Category Archives: Spend Analysis

Mercanis: Men with a Mission to bring Modern Volkswagen Efficiency with BMW Style to Source-to-Contract! Part 2

As discussed in Part I, Mercanis is a new Source-to-Contract mini-suite provider based in Berlin, Germany that is bringing a powerful, affordable, and easy to use solution to the mid-market that not only has core capabilities in sourcing, supplier management, analytics, and contract management, but also has core capabilities around risk assessment AND intake, which is not something we have traditionally seen in mid-market Source-to-Contract, and even enterprise Source-to-Contract and Source-to-Pay suites.

Logging into Mercanis takes the end user, who could be a buyer, an AP clerk, or an average employee who needs to go out to market for a product or service to do their job, to their customized dashboard (according to their role) where they can see an overview of their events/requests, contracts, suppliers (including individual supplier overviews) they manage or have access to, organizational spend they oversee, and other relevant information depending on the selected widgets.

Yesterday we overviewed Sourcing, Supplier Management, and Risk. Today we are going to overview Contracts, Spend Analysis, and Platform Administration.

CONTRACTS

Contract Management in Mercanis is straightforward contract document management with a sprinkle of contract creation capability. It stores all of the contracts and associated metadata, including the supplier, active term, value, type, and status (which is draft, pending, active, inactive, and archived by default). It’s easy to search, filter, retrieve, and view a contract at any time. Viewing takes the buyer to the summary screen, from which the user can drill into more detailed screens on payment, linked documents and contracts, stakeholders, relevant clauses, and other (custom) information screens as appropriate to the contract type. The system also supports the definition of tags and contracts can be tagged to categories or conditions of interest, such as sensitive of personal data, auto-renewing, special initiatives, and so on.

Uploading a contract in the Mercanis platform is easy. You drag and drop the document and it auto-extracts most of the key meta data elements that are described in the platform using OCR and advanced NLP. It’s not perfect (no system is, no matter how much fancy AI the systems claim), but it’s easy for the user to override any extract data that is not quite what they want, or not found, and index into the relevant part of the contract.

Finally, contract queries can be search and filter on metadata or Natural Language chat, which will learn from repeated use and adapt to the user’s natural language queries over time.

SPEND ANALYSIS

Basic Spend Analysis is integrated into the core and allows the user to select filterable widgets and dashboards that show spend by category, cost center, supplier, and other major identifier in the system (contract, sourcing event, etc.). It is instantiated with AP data on system implementation, which the system auto-maps to your pre-defined category taxonomy using (auto-generated) mapping rules consisting of suppliers and keywords/phrases/abbreviations/tags in the line item descriptions (identified by AI and curated by humans) and provides sourcing professionals insights from the date of go-live.

As with every other modern platform, it’s easy to drill into the categories (and sub-categories), suppliers, cost centers/business units, and contracts and see the associated transactions. Filters will also allow limiting to date ranges or other record values of interest. And it’s very easy to pop-up a supplier profile from a spend analytics widget or screen or a contract as the analytics, while basic compared to best-of-breed spend analysis tools, are fully integrated.

ADMIN

When it comes to platform administration, it is highly configurable by the organizational administrators. This administration includes the ability to configure approval paths, role groups, individual users, and workspaces (which roles can be limited to) as well as the company information your suppliers see about you. (It’s such a simple concept, but even many SRM platforms don’t make it easy for a supplier to access the customer information about you that they need as a supplier.) There can be different approval paths for every workflow including, but not limited to, supplier onboarding, sourcing (intake) request approval, sourcing awards, and contract approvals, including conditional/branching approvals based on arbitrary fields (such as amounts over or under 50K, product/service category, etc.). These flows can be built using a visual approval workflow builder that can support all standard Boolean logic and if/then/case conditionals.

Let’s dive into workspace configuration, as this is one of the most unique capabilities. The platform supports the definition of as many workspaces as you want, where each workspace can have its own dashboard, its own subset of modules, restricted/no admin access, approval workflows, and templates. Most importantly, a role can be associated with a workspace and when a user is associated with role, that is the workspace, and the only workspace, they will see when they log in. If necessary, the platform can support hyper-personalization natively.

In addition to the platform administration capabilities outlined above, the organization can define business units, manage its category tree (for sourcing and the built in spend analysis), define it’s default meta data requirements by contract type, visually manage all platform workflows (across all modules), manage its currency exchange rates, define its (supplier/RFQ) ratings, and define and manage the data collection templates for every module in the system including supplier data collection forms, pricing sheets, RFP questionnaires, and contract/document templates.

