Spend Radar was contacted by a leading Business Process Outsourcing (BPO) provider to support their multi-year agreement to provide strategic sourcing and spend management for their client - a global 200 consumer packaged goods manufacturing company.

1. Spend Radar’s Award-Winning
Spend Analysis Case Study
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2. Background
Spend Radar was contacted by a leading
Business Process Outsourcing (BPO) provider to
support their multi-year agreement to provide
strategic sourcing and spend management for
their client - a global 200 consumer packaged
goods manufacturing company.
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3. The Client’s Cost Cutting Initiative
The client had an ambitious plan for cost cutting.
Cost-cutting programs had been implemented that
represented less than 3% percent of their cost of goods
and the client was pushing for that figure to be more
than 4%.
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4. The Client’s Savings Initiative
For their savings initiative, they put in place the following
Service Level Agreements:
1. Savings percentage for 28 categories across three
different types of projects
2. Seven-day turnaround from receipt of data until report
delivery
3. Allocate savings by category down to the plant level
4. 95% accuracy
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5. Spend Radar’s Responsibilities
Specifically, Spend Radar was responsible for
collecting, cleansing and classifying spend data
from over 90 global locations.
But it didn’t stop there. After identifying the savings opportunities, Spend Radar was responsible
for tracking and allocating the savings back to the various operating companies, product lines,
spend categories and plant locations.
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6. The Project
All projects at Spend Radar follow a six-step
process outlined in our Project Excellence program.
This program was implemented to ensure the
consistency and quality of all of our projects.
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7. Step One: Project Kickoff
Each client is designated a project manager that is
responsible for keeping the project on target, on
time and on budget, as well as ensuring that the
client is kept up to date.
Introductions are made, roles are defined and
communication guidelines are set.
The project kickoff is also used to ensure that we clearly understand the client’s business, an
important aspect when determining categories and classification codes. A commodity that is
classified as MRO for one company may be classified as a direct spend for another.
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8. Step Two: Acquiring the Data
Within one day of receiving the 1.5 gigabytes of spend data, the Fast Facts:
data was uploaded to Spend Radar’s Data Manager, a master data
 1.5G of spend data
management (MDM) module designed specifically for spend data.
 +$20B in global spend
All of the data had been extracted from multiple SAP instances. This
data represented over $20 billion in annual global  90 global locations
spend, representing the following four high-level indirect spend  1 day to upload
categories:
 4 indirect categories
1. Manufacturing Equipment
 4 SLAs
2. Corporate Services
3. Information Technology and Telecommunications  95% accuracy
4. Human Resources and Professional Services
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9. Step Three: Cleansing and Classifying the Data
All data is collected and stored in the Spend Radar Data
Manager module and managed by an internal team of solutions
consultants that have been fully informed of the company’s
business-specific categorization needs.
The Data Manager’s Rule Builder creates, edits and manages
company-specific supplier and transaction classification rules.
Based on our extensive history with data classification, we have
also included pre-built, commonly used rules into the
application to assist with the classification process.
Without the use of this flexible master data management module, a quick turnaround would not
have been possible.
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10. Step Four: Client Workshops & Business Reviews
Constant, immediate feedback from the BPO as well
as the client allowed us to complete the cleansing
and classification within three weeks. The BPO had
visibility into the process at all times, ensuring that
the data was being cleansed and classified in a
manner consistent with the BPO’s sourcing strategies.
The data was cleansed at 95% accuracy – a level of accuracy that was agreed upon by the client.
We used our data accuracy model to ensure this SLA was achieved. The data accuracy model is a
formula that is used to generate a representative sample of an overall data set that is approved
by the client.
