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A Tale Of Two Purchasing Managers

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It shows the best of practices, it shows the worst of practices. …

It shows the best of practices, it shows the worst of practices.

The epic tale of the Spend Analysis journey across two enterprises, illustrated.

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  • 1. Sources: Aberdeen Group; Best Practices in Spend Analysis: Cure for a Corporate Epidemic (2004); SpendAnalysis: Working too Hard for the Money (2007); Spend Analysis: Pulling the Cover Back on Savings (2008); SpendAnalysis: Transforming Data Into Value (2009); Spend Analysis: The Nexus of Spend Management (2011)Coming soon: “Great Sourcing Expectations”Find out: ariba.com/go/analyze-your-spendWHAT WOULD YOU DO WITHSPEND ANALYSIS?Strengthen their contractnegotiation position46%Prioritize topspend categories63%Identify andforecast savings67%That’s why 81% say they would use spend analysis to boostprocessing efficiency and cut costs. Specifically, they would:lack adequatespend analysis skills27%have insufficient systems inplace for automated analysis45%Amount organizations collectively lose every year because...$260 BILLIONEPILOGUE...who all now understand how automated analysis revealsthe spending costs, risks, and opportunities within their areas.Finance - Manufacturing - Accounts Payable - ITProcurement - Product Support - Legal - Audit and Compliance...making him a hero to his colleagues in...from increased spendunder management$8.5MFrom strategicsourcing initiatives$3MFrom contractualcompliance$7.5MEvery $500 million of his spendthat’s captured in analysis translatesto incremental savings of...Greater risk of supplychain disruptionFewer volume discountsLeaked savings from noncomplianceand maverick spending.Slow, inefficient sourcing processesLimited visibility into spendingand suppliersAnd is doomed to...Sourcingsavings17%Cost-avoidancesavings9%...and as a percentage oftotal spend, increases of...Contractcompliance76%Spend capturedduring analysis96%While this purchasingmanager enjoys...Sourcingsavings5%Cost-avoidancesavings5%...and as a percentage oftotal spend, increases of...Contractcompliance35%Spend capturedduring analysis55%This purchasingmanager achieves only...It automates the classification,enrichment, and analysis ofcompany-wide purchasing data.This helps him answer his questions,review supplier information, andbenchmark his spend performanceagainst market and peer data.He finds out that data formats, details,and quality vary widely, and has a hardtime collating and comprehending it.This labor-intensive effort eats up...30% - 50% of his time12% - 15% of his sourcing cycleAs a result...This manager implements anautomated spend analysis solution.This manager tries togather and analyze data manually.But they each takea different course of action...suffer from toomany incompatibledata sources44%struggle withpoor data quality40%of companies relyon paper and pencilto classify spend60%Now, like many, they face significant obstacles...Are we facingsupplier risks?Are we compliant withour policies andcontracts?Could we negotiatebetter to save money?What are we buying?From whom? How often?How much? At what cost?To begin, they’re askingthe same questions...If you could see and analyze it all, you could spot ways to reduce costsand supply risks. Realize negotiated savings. And make more confident decisions.But getting a firm grasp on your spending is a heck of a challenge. It needn’t be.To illustrate, let’s take a look at how two purchasing managerstackle the problem.Your company spendsa lot of money.PURCHASING MANAGERSA TALE OF TWO