Validation & Enrichment leads to savings. In this example, two separate instances of the same supplier <Smurfit-Stone Container> were normalized. Without validation, the spend for this supplier would have been fractured and leverage would have been lost. Often times, when a supplier is known by different trade and legal names, duplicate entries are created in the supplier master file. Duplicates also arise when different addresses are used such as remit-to vs. the physical address. Validation resolves these issues by matching against alternative names such as legal, trade style and DBA (Doing Business As) and alternative mailing addresses.Enrichment maximizes leverage by identifying parent companies.In this example, we started with five suppliers. With validation we reduced the supply base to four, enrichment further normalized the supply base to only two suppliers <RockTenn Company> and <Verizon Communications>. The data can also be enriched to include financial risk, diversity, government certifications, and more, to improve decision making.
Item classification is often incomplete and misses leverageAccount classification focuses on why something was purchased, not what was purchasedIndustry or Supplier classification is over-simplified, assuming a supplier sells only one thing, alternative leverage goes unnoticed
Multivariate classification leads to savings.Supplier classification is simple, but overlooks alternative leverage. Suppliers often sell more than one thing. This oversimplification causes alternative leverage, such as freight & shipping, to remain unseen and unleveraged. In this example, packaging is overstated – we are missing freight and the associated graphics design services to create the displays. Furthermore, classifying by supplier industry can miss the finer details such as packaging vs. displays.Item classification is often incomplete. Item descriptions tend to cover direct spend and may not be populated for indirect services or expenses. In this example, the indirect services such as telecom and graphics design are not assigned and result in missed opportunities.Another approach is to classify by account. But General Ledger account structures tend to be shallow. They usually track "why" something was purchased instead of "what" was purchased. In this example, <Accounts Payable trade> is too vague a description to classify what was purchased, <Promotions> tells us "why“ we purchased graphic design services but not the fact that we actually bought graphic design services. Lastly, cell phones are obscured because they are considered to be a general office supply – once again stating why not what.SAP’s multivariate approach to classification yields greater accuracy and granularity. Here, we have full visibility to spend because multiple variables are taken into consideration. If we simply rely on item, we would miss leverage because not all transactions have item descriptions. If we rely on account we risk classifying WHY something was purchased – not what was purchased. And if we based our classification on the supplier we would oversimplify the spend, missing alternative leverage. This example shows the interaction of just a few variables... imagine the impact of adding other variables including: Buying Location, Organization, Cost Center, Source System, Line of Business, WBS Element, Department, and so on.
Colgate Palmolive Co. 15.6B global consumer products company Founded in 1806 35,000 Colgate people worldwide Products sold in 200+ countries and territories The Company focuses on strong global brands in its corebusinesses Oral Care Personal Care Pet Nutrition Home Care
Colgate Palmolive project scopeDataSpend (Account Payables)Purchase OrdersTravel & EntertainmentExternal Factors (CommodityPrices)Three years of dataGeographyGlobal ImplementationSeven SAP ERP’s / One SAP SRMProcurement OrganizationDirectIndirectLogistics
Johnson & Johnson Company BackgroundHeadquartered in New Brunswick, NJGlobal Leader inHealth CareSpecializing in Pharmaceuticals, Medical Devices & Diagnostics and Consumer ProductsMore than 250Operating CompaniesIn 60 CountriesSelling Products in More Than 175 Countries114,000 Employees Worldwide
J&J Consumer - Implementation ScopeLocationsLatin AmericaEurope, Middle East, AfricaAsia PacificNorth AmericaSource DataTransaction DataContracts, Purchase Orders, InvoicesVolumes consistent with a large Consumer Products company.Key Master Data Material, Buyers, Buying Orgs, Categories, Suppliers, Plants, Geography, Management Organization (plus many more attributes)Source system data is not standardizedMaster data values not standardizedTransaction data configurations varySpend Scope:Direct Material Spend (Raw Materials & Finished Goods)TechnicalInstallation of SPM V2 on our existing J&J SAP BW 7 SP 18 system.Integration with 12 source systems File transfers to/from external cleansing 3rd party.Source System TechnologyBPCS SAP 46C with SPM V2 extractorsSAP 46C SPM V1 extractorsSAP 47CSAP ECC5SAP ECC6Global & Regional End Users: 100+
SAP BusinessObjects BI Platform Universe support allows Spend data to be accessed with BI solutions for advanced graphical analyses.View Spend data on mobile devices using SAP BusinessObjects Explorer iPad client for advanced analytics anywhere at any timeExtra SAP BusinessObjects BI Platform and Explorer licensing required