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11. Step Five: Delivery of Reporting and Analysis
The BPO leveraged the Spend Radar Reporting and Analysis
module, allowing the end users to create reports, analyses and “We’ve been struggling to
pull this data together for
views in mere seconds, with minimal to no training. And months. I’m amazed at how
because the tool is easy to use, end users could manipulate quickly this project was
reports and analyses on their own, without the need for IT or delivered.”
senior analyst support. -Finance
Once the savings were identified, we:
 Tracked and allocated the savings back to the various operating companies, product
lines, spend categories and plant locations using an organizational hierarchy that we
incorporated into the Data Manager module.
 Integrated sourcing award savings data and cost allocation percentages by business
unit, plant, etc., as per the organizational financial model and as desired.
 Applied the savings and cost allocation percentages back to the business units, plants and
locations as defined by the organizational hierarchy and savings allocation model.
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12. Step Six: Ongoing Data Refreshes
Since the initial cleansing and classification process, we
have been conducting ongoing monthly refreshes of the
client’s spend data. Monthly refreshes are made possible
by the extensive initial cleansing and classification process
that we conducted. Company-specific rules for item
classification were created that can be used for all future
refreshes and changes and additions can easily be made.
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13. Challenges
The challenge for this project was incorporating a
customer-specific financial allocation model within Data
Manager. This was not standard functionality and
required custom development to accomplish. The client
provided their organizational hierarchy and allocation
model, and we were able to include this information into
Spend Radar’s Data Manager.
All software customization is done in-house so we have complete control over timelines and can
quickly adapt to new customer requests. And since Data Manager is offered as Software-as-a-
Service (SaaS), once the enhancements were complete they became available to all clients.
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14. Results
This case study describes an advanced spend
management project that resulted in:
 Merging global spend from over 90 locations
 Providing indisputable proof of realized cost
reductions
 Providing insight into forthcoming cost
reductions
 Relating impact to the bottom line by product
line, operating company, category and location
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15. Key Takeaways
The most important lesson of this or any other spend analysis
project is that spend analysis is not simply about identifying
potential cost-reduction opportunities. Any savings should
then be measured, validated and tracked so that true success
can be quantified and managed in an ongoing, repeatable
manner.
And for some businesses, it is critical to ultimately trace back and allocate any realized cost
reductions directly to the individual locations or business units. Not all organizations manage
their savings and cost allocations directly to each individual organizational entity, but for the
many that do, having a spend analysis solution that can fully manage this process in an
indisputable manner is critical.
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16. Conclusion
Managing costs has always been important. In the
current economic climate, it is imperative. However,
the promise and hype of spend analysis has left much
to be desired from previous generations of spend
analysis solutions. Unlike our predecessors, Spend
Radar is delivering fast, accurate and measurable
impact to our customer’s bottom line. Isn’t that what
spend management is all about?
This case study outlines the real-world experiences of this team and their project. We hope that
you are able to learn from and leverage this insight to define and implement a successful spend
management project at your company.
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17. Award-Winning
Upon completion of the initial phase of this project, the
team at Spend Radar realized they had accomplished
something special – a twist on the typical spend analysis
project that provided even greater savings and sourcing
opportunities. When submissions for the Supply &
Demand Chain Executive 100 became available, we knew
that we had to submit this project for
consideration, illustrating the tangible benefits that can be
achieved through spend analysis. We’re pleased to
announce that this project resulted in winning this
prestigious award.
Supply & Demand Chain Executive is the executive's user manual for successful supply and demand chain transformation, utilizing hard-hitting
analysis, viewpoints and unbiased case studies to steer executives and supply management professionals through the complicated, yet critical, world of
supply and demand chain enablement to gain competitive advantage. It is located on the web at www.SDCExec.com. Ten years ago, Supply & Demand
Chain Executive announced its first "100" list of supply chain solution providers, consultants and other organizations that were helping lead the way in
transforming companies' supply and demand chains. To learn more about this award, visit www.sdce.com/content/awards.jsp..
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18. Contact Us to Learn More
Spend Radar
311 S. Wacker Drive
Suite 2270
Chicago, IL 60606
+1 312.262.9810
sales@spendradar.com
www.spendradar.com
www.spendradar.com/blog
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