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Crossing the Spend Chasm

Addressing the Spend Visibility Gap

Crossing the Spend ChasmAddressing the Spend Visibility Gap

Steven King

Source to Contract Improvement Manager

Corporate Procurement, Sony Europe Ltd

What is Spend Analysis?• The foundation for successful sourcing activity

• Ongoing process applied to Spend Data to:• Aggregate• Classify• Leverage

• Outcome – gain visibility to enable: • Cost Reduction• Contract Compliance• Supplier rationalization

• More than just reporting:• Good Spend Analysis should drive reports & enable you to dig deeper in a more

insightful & flexible way• Drive new questions & answers• Ongoing intelligence to apply, evolve and transform sourcing activity

Background• Based in Surrey, UK is a subsidiary of Sony Corporation

headquartered in Tokyo• Sony Europe’s role is to manage and develop Sony’s

electronics business across Europe:• Manufacturing, R&D, design, sales and marketing of consumer and

business products across Europe

New Team. New Analytics• Newly formed team:• Consolidation of legal entities into one European presence • Newly established Indirect Procurement team across Europe • Need for spend visibility

Key Issues• Visibility

• No prior understanding of spend across Europe• P2P roll-out required thorough understanding of spend• Historic spend is not stored against newly introduced purchasing taxonomy

• Categorization• Newly established purchasing taxonomy

• Spend Savings• Immediate need to gain traction within the business and identify savings opportunities

• Cross-department collaboration• Ensure latest spend information is available to whole purchasing team

• Data Quality and Accuracy• Mis-coding of spend leads to inaccurate reporting

• Compliance / auditing• Need for complete & measurable audit trail• Contract compliance

Key Functional Requirements• Collaboration• Easy-to-distribute reports• Ability for simultaneous access to dataset & reports

• Usability• Clear user Interface• System is easy to use for both technical and non-technical users

• Flexible & trackable categorization• Ability to be dynamic & Controlled • System allows re-categorization requests to be issued and

approved/ rejected by controller• Include complete audit trail

• Flexibility in data refresh• Ability to choose refresh frequency to suit preferences

Project Timeline

- Map historic spend to new purchasing taxonomy- Validate categorization with buyers

February

Agree Project Implementation Plan with Rosslyn

- Create rules in system- Load data- UAT

- Training- GO LIVE

- Launch to procurement team- Training- BAU

March

April

May

June

The importance of users• User Adoption vs Compliance

RAPid Strengths• Simple Reporting (Data Mining)• Dashboard Reports (Business Intelligence)• Category Audit Trail• Increased compliance

• Usability• Saving/Bookmarking Reports• Area ownership for each spend manager• Accurately and confidently assess spend under management

• Enables fast response to ad-hoc requests

Simple Reporting (Data Mining)

N.B. Test data used in examples

Simple Reporting (Data Mining)

N.B. Test data used in examples

N.B. Test data used in examples

Simple Reporting (Data Mining)

N.B. Test data used in examples

Simple Reporting (Data Mining)

N.B. Test data used in examples

Simple Reporting (Data Mining)

N.B. Test data used in examples

Simple Reporting (Data Mining)

N.B. Test data used in examples

Simple Reporting (Data Mining)

Visibility / Usability

N.B. Test data used in examples

Categorization

N.B. Test data used in examples

Category Audit Trail• Spend with PO, will pull through PO category• Rules created to map non-PO spend• Rules can also exist to correct mis-coded POs• Rules will be applied to data on each load• Procurement will always have the correct view of

spend per commodity• All rules are managed through the Category Audit Trail•Workflow allows approval/ rejection of new rules

Category Audit Trail

N.B. Test data used in examples

Category Audit Trail

N.B. Test data used in examples

Category Audit Trail

N.B. Test data used in examples

Category Audit Trail

N.B. Test data used in examples

Category Audit Trail

N.B. Test data used in examples

Category Audit Trail

N.B. Test data used in examples

Dashboard Report - KPIs

N.B. Test data used in examples

Dashboard Report

N.B. Test data used in examples

Key Results

• Easy identification of demand management activities – one project alone delivered €2 million• Reduce the tail (27% decrease in vendor base)• Supported savings delivery of ~€20 million in 2013• Enabled tracking and compliance of contracted spend

(increased from 68% to 91% since introduction of spend analysis)• Enabled Procurement insight to be introduced during

Budget setting meetings & procurement to become seen as more strategic within the organization

Procurement Empowerment• Sourcing Managers have the data they need when they

want• They have the ability to correct category mapping• Procurement can support the whole business with

spend information• Common reports;• Number of vendors per category/ region• Spend Trend by supplier per category/ region• Monthly invoice line report for key vendors• Inactive vendors• New vendors

Q&A

Thank YouFor more information, please contact:

marketing@rosslynanalytics.com