When it comes to workflows, just like the platform can support as many workspaces as you like, it can support as many workflows as you like for each process supported by the module. For example, you can not only have a different sourcing workflow for each category, but you can have multiple workflows based on expected spend. You can have different supplier onboarding workflows depending on category, geography, or a combination thereof (for example), different contract / document creation and management workflows (in addition to approval), and so on. And each can be linked to the associated module in the associated workspace. Highly configurable.

Workflow definition is enabled by the rule builder which is very flexible, and just like approval workflows, is completely visual, supports all Boolean logic, and allows rules to be easily defined in a rule chain that defines the category/ies, role group(s), workspace(s), discriminator (such as budget amount), and action (which can itself kick off another workflow).

The pricing sheets are very flexible and essentially act as mini-spreadsheets embedded in the sourcing tool. Allows for detailed cost break downs and calculations in both sourcing events, and analytic comparisons. The templates can have any number of elements and support all standard HTML components.

IMPLEMENTATION

The system can be implemented and configured for go-live in as little as two weeks, as long as the relevant supplier dataset and spend history can be provided day one and is complete enough that their processes can sufficiently classify the AP data on the first pass to the point that they can complete the processing with manual intervention within the timeframe. Note that the buying organization can choose to load all suppliers, all suppliers used within the last x months or years, or just currently active suppliers that will be used in sourcing events.

Mercanis is a great new entry to the mid-market Source-to-Contract space, especially considering all of the acquisitions and roll-ups of the last 5 years or so that took a lot of companies out of the mid-market and into the enterprise suite game. If you’re looking for a new S2C solution, and especially if you are based in Europe, Mercanis will make a great addition to your shortlist. It’s come a long way in a short time and the doctor has no reason to believe that they won’t continue to make significant progress, and add significant value, over the next few years while maintaining a price-point the mid-market can afford.

Mercanis: Men with a Mission to bring Modern Volkswagen Efficiency with BMW Style to Source-to-Contract! Part 1

Mercanis a new Source-to-Contract mini-suite provider based in Berlin, Germany that is bringing a powerful, affordable, and easy to use solution to the mid-market that not only has core capabilities in sourcing, supplier management, analytics, and contract management, but also has core capabilities around risk assessment AND intake, which is not something we have traditionally seen in mid-market Source-to-Contract, and even enterprise Source-to-Contract and Source-to-Pay suites.

Logging into Mercanis takes the end user, who could be a buyer, an AP clerk, or an average employee who needs to go out to market for a product or service to do their job, to their customized dashboard (according to their role) where they can see an overview of their events/requests, contracts, suppliers (including individual supplier overviews) they manage or have access to, organizational spend they oversee, and other relevant information depending on the selected widgets.

Today we’re going to discuss Sourcing, Supplier Management, and Risk.

SOURCING

Creating a sourcing event in Mercanis for new or previously sourced articles can be accomplished in just a few minutes as the platform was designed for high efficiency. With integrated intake, the system will either guide an organizational user to a self-serve sourcing event for articles (products/components/fixed services) in acceptable categories under a certain amount or funnel to the appropriate sourcing team, as appropriate.

When an organizational user wants something, they define their event name, a unique departmental project reference, category, budget, RFX due date, relevant organizational tags, affected business unit[s], preferred NDA (from those associated with the category), and then the system will either notify the requester that this needs to be a (strategic) sourcing event and direct it to the sourcing team or take the buyer to their (selected) workspace where they can set it up on their own.

In either situation, the next step is to select suppliers. Suppliers are auto-suggested by the system and it’s one click to select them (and the user can search for other known suppliers or even invite a new supplier for onboarding if they want to). After that, they select an appropriate pricing sheet (from those associated) which is automatically pulled in, and then they select appropriate RFP surveys that they want filled out (which are also auto-suggested based on the article). They can then launch the event immediately, or specify a later date, and at any time they can (come back and) add stakeholders.

For a single article, since everything is auto-suggested, they can literally select the core suppliers, price sheet, and surveys with a few clicks and launch a small event in a minute. Most events on an article or category can be reasonably defined in five to fifteen minutes (vs. the 15 hours for some first, and even second, generation suites).

