Category Archives: Spend Analysis

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.

Simfoni – Ascending the Scales in Spend Analysis

Simfoni has matured and progressed quite a bit since we last covered them on Sourcing Innovation back in 2017 (in our article that discussed when a quartet’s not enough), and has even progressed since the doctor last co-covered them on Spend Matters in early 2022 (although the site revamp has conveniently erased his author credit from many of the series he co-authored) in their most recent 3-part vendor analysis (Part I, Part II, and Part III). (Note that a Spend Matters ContentHub subscription will be required to view this three-part series.)

Since the early days, when Simfoni was essentially a spend analytics solution built on Microsoft Power BI with some roll-your own customized spend analytics capabilities embedded with spend analytics process expertise, they have added quite a lot of capability on top, including both out-of-the-box and some DiY (do it yourself) analyses as well as:

  • Extensive out-of-the-box opportunity assessments
  • Impact assessments regarding GHG, ESG, and CSR elements
  • Self-serve classification and taxonomy management
  • Advanced dashboards and custom data analysis
  • Sourcing pipeline management
  • S2C (Source-to-Contract) capability accelerated through its EC Sourcing Group acquisition, including the following:
    • Self-Source/Full e-RFX (RFI, RFP, RFQ, etc.)
    • Supplier Management
    • Contract Management
  • Workflow Routing & Enablement
  • Catalog Management & Creation
  • BuyDesk & Global Sourcing Support
  • Invoice Management
  • Performance Management & Savings Tracking

In this update, we’re going to focus on Simfoni Spend Analytics. We’ll cover their S2C capability (which we last covered in 2016 in our post on how EC Sourcing was getting ready to take the mid-market by storm, and the doctor last co-covered on Spend Matters in 2021 on their 3-part vendor analysis: Part I, Part II, and Part III), in a later update. Note that we will not be covering their Global BuyDesk, their back-office GPO / Procurement-as-a-Service offering, or their Tail Spend Management Services as we focus on technology products only in this blog. But if you’re short on Procurement People Power or Category Competence, we do suggest checking these offerings out. After all, there are advantages to using the same provider for software and services, especially considering the breadth of their platform which provides a complete history and additional advantages once you’re ready to take over self-sourcing and make procurement personal.

The first screen you see in Simfoni Analytics is the “Terminal” which is the cross-application dashboard that front-ends the analytics solution providing a jumping point into key metrics and insights from each module of the full Simfoni platform, including analytics, sourcing, supplier management, and contracts. The Terminal is configurable, with several pre-built out-of-the-box widgets to choose from, which can even include currency trends / heat maps, quick links into key parts of the platform, and even (third party) content feeds.

From the Terminal, the most common jumping point will be Analytics, which has its own landing page that provides the entry point for all of the built-in dashboards which include:

  • Insights: spend summary for the current month vs the prior month, and the same month one year ago (in terms of spend, transactions, suppliers, and other key data points)
  • Spend: classic spend summary (total suppliers, transactions, POs, categories, suppliers, business units, trends, etc.)
  • Geo Mapping: spend breakdowns by regions / countries (and visual bubble map overlays)
  • Trend Analysis: insight into spend trends by supplier, category, region, etc.
  • Category Console: spend breakdowns by category and segmentation by value bracket
  • Spend Distribution: taxonometric breakdowns
  • Commonality Analysis: supplier by count of entity analysis and associated spend
  • Supplier Normalization: suppliers by duplicate count / familying opportunity and impacted spend
  • Supplier Spend Profiles: spend analysis dashboard restricted to a single supplier, possibly augmented with risk, impact, or other customized insight
  • Tail Spend: a spend dashboard limited to, and customized on, tail spend including breakdowns by invoice groupings, vendor groupings, and transaction groupings for insights into spend type (contract/non contract, direct/indirect), variance, and transaction cost

and may also include:

  • Supplier Risk: a risk dashboard based upon integrated third-party risk data feeds (from Darkbeam, out-of-the-box with subscription, or bring your own subscriptions like BVD or Ecovadis)
  • Spend Impact: the impact of your organizational spend from an environmental or social perspective, provided you have the appropriate data feeds for the necessary calculations;
  • M&A Analysis: a specialized dashboard that allows you to compare spend between two entities and do an opportunity analysis
  • Custom Insights: a dashboard custom built for very specific needs unique to your organization

In addition to these analytical dashboards that provide deep insights out of the box, the platform also has some optimizer dashboards that include:

  • Opportunity Assessment where they use the results of all their analysis above to indicate top opportunities across supplier consolidation, one-time vendor elimination, supplier normalization, production commonality, catalogue buying (vs off-catalog purchases), PPV (purchase price variance), payment terms, and other actions (based upon a custom analysis they build for you upon implementation)
  • Supplier Consolidation opportunities by bottom level category as well as projected savings (and savings range) from consolidation to the lowest cost product
  • Purchase Price Variance by product along with savings potential by item
  • P-Card centric tail spend dashboards with spend, transaction, category, supplier, user, facility, etc. breakdowns for deep insight so that what happens on the P-Card doesn’t stay on the P-Card
  • Payment Terms analysis and impact from payment term alterations

