Sourcing Innovation is pleased to welcome Lexington Analytics as a lead sponsor. Lexington Analytics is a very appropriate sponsor for Sourcing Innovation because it believes in pushing the innovation envelope by using advanced data analysis techniques to find hidden savings opportunities in PxQ (price X quantity) data. Lexington Analytics was founded by Bernard Gunther, who has in the past been kind enough to post How much do you know about your spending? and Do you have a plan? right here on Sourcing Innovation. Bernie was one of the co-founders of The Buying Triangle, and has a long pedigree as a partner in several leading sourcing consulting firms.
Over the last few years, The Buying Triangle surprised skeptics by performing project after project for Fortune 500 companies that not only identified millions in savings opportunities, but also recovered millions of dollars in overspending and overcharges. Lexington Analytics has taken this key IP forward, continuing to refine those techniques to become one of the few consultancies to aggressively apply market-leading spend analysis technology and business intelligence techniques to commodity-specific procurement. LA typically builds not only an A/P view of spend, but also dozens of commodity-specific cubes to drill down on concrete savings and refund opportunities. Bernie and his Lexington Analytics team bring decades of data analysis expertise to each and every project.
The Lexington Analytics solution is based on the traditional prepare-analyze two-step, but with a crucial difference: with LA, it’s a continuous feedback cycle, as they employ state-of-the-art analysis tools (including BIQ) that allow them to rapidly create, analyze, and throw away data cubes until they identify a high value savings strategy. They don’t just create one cube, run a standard set of reports, and give you a “top ten spend” report. They create multiple cubes, run some analytics, look for anomalies, then drill in, out, and, if necessary, drill sideways until they’ve uncovered the hidden opportunities that canned analysis reports completely miss — opportunities that can often translate into massive additional savings.
For example, Lexington Analytics personnel helped a regional bank with $770 Million in spend develop a plan for saving $85 million. Using that plan, the bank was able to deliver $93 million in savings over the next 18 months. LA helped a financial services provider discover that total enterprise spending with a certain vendor with whom they had a $1.5 million contract, and who was classified differently in different systems by different departments, was actually billing $14 million, translating to substantially better discount levels. A national insurance company had established a corporate purchasing program with an office supply vendor, but employees were also using their corporate cards to purchase from the vendor’s retail outlets. This represented 20% extra cost for 3% of their total spend. Using the information provided by LA personnel, the vendor was able to return 0.6% savings to the company without making any changes to behavior or programs. And that’s just a few of LA’a success stories. They have many more (which they’d be more than willing to share if you contact them).
Please join me in issuing a sincere welcome to Lexington Analytics. If you are in the market for assistance in starting a spend analysis program, performing an opportunity assessment, improving your current spend analysis program with invoice-level analysis, or simply need some training or a jump-start to help your staff take your current program to the next level, I would recommend that you add LA to your list of potential partners. I’d also recommend that you take a few minutes to visit their site (through a Sourcing Innovation link) to let them know that you approve of their decision to support Sourcing Innovation – your #1 independent source for education and innovation in sourcing, procurement, and supply management.