In the Sourcing projects can be multi-round if necessary. Once the results come back, the buyer can kick off another event based off of that project and link it to the existing one to create a multi-round event.

Also, once response come in, as many stakeholders as desired can score it, the scores can be weighted, and once an award is decided upon, it can be sent to the contract module. Survey responses for each survey can be compared side-by-side for easy comparison against peers. And when the individual responses are scored, the buyer can see the assessment criteria scores graphically in spider graphs, including a calculated score based on total relative pricing. When it comes to price sheets, which can include embedded formulas, the buyer can select the prices of interest for side-by-side comparison as well. And to make the comparisons pop, the buyer can even shift to dark mode. While not always the best for data entry, it does make certain visual comparisons pop.

The entry point to sourcing is the dashboard which will summarize the requests, events by category, upcoming, and current sourcing events that need to be reviewed, managed, or awarded.

An organizational buyer can also two-click a new sourcing event by going to the article summary screen, locating the article of interest, clicking on it, defining an event name, selecting one of the associated sourcing workflows (defaulted if just one), selecting one of the associated pricing sheets (defaulted if just one), and confirming the event creation.

SUPPLIER MANAGEMENT

The Supplier Management module revolves around the Supplier Repository which organizes all supplier related information in the system with each supplier maintained by the system. It’s easy to search suppliers by name, category, location, associated transaction cost centers, and other information. Upon implementation, Mercanis can import all of your suppliers from your ERP, just a subset you mark as active, or only those suppliers used in the past x years.

On implementation, they will pull in as much information as they have, fill in gaps with any information they have in their system, and augment with a 360-degree profile they auto-generate using their AI tools that scrapes supplier websites and pulls in data from third party sites, Compliance Catalyst, Dun & Bradstreet and/or other third party supplier data providers you have a subscription to. This profile will include a short description, any known (reference) customers, categories the supplier (can) supply in your taxonomy, any known contacts, owners, known business units, primary / head office location, website and Linkedin URLs, and even known similar suppliers in your database. It will also contain direct links to any third party profiles you have access to, and can even pull all of that information into the platform for you.

This is in addition to the basic corporate information (and contacts) maintained by the system (which includes legal identifiers, basic accounting information, and location data), supplier states (which can be buyer organization defined), tiers (as the organization can track tier 2 suppliers or suppliers typically used by your suppliers, third party ratings (from the ERP or a data partner) and data that can be pulled in (which can be visually displayed in spider graphs), specific information collected during onboarding, and appropriate risk data (including cached data from any third party data feeds you have a license too). Note that suppliers can also be evaluated using organizational surveys that can be associated with them, and multiple evaluators can be associated with these surveys.

The SRM system also centralizes and maintains a record of all system activity, including sourcing events, contracts, risk profiles, and associated supplier analytics. It also tracks all associated tasks from across the system in one location, all associated (onboarding/sourcing/contract) requests, and any notes the buying organization wants to add.

New supplier creation is easy. It can be as easy as defining a name and email to kick-off the onboarding process, which will send a request to the buyer to provide the requested information. (Note that if you provide an appropriate legal identifier or URL and the supplier is in the Mercanis database, base information will automatically be populated to simplify the onboarding process for the supplier.)

Search can be customized to work on any given supplier identifier.

RISK

The risk module, primarily used in supplier pre-qualification, tracks country and industry risk across the globe and can instantly associate the relevant country and industry risks with an existing, or new, supplier based on its address and NAICS code. The platform uses over 40 different data sources to analyze country and industry risk in accordance with the German Supply Chain Act and computes a score for every country-industry risk correlation.

In addition, it can integrate with third party data from providers like IntegrityNext and Ecovadis and, for any supplier, pull in all the relevant data if the customer has the data feed licenses and automatically compute advanced risk measures using their data (from public sources) and third party data.

Come back tomorrow for Contracts, Spend Analysis, and Administration.

If You Need to Bring The Hammer Down, Make Sure You Have An Anvil (Analytical)!

On New Year’s Day, 2022, Anvil Analytical (Anvil) was spun out of 4C Associates to bring a stand-alone spend-analysis technology solution to the market, based on the solution that 4C had developed over the course of a decade or so. (4C was founded back in 2000 to help companies with their Supply Chain and Procurement operations, and that required a deep understanding of the supply base and spend, and that required the ability to dig deep into the organizational spend.)