And, since the early days, they have added a lot of self-serve data management capabilities including:

  • Category Management where you can define your categories (in a taxonomy)
  • Material Description Management where you can define standard material descriptions
  • GL Description Management where you define GL codes
  • Supplier Management where you manage supplier groupings (families)
  • Transaction Management where you can drill down to the transaction level and get full details and perform transaction-level mappings
  • Taxonomy Suggestions where new classification or change requests are tracked
  • Manual Classification where you can classify by supplier, description, material, and/or GL Description and where you can see the % of currently classified transactions, suppliers, and spend

Simfoni’s Spend Analytics capabilities are quite extensive, informative, and best of all, easy-to-use. If you’re looking for a best-of-breed spend analytics solution from a mini-suite vendor that also has strong procurement services, Simfoni is a vendor you should definitely check out.

There are NO Perils of Big Data in Procurement!

First of all, no organization has enough data, and those that come close don’t have big data.

Secondly, the more data you have, the better.

Third, if you think you have too much data, you’re not getting it!

So where’s this rant coming from? The rant-inducing headline du jour. The CIO Review recently published an article on The Perils of Big Data in Procurement which is complete non-sense, as there are no perils to having more data (because there’s never enough), unless it’s bad data (but the assumption in the article was that all the data was correct), just perils in terms of how that data is presented and accessed.

The perils in terms of how that data is presented and accessed can be significant, but that’s not due to having big data, that is due to poor system design — and that’s a different issue!

According to the article, buyers and procurement managers … have available a huge and unprecedented amount of data … [and] start to measure everything in order to manage it and that with this approach, several data lakes are created, feeding various dashboards, scorecards, reports, and metrics as procurement professionals try to understand spend analysis, price trends, market fluctuations, volume, cost savings, negotiation performance, and other essential factors. And this is true.

It goes on to say it is very easy for a person to be lost in the sea of numbers and details and miss the big picture entirely because you don’t know what is the crucial data that would give you critical insights. And if that wasn’t enough, it goes on to say it is the same as someone that enters the hospital with a broken leg but has everything else checked. WTF?

This is so dumb it makes you angry!

  1. If a person gets lost in the sea of details and numbers it’s because they don’t know what they should be looking for and how they should be looking for it, not because there’s too much data.
  2. If they don’t know what is crucial, it’s because they don’t know enough about the project they are doing to identify what’s critical and what’s not.
  3. What health practitioner is going to be so stupid as to not see a broken leg on a triage? Come on now! And what Procurement practitioner would check all but one dashboard randomly and then not check the last remaining dashboard? (And that’s what the article is implying with its ridiculous statement.)

In other words, the headline, and claim, is bullcr@p. Don’t blame a mountain of data for a lack of capability in your people, poor vendor technology choices (that bury you in useless dashboards), and your unwillingness to train your talent in modern technology and best practices so they can do their job properly.

And while the author is completely right in that you need to

  • understand what matters
  • start with a top-down view
  • have people who are good at interpreting the data

It still misses the point in that you need to, for any application you buy and any project you wish to undertake

  • define what’s relevant up front
  • find a solution that is configured/configurable to show that up front
  • make sure the data is easy to interpret, is accompanied with written guidance, and that your talent is trained on how to properly interpret the data and
  • if the goal is opportunity finding, the solution needs to identify and present the top opportunities across all of the analysis done, with deep supporting dashboards buried under the high level summary dashboard

More data is always better, especially if you want to use machine learning. In other words, it’s not the data, it’s the application, or the people, so don’t blame the data for your organization’s shortcomings.

Ignite Wants to Spark Your Sourcing Success with Actionable Analytics!

the doctor has written about many Spend Analysis vendors over the last decade*, including Ignite Procurement, which is one of the few newer vendors that he expected would soon breakout of their (Nordic) niche and start expanding, something which they are now starting to do having tripled their customer count in the last 6 months to over 200 customers.

The reason for this expectation? They earned their top right status in the Spend Matters Spend Analysis Solution Map when the (quadrant) maps still existed and the doctor was responsible for grading them as a Top 5 Best-of-Breed Mid-Market focussed Spend Analysis player located in Western Europe / the UK.

Founded by ex-BCG (Boston Consulting Group) consultants in 2017, with the first version of the platform launching in 2018, the key players not only have a firm understanding of spend analysis, but what analysis capabilities a customer needs to find their spend waste and their opportunities. Plus, they understood since day one that spend analysis in a vacuum is not that meaningful and is most meaningful in the context of negotiations, supplier management and development, contract obligation management, labour compliance and ESG reporting, for example. Negotiations work best when they are fact based, supplier development efforts are best focussed on those suppliers where improvements would result in considerable cost reductions or value generation, contracts are meaningless if not adhered to (and the resulting overspend completely unnecessary), labour violations in the supply chain can result in huge fines to your organization, and exceeding your carbon caps can be even more expensive (not to mention the fines if you don’t properly report). (And yes, this is a bit of foreshadowing.)

