Today’s guest post is from Bernard Gunther of Lexington Analytics.
He can be reached at
bgunther <at> lexingtonanalytics <dot> com.
Several years ago, I was involved in a data warehouse project. At one point in the design phase, the discussion turned to the creation of the initial reports. We discussed a number of different things we wanted from the system and explained how each report was likely to change once it was populated with data. At this point, the Programmer became frustrated, “Why can’t you guys just figure out what you want? Get those specs right and we can be done with the reports once and for all.” In his mind, Procurement was doing a horrible job because it couldn’t make up its mind about what it really needed.
This story of the frustrated programmer sticks with me as an important lesson because it highlights one of the key challenges facing users of procurement data — there isn’t one perfect report! And, even if there were, it would only be ‘perfect’ for a brief time. One observation leads to another, which leads to another, and so on. A good report should lead to questions — and the need for another report. Reports are forms of communication and they are tools for users to get their jobs done. As such, they should be dynamic not static. Once they become static, chances are good that no one is using them — either because the format doesn’t work for them or it’s no longer relevant to the current situation.
Let’s take the example of the preferred vendor within a category. Let’s pick on temporary labor for this example.
First Report: You produce a report which shows the overall spending for temporary labor by month with two columns, one for preferred vendors and one for non-preferred vendors. This gives the overall status that spending with preferred vendors has gone from 50% in January to 75% in June. Good work!
Second report: The data you provided in the first report needs to be distributed to the business units. The report now has to have the summary and the detail by business unit. Easy change, you’ve already built it into the initial specification.
Third report: The business units want to pass this report down to their managers. The report now needs to be done for each business unit. Again, a change you’ve planned on, so it’s easy.
Fourth report: The business units report that they have existing contracts which can’t be changed, so they need to tag certain vendors as “legacy contracts” so they can show that they are complying with the program and using the preferred vendors. All the reports now need a new category – “Legacy Contracts”
Fifth report: The commodity manager wants to estimate the incremental cost of using the bypass vendors. The report now needs to show this estimate for each business line based on their savings model. This needs to be done at the top level and for each business unit.
Sixth report: One of your business reports that the preferred vendor can’t supply a certain type of specialty services. You need to add a category for “specialty vendors”.
Seventh report: A manager in one division wants to eliminate the “legacy” category for her spending, “All this spending is bypass. I want my team to move more quickly to the vendors with whom we have contracts. Don’t show me any legacy or ‘specialty’ vendors”
Eighth report: The business lines are changing one of the preferred vendors. The report now needs to show the first 6 months with the original vendor, then the following months with the new preferred vendor making the spending with the original vendor as bypass.
Ninth report: The head of processing operations like the reports, but wants to make two sets of changes. He wants to change the categorization of vendors into “Primary”, “Secondary”, “Non-Group Contract” and the tagging needs to be done differently for each major production location. A vendor can be the primary in location 1; the secondary in location 2; and, non-group contract in a third location.
And the sago continues, but you get the picture. Each report was useful as it was created, but needed to be modified as users worked with it. And this is a great news story. People are using the information and acting on it. You company is saving money and the reports are highlighting the savings achieved and the actions necessary to achieve more savings. But the reports keep changing and that’s the reality of procurement information.