However, while the solution revolves around their service-oriented spend analytics solution (which can include a contract-focussed spend analytics module), Anvil Analytical also offers a Scope-3 Carbon Tracking, a country-based Risk Intelligence, a Market & Inflation Intelligence solution, and a Project Management (Savings Tracking) module.

When we say service-oriented spend analytics solution, we mean it’s a hybrid service/DIY solution. Anvil handles the data loads and refreshes, the validations, the mappings to your chosen taxonomy (which also maps to their internal taxonomy, more on this later), the initial implementation of the system, new report (dashboard) creation and customization (a certain number of hours for this are included in the annual subscription), and monthly/quarterly check-ins and advisory. (Depending on the client’s typical refresh interval and assessment cadence.) The client does regular monitoring, analysis, project identification and creation, savings tracking, and what-if analysis on market/inflation/project trends to identify new projects that the client wants to undertake. It’s designed for a Procurement department that is sophisticated enough to understand the power of spend analytics and use a modern tool to extract the insights it needs, but doesn’t have the manpower to do a lot of deep analysis work and/or any real data analysts on staff and wants help with the heavy lifting.

Implementation

Depending on the organization size and maturity, the initial implementation and setup will take anywhere from 2 weeks to 4 months from the kick-off meeting. The first step is for the client to provide the Anvil team with data exports for the previous years [they need at least 2 years, or the year-on-year analysis won’t work, for example] from all relevant systems (ERP/AP/I2P). Anvil then manually processes subsets of these to create training sets and verification sets for its traditional AI-classification engine, trains the models, runs the verification sets, corrects the model, repeats until high accuracy, and then runs the full data set. At this point, the client is engaged, remaining errors corrected, the model retrained, and then the system is delivered. Simultaneous to the training process, they work with the client to identify any special reports or customizations the client wants to the primary reports and dashboards and build them simultaneously. Once the system is rolled out, they do an initial training session, review the primary analysis and identify initial areas for analysis, set up the support processes and methodology for the regular (incremental) data updates, and determine the goals of the monthly/quarterly cadence meetings and future training sessions. Every cadence meeting will review the results of the last update(s), identify new suppliers, and identify new analysis of interest.

With respect to validation and cleansing, they will establish data standards and formats and ensure all data adhere to them, normalize and identify suppliers against their database (or a third party database if you have a subscription to one where they have, or can develop, an API) which has almost a million suppliers, validate key pieces of supplier information (such as tax and registration ids), and fill in key missing data elements if they have it (or identify missing data that needs to be collected).

Spend Analytics

Spend analytics revolves around Materiality, Growth, Fragmentation, and Churn. Materiality, defined as a measure of both the scale of your spend and how easy it may be to access, is all about understanding the category spend breakdown, where the most spend, and possibly the most opportunity, is. Growth identifies which categories are the fastest growing (or fastest shrinking) in terms of your spend, and helps you identify where you may need more contracts, monitoring, control, or even (key) supplier development to reduce spend. Fragmentation, which measures how fragmented your spend is in each category compared to the average fragmentation that has been identified through thousand of engagements undertaken by 4C and Anvil Analytical, helps you identify [with color coding that show 50%, 75%, and 90% thresholds] where there is likely significant opportunity through consolidation (or significant opportunity to reduce risk if fragmentation is too low). Churn measures how much spend is being gobbled up by new suppliers in a category and helps you identify where you may need to introduce competition or innovation to keep costs down. This is summarized on one of the primary dashboards included in spend analysis – Deep Dives. Each of these area can be drilled into. For example, drilling into a materiality category from the main deep dive dashboard will give you your overall category spend, supplier count, high materiality supplier count, medium materiality supplier count, spend per business unit, spend per country, supplier spend per business unit, and so on. (And from here you can dive into just the higher materiality suppliers, or just one, and get the relevant insight.)

Like every other spend analysis tool, the entry point is the Summary Dashboard that summarizes your spend, on contract (if you have the contract [sub] module), supplier count, on PO, invoice count, average payment time, consolidation percentage, on-time payment, spend by L1 (top level of the) category (hierarchy), by business unit, by country, overall spend growth summary, and top X suppliers. Each of these can be drilled into for more detail. There’s also an insights dashboard that will give you, for a category, the materiality rating, growth rating, fragmentation rating, churn rating, and opportunity rating. Key insights and observations across each area (based on insights from Anvil’s market-intelligence modules, anonymized recent 4C project results or recent 4C insights, or market partners) are also included, as well as a breakdown by country, the likely chance of success against the main procurement levers (compete, consolidate, demand, or collaborate), and a Pareto analysis. It also highlights the top 5 opportunities based on spend and likely savings potential (based on market intelligence and/or a variance analysis), supplier growth by threshold, inflation impact, and index sensitivity. Finally, you can drill down to line level transactions if needed, or search for, and bring up, summary reports on any supplier in the system.