The core of the Ignite “Spend Management” solution is the analytics offering which, like most spend analysis solutions, has two core components:

1. Data Management

It’s very easy to get data into the Ignite Platform. In fact, it can be as easy as dragging-and-dropping a file onto the browser pane as Ignite allows you to define all of your taxonomies as well as your standard file format mappings to those taxonomies. It can then detect if the data is new, incremental, or updated and allow you to add, add only new records, update existing records, or even load the file into an entirely new cube.

When it comes to taxonomies, you can start with your own or built-in and then, during analysis, you can define and redefine taxonomies on the fly, with reclassification as simple as dragging-and-dropping. You can also define and update mapping rules quickly and easily as well, fixing errors or updating classifications as the need arises.

Data enrichment is easy-peasy compared to generic analytic platforms or suites as they support a number of financial metric, industry classification, currency exchanges, commodity intelligence, CO2 emission sources, and risk metric sources out of the box and provide a full integration platform with APIs, pre-built connectors, and timed data pulls (via SFTP, for example) for those who need custom integrations.

The platform also supports multiple tables and spend cubes and allows you to work on global tables and cubes or local tables and cubes for what-if analysis.

But most importantly, it’s one of the few best-of-breed platforms with a fully integrated visual data flow manager where you can define the entire loading, mapping, enrichment, classification, and automated analytics, reporting, and notification process, including automated supplier normalization.

2. Analytics

The Ignite Platform has just about everything you would expect from a modern analytics platform including arbitrary dimension selection, formula-based dimension derivation, easy (powerful metric based) filters, multiple chart and widget types, easy drill down, easy view/report modification, and ad-hoc analytics.

It also comes with a full suite of out-of-the-box analytics to help you identify potential savings opportunities through contracting (off-contract spend), renegotiation, supplier (re) negotiation, supplier benchmark improvements, spend consolidation, invoice management, payment term rationalization, price improvement, etc. Contract coverage, PO Coverage, key supplier coverage, and a suite of KPI reports are also available out-of-the-box (including a spend development dashboard that can go beyond just spend to impacting metrics such as OTD, quality incidents, etc. if you track the data in the supplier management module).

It’s ability to identify supplier-based (re)negotiation and development opportunities is extremely good and based on its proprietary Ignite Matrix that maps “share of wallet” vs EBIT Margin (which it calculates using mandatory government disclosures and integration with appropriate feeds, such as Enin in the Nordics, and appropriate adjustments) and scatter plots the results to help you quickly identify where your business is contributing to a supplier’s high profit margiin (and where the supplier has room to negotiate without jeopardizing its stability).

On top of this they have also built:

3. Supplier Management (Information / Performance / Risk / Compliance)

With its strong data management underpinnings, the Ignite Spend Management platform can store any all supplier related you wish to track and analyze, which not only allows deep spend-related insights by supplier, but performance and risk (metric) insight by supplier, with the ability to track and compare over time.

In addition to providing a full Supplier 360 view across all data captured in the platform, the Supplier Management capability includes standard campaign management where a buyer or supplier management can create questionnaires for supplier data augmentation and collection of relevant data and documents for supplier performance / risk / compliance management.

4. Contract Management (Governance)

Due to its strong data management underpinnings, the platform can also store all relevant contract meta-data in addition to the contract documents and allow users to manage, report on, and automatically annotate spend that is covered by a contract (as well as determine if it was billed, and paid, at the contracted rate using the appropriate payment terms). Also, as with most contract management plays, it can support tasks and alerts and the linking of contracts to tasks and alerts.

5. Scope 3 Management / Carbon Accounting

The best foundation for a carbon calculator / carbon reporting application is a true analytics platform that can support the definition of all of the appropriate Scope 1, 2, and 3 Categories of relevance to the organization and/or required by the appropriate authority to which reports must be made; the integration of data feeds to allow for the appropriate carbon emission calculations; the collection of actual data from suppliers that can supply it; the generation of the appropriate reports with the appropriate calculations for mandated reporting; and the tracking of changes over time. This is precisely what the Ignite Procurement platform supports.

The entire platform is easy to use and the UX is quite modern, but you don’t have to take our word for it — you can see a three minute demo on their webpage … just scroll down to the Meet Ignite Procurement section. So if you’re looking for an analytics platform that can provide you actionable spend insights on your contracts, suppliers, and ESG that you act on to reduce waste and increase value, you should make sure that Ignite Procurement is on your shortlist, especially if you are in its current target marketplace in the EU/UK.

* Not all on SI, many write-ups are on Spend Matters, behind the revised paywall.