Primary SIC: 0782 Lawn
and Garden Services
TruGreen-Chemlawn
132 North Street
Dallas, TX
Rescue Rooter
Memphis, TN
A-T #: 12691513
Sales: $550M
Primary SIC: 1711 Plumbing
Heating and Air Conditioning
TruGreen-Chemlawn
5551 Lamar Street
Chicago, IL
Supplier Name
# of Records
Spend (2004)
13974153
52
$1,349,801.23
16115316
27
$3,113,594.17
27
$1,460,603.69
21173372
24
$386,107.15
5597502
20
$241,868.71
18340971
19
$979,731.84
18343355
WOLTERS KLUWER NV
18
$1,080,728.23
3567301
FEDEX CORPORATION
17
$40,401,234.08
12527573
17
$145,012.56
14166301
16
$687,262.17
10669694
15
$443,018.44
30882246
DEUTSCHE POST AG
13
$3,437,699.88
18310528
BUHRMANN NV
13
$1,712,750.39
18344116
12
$1,064,144.11
492553
Supplier Name
Spend (2004)
604246
$465,267.25
600085
$208,891.97
600003
$78,629.45
600975
MALLINCKRODT INCORPORATED
$65,409.40
104127
$47,975.76
600876
SIMPLEX GRINNEL
$32,690.20
100043
$29,547.12
607430
SIMPLEXGRINNELL LP
$24,831.38
603485
MALLINCKRODT INCORPORATED
$13,402.41
101779
MALLINCKRODT MEDICAL
$6,057.82
302799
SIMPLEX
$5,255.76
317413
SIMPLEX GRINNELL LP
$1,330.00
608168
$443.33
304106
$0.00
713316
$0.00
737481
$0.00
102987
MALLINCKRODT BAKER
$0.00
Commodity Categorization
Commodity
Dimension
Organizes
expenditures
into
sourceable
commodity
buckets
Ground
Fleet Fleet
Goods &
Services
Spare parts
Organization
Geography
Supplier
Product Category
Location/Org. Dimension
Organizes expenditures along
geographic or business lines
N America US Texas
Total Co. Division 2
Time
Year 2003
Quarter 2nd
Month April
Analysis Dimensions
Spend cube can be analyzed across its dimensions which provides a comprehensive
view of purchasing
Types of Analysis
Level
Purpose
Examples
Overall
Category
Supplier
Item
Transformation
Presentation Alternatives
Output Files
CLIENT NAME
3M COMPANY J CH0336
CONAGRA BEEF
CONAGRA DAIRY
COUNTRY SKILLET
LAMB WESTON
FERNANDO'S FOODS CORP.
Data
Data Mapping/
Sources Categorization
Operating Co. 1
(A/P data mart)
Output
The Spend Cube
Operating Co. 2
(A/P
systems)
Operating Co. 3
(A/P
systems)
Suppliers
at
C
ry
go
AT ATNUM
AT NAME
AT SUBNUM
AT SUBNAME
AT ULTNAME
3M COMPANY
CONAGRA BEEF
CON AGRA DAIRY FOODS CO
COUNTRY SELECT COMPANY
LAMB-WESTON INC
CONAGRA MEXICAN FOODS INC
0
0
0
0
8520330
8071130
0
8071131
8071131
8071131
LAMB-WESTON INCORPORATED
8071131
CONAGRA FOODS FROZEN FOODS GROUP
8071131
3321387
4389247
7320009
0
10878311
10878311
10531344
2781568
2054204
1825068
1825068
11365197
13890077
13890077
13890077
14166597
14166597
14166597
14166597
2889871
0
0
0
0
17142989
KELLOGG SNACKS
16125443
16125443
16125443
16125443
16125443
KELLOGG COMPANY
KELLOGG COMPANY
KELLOGG COMPANY
KELLOGG COMPANY
KELLOGG COMPANY
SIMPLEX GRINNELL
8537335
SIMPLEX GRINNELL
SIMPLEXGRINNELL LP
18340971
38721
Standard Reports/Views
Analytics Platform
Organization
AT ULTNUM
7052825
16748788
16571351
17130902
2433489
5603941
Spend Categorization
Segment high priority spend categories, identify savings
opportunities, and evaluate business risk.
Total Overall Spend
Total Spend by
Each Supplier
Total Spend by
Each Category
Total Spend by
Each BU
Total Spend by
Each Entity
Spend Ranked by
Supplier Dependency
Supplier Spend
by Category
Category Spend
by Supplier
BU Spend by
Supplier
Region/Country
Spend by Entity
Supplier Spend
by BU
Category Spend
by BU
BU Spend by
Commodity
BU Spend by
Entity
Supplier Spend by
Diversity Groupings
Supplier Spend
by Entity
Category Spend
by Entity
BU Spend by
Entity
Spend by
Supplier Parent
across Entities
SRM/
Spend Management:
Ariba, Emptoris,
Frictionless, i2,
Ketera, VerticalNet
Applications
Content / Data
Services
Professional
Services
Spend
Analysis
Boutiques:
Analytics,
Ariba
(Softface),
Zycus
Supplier Data
Management:
Austin-Tetra,
D&B
A/P Audit:
PRG-Schultz,
Apex Analytix
Deep Niche
SCM/PLM:
i2, UGS
Business
Intelligence:
SAS, Cognos,
Business Objects
Sourcing Services /
Technology Hybrids:
Ariba (FreeMarkets),
Silver Oak, UGS,
VerticalNet (Tigris)
ERP:
SAP,
Oracle,
PeopleSoft
Management
Consultants:
ATKearney,
Accenture,
CGE&Y, Deloitte,
IBM GS
Broad Suite
comprehensive
data
solutions
Austin-Tetra Clients
(Representative Listing)
Contact Information
Rip Greenfield
Phone: 512.695.7999
Email : rip.greenfield@austintetra.com
www.austintetra.com