Contract Analytics

We’ll cover contract analytics next as it builds on spend analytics. In the Anvil platform, contract analytics is another set of dashboards that works off of contract metadata, which would be loaded during implementation and then updated in the regular refreshes. (Note that if you happen to be using one of their partner contract management solutions, they already have pre-built APIs and the loading of this data will take minutes. If your CLM has an API for metadata, they can build an extraction facility to extract that data as a service, and if not, they can work with flat-files as they do with spend.)

Contract Analytics is essentially another (set of) dashboard(s) and reports but focussed on breaking down spend by contract. The main dashboard will breakdown spend by on-contract vs. off contract, % category spend > XK (default 250K) on contract, suppliers on contract, expiring in the short term (3 to 9 months, for e.g.), contracts by business unit, and suppliers with > xK (default 250K) spend with no contract. Other relevant measures can be easily defined on implementation and, of course, all summaries can be drilled down to the line level. Since it’s essentially just another dimension of spend, we’ll conclude our high-level summary of it here.

Carbon Management

The Anvil Carbon Management platform was designed to help a company assess the scope 3 emissions of the goods and services they buy, segment the supply base as needed to support the different engagement approaches needed to maximize reach and results, support decisions when scores for tenders are carbon-adjusted, and determine B-corp accreditation based on carbon-based market ability.

The main entry point to the Carbon Management module is the Carbon Baseline Dashboard that allows you to drill into the spend carbon baseline, quantity carbon baseline, carbon insights, and carbon project tracker. The spend carbon baseline will give you your spend-based carbon footprint, your supplier count, and invoice count. It will break it down by Level 1 Category, Level 2 Category, and Level 3 Category. It will give it to you by supplier, by country, by business unit, and display the monthly totals relative to the supplier count. The supplier spend vs. carbon footprint breakdown can be particularly insightful when you find out that your top supplier with 5% of your spend only contributes 1% of your carbon footprint while your 11th place supplier (not included in the Top 10 report) that only accounts for 1% of your spend contributes 15% of your carbon footprint. It can happen, since carbon production is directly tied to the product/service — certain extraction and manufacturing activities are way more carbon intensive than others, and, even worse, depending on the technology being used, there can often be a 5X to 10X difference between traditional approaches and new techniques that only a few extractors/manufactures use. For example, in the EV industry, the production of a battery can produce anywhere between 2,000 and 16,000 kg of CO2. That means a poor process using materials from dirty raw material extractors can produce 8X the amount of carbon that needs to be produced. Now, it’s likely that in the automotive industry a battery supplier would be a top 10 supplier, but it might not be as obvious just how much carbon is in that Scope 3 battery supply chain vs. the steel supply chain or the electronics supply chain for the control system.

The quantity carbon baseline allows an organization to focus in on new carbon emissions between two points in time, scope 1 vs scope 2 vs scope 3, the measured % (vs estimated from third party sources), and the breakdown by business unit, country, supplier, and combination thereof.

The carbon insight dashboard allows you to drill into a summary of your carbon (project) pipeline and expected carbon savings, vs. carbon savings realized in categories in which you have undertaken improvement activities and marked such in the system (with a start date). You can drill into the forecast, the projects by status, and (potential) by business unit. The corresponding carbon savings dashboard allows you to see the carbon savings you’ve realized over time as a results of projects that have already started delivering results.

For the Carbon Management module to be a success, the organization needs to have data for each level 3 / level 4 product or service purchased. Most organizations won’t have this, and nor will their suppliers, but Anvil will work with you to produce the figures using average carbon production for the industry, category, and region using the appropriate carbon data source which may include, but is not limited to, the ONS (UK), Carnegie Mellon (USA), Project Carbon (France), and other sources they, or you, have access to that may be more accurate. This data will be updated on regular intervals when more accurate estimates and/or actual emissions tracking becomes available for a supplier, methods change as a result of development projects, or suppliers make extraction or production improvements on their own.

Note that use of this module could require significantly more services than the other modules as spend and contract analytics are more-or-less cookie-cutter, risk management is based on standard measures, and the market inflation & analytics offering is also based on market data, 4C & Anvil Analytical project results, and anonymized data from their e-Sourcing partners (which include Market Dojo and Unit4 Scan Market).

Risk Management

Once you have a grip on your carbon/GHG, you can get a grip on your risk. The risk management module tracks location based risks by country and allows you to determine the location-based risks of a supplier based on the country they are in and the risks associated with transport based on the route(s) available between an origin, intermediate, and destination country and the transport method chosen (as the risks are different for truck, rail, air, and water). When you select a country, or a set of countries that would represent a transport route, it will give you, for a slew of major risk factors, a risk score, origin rank, and total rank. These risk factors include factors such as:

  • carbon factor
  • economic quality
  • education
  • electric grid emissions
  • enterprise conditions
  • global slavery
  • governance

The idea is to provide you with a foundation on which to identify which Environmental, Social Responsibility, and Governance factors may be the most relevant to consider for a supplier, based on their location and the trade routes available to you from their location to your consumer market. This could allow you to short circuit an analysis (as you can quickly identify the most likely high risk factors that might eliminate the supplier from consideration). The data comes from 1500+ different open/publicly available sources that include the corruption perception index and transparency.org.

In addition, with the risk management module you will also get a set of risk-based spend management dashboards which profile an organization’s spend and show the likely types of risk associated with these areas.

Market Inflation & Analytics

The market inflation & analytics module provides category specific inflation projections with geographic variances to allow an organization to identify the categories where their costs are likely to rise, determine the projected spend uplift, dive into the sensitivity of each category (against a single inflation point), and, most importantly, counter supplier price increases when there is no data to support the increase.

The platform tracks over 1,000 commodity prices using indices from markets, banks, national bodies, and commodity markets and contains detailed forecasts for almost 100 commodities. The buyer can also drill into CPI Data, PPI data, SPPI power, ONS data, FRED data, Bureau of Labor Statistics data, IMF data, and Worldbank data.

The most interesting parts of the offering are the Market Insights and Buyer Power. The Market Insights integrate category risk weightings, weightings by subject matter (such as human & labour rights, business conflicts, health & safety, service performance, diversity, environment, etc.), and deep dices into constraints, drivers, opportunities and challenges from a demand/risk perspective and trends from a low, medium, high perspective which provide interesting insight into growth, models, inflation, or other factors. You can drill into a regional market and see its size, portion of global market, regional growth rate, global growth rate, average supplier maturity, average buyer maturity, and a Porter’s Five Forces analysis.

Buyer Power allows you to drill into the relevant data around buyer power vs. supplier power, which supports the Procurement levers widget in the summary dashboard (if you have the market inflation module). This insight is unique as it is based on the results of recent, anonymized, sourcing events from the client base of Anvil and its Sourcing Partners and allows you to see the expected results vs. (forecasted) inflation in the category.

Project Management

Project Management is one of the newest modules and accompanies the suite-wide UX update that is being released in December, 2023. It is standard GANTT-based project management for savings and carbon project management that integrates with the analytics and carbon modules so that an organization can also track savings/reductions over time. When we say standard capabilities, we mean that you can allocate resources, manage approvals, define tasks and milestones, track progress, get real-time updates and reports, drill into the project data, and customize it to your organizational processes. There’s nothing unusual, unexpected, or uncharacteristic, but that’s typically what you want for a project management tool.

Services

While Sourcing Innovation is focussed on products, we will note that Anvil also provides sourcing & savings project management on demand, and will manage its partner companies who execute the event for you as well as extract all of the relevant event data and push it into your systems as appropriate.

So if the hammer must fall, consider bringing it down with the Anvil’s support. It’s a solid service-oriented spend-analytics solution that can start you off with the carbon, risk, and market insights you need as well as provide a baseline of services to help your Procurement team mature in their analytics skills and get going quickly.

Source-to-Pay+ Part 8: Analytics / Control Center

In Part 1 we noted that Risk Management went much beyond Supplier Risk, and the primitive Supplier “Risk” Management application that is bundled in many S2P suites. Then, in Part 2, we noted that there are risks in every supply chain entity; with the people and materials used; and with the locales they operate in. In Part 3 we moved onto an overview of Corporate Risk, in Part 4 we took on Third Party Risk (in Part 4A and Part 4B), in Part 5 we laid the foundation for Supply Chain Risk (Generic), in Part 6 we addressed the first major supply chain risk: in-transport, followed by the second major supply chain risk: lack of multi-tier visibility in Part 7.

In almost every article to date, we’ve highlighted that a key aspect of every risk management system is good analytics, and, in particular, a good control centre to manage the data, the analytics, and the insights gained from the analytics (as well as the plans created around those insights).

Capability Description
Graph (Analytics) Support Standard analytics based on numeric data is not enough. As we have illustrated through this series, risk is more than numbers, roll ups of numbers, and trends on numbers. Risk is relationships, risk is connections, risk is propagation, risk is feedback. You have to be able to track the impacts across chains that span entities, geography, and time.

The risk application must natively support graphs, graph algorithms, and graph analytics. It must be able to count the number of impacted nodes up and down a BoM, multiple BoMs, a chain, and multiple chains. From this, it must be able to calculate an impact of a delay, a shortage, and a catastrophic failure based on BoM requirements, production times, costs, and margins.

Multi-level Metrics and Trend Analysis Even though graph analytics is key for supply chain risk analysis, good old fashioned metrics and KPIs are still key for analyzing risk potential at a point in time, and over time based on changes (and comparison to past trends that have led to risk and failure). For example, an increase in delivery times in every shipment, decreasing raw material supplies going into a source supplier that provides a refined version of that raw material, increasing failure in key components, etc. all indicate increased risk.

The application must support the definition of metrics based on arbitrary formulas, roll ups, and drill downs. It should also support basic trend analysis, allowing for comparison between time periods, similar trends, and historical trends of interest. it should also be capable of projecting the trend for an arbitrary time period in the future based upon the current trend progression and the most likely continuation based upon correlation with similar and historical trends.

Real-time Data Monitoring & Automation The application needs to integrate with third party data feeds, get (near) real-time updates, update all of the metrics the data relates to, monitor the changes against alerts, update the trends, and determine if any updates indicate trends of interest, significance, or concern. This all needs to happen automatically.

The application must support an open API, support standard data formats, be aware of standard data records used in direct supply chain, integrate with third party data feeds for all types of supply chain (risk) data out of the box, and be able to normalize all of this data into a standard data store (warehouse, lake, lakehouse, etc.). It must support rules-based alerts, integrations, monitors, and workflows to allow for appropriate automation support.

Mitigation Plans The platform must support the definition of mitigation plans, with individual actions, objectives, and impacts. Mitigation plans should support multiple stages, actions should support detailed definitions and expected outcomes, objectives should support a metric-based definition, and impacts should support detailed cost definitions.

It should be easy to instantiate an instance of a plan when a risk event is detected or defined by a user, track updates in real time as new data comes in or users define new data, track the impact of a recovery action (if it decreases the time to recovery, etc.), and auto-generate progress reports on a regular basis, as well as roll up all of the impacts, and recoveries, for users who need it. It should also support the creation of what-if scenarios to calculate the potential impacts of a potential action (in a given timeframe), and allow for cost vs impact vs margin/profit improvement calculations to help an organization determine if the action could be worth it, especially if the associated chance of success is limited.

Surveys The platform also needs to support the creation of surveys that can be distributed to multiple parties up and down the chain to collect data for analysis purposes.

The surveys must be capable of collecting numeric, type-valued, and open-valued data, as required.

SourcingShark Wants to Give You Sourcing Insights That Take a Bite Out of Your Sourced Spending

Sourcing Insights was co-founded in 2017 by a CPO who knew the importance of spend-based insights for Sourcing Success and a technologist who spent over two decades developing P2P analytics and audit software who both saw the need for deeper insights into organizational spend for strategic sourcing, especially in direct material industries (as most of the [leading] spend analysis solutions on the market was focussed on indirect spend or analysis at the category level). Together they built a hybrid company that offers a leading spend analytics solution as well as expert services that can get you started and make sure you get the value out of the solution that you expect.

In other words, while Sourcing Insights appears to be just another spend analysis company, it’s not just another spend analysis company. The reason being is that it supports spend by commodity and/or part based spend analysis of the box, tracks price movement at the part/commodity level out of the box, and the definition of commodity or part-based plans out of the box. But first, let’s cover the basics.

The entry point to SourcingShark is either:

  • a customizable spend overview dashboard that not only summarizes spend by various dimensions (commodity, month, PO, supplier [group], etc.),
  • a commodity dashboard that summarizes the commodity codes / parts in the system, associated contracts, purchase order, (potentially) duplicate invoices, and other spend metrics of interest to the organization,
  • or a merged dashboard that combines all of this information into one dashboard and allows for filtering by commodity or organization (and soon to be organization/division groups)

From the supplier widget[s], you can dive into the vendor summary dashboard which can be configured to display the same information, but just on the vendor, or other vendor-specific information that we’ll discuss a bit later.

Before we dive into some of the more unique (out-of-the-box) capabilities of SourcingShark, we will note that they cover all of the basic out-of-the box reporting requirements that one would expect from a modern spend analysis application (for direct materials). This includes deep, customizeable dashboards for

  • invoice spend (vendor type, vendor, cost center, GL, creator, company [if you have a multi-level organization]),
  • PO spend (vendor, cost center, GL, company, part/commodity category, part/commodity, creator, etc.),
  • Invoice Analysis, and
  • PO Analysis.

However, the more/most unique capabilities revolve around (direct) vendor deep dives, part/commodity analysis (& price movement), and strategy insights.

When it comes to vendor deep dives, they have the following out of the box:

  • Deep Vendor Management where you can track deep (SIM level) vendor details if you want to, map vendors to all of the commodities/parts they supply, associate them with contracts, quickly see spend-based summaries by part/commodity, by GL, or Company (if you are a multi-level organization).
  • Vendor Score Dashboard which allows you to overview vendor performance as the platform can track on-time delivery, quality scores (based on disruptions, PPM, SCARs, etc.), commercial scores (based on supply agreements, cost improvements, financial ratings), and risk scores (if you have access to third party feeds to collect the appropriate data and define your risk model), and provide you with widgets to drill down into all of this data, which can also include metric-based summaries of all system data fields
  • After-The-Fact Vendor Summary which presents a detailed summary of after-the-fact purchases

When it comes to part deep dives, they have the following out of the box:

  • Spend Summary that summarizes the spend by part by vendor, invoice, amount, month, etc.
  • PO Spend Summary that summarizes the spend by part by vendor, invoice, amount, month, etc.
  • Price Movements that shows the price movement for (a category of) related parts over a time frame, with the ability to drill down by vendor, and see the potential savings if all parts were bought at the lowest price
  • PO Price Accuracy Analysis that shows the percentage of vendors, POs, and invoices which were accurate (to the PO or Contract)
  • Part / Commodity Deep Dive where you get just the part related spend and metrics, can define your part/commodity strategy, and track the success to that over time
  • Exportable PO-Based Purchase Price Variance Analysis where, for each part/SKU in the system, you can get the PPV for the time-frame of your choice using actual PO data

As alluded to above, they also support contract metadata management which allows a user to define all of the relevant data for contract, and spend, analysis; associate those contracts with vendors and parts; and define contract summary / analysis dashboards and reports as needed.

And, with their new release this month, they now support Part/SKU Strategies where an organization can capture their current and future sourcing strategies along multiple key dimensions, including:

  • target # of suppliers
  • suppliers under contract (not necessarily the same, you may want a spot-buy supplier just in case)
  • supplier reach (local, regional, national, international, etc.)
  • primary supplier award / supplier split percentage
  • desired volume incentive rebates
  • PPP Trend expectations
  • target savings

as well as track the project status, the communication status (with potential suppliers), the primary type of commodity sourcing strategy (contract renegotiation, multi-round RFX, etc.), and the primary price (commodity) driver, typically associated with a market index of the primary material (or material with the highest variability). It looks pretty basic when you first see it, but it’s incredibly powerful and useful and will likely evolve over time, especially when they add in full Bill of Material Support / (Sub) Assembly Support, slated for their next release (target 2024 Q1).

Finally, the team has the experience and the services to support your spend analysis efforts. They can handle all of your data refreshes, design your custom dashboards, and walk you through proper spend analysis methodologies, or even do the first pass for you, to make sure you achieve your organizational goals and have the knowledge you need to do spend analysis right going forward. Sourcing Insights might not be as old as the grandparent spend analysis vendors of the space, but they are already one of the best platforms out there for direct spend analysis.