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Spend (Supply Chain) Analytics Day I

Spend (Supply Chain) Analytics Day I. Why do Companies have a Procurement Department ?. In conclusion, our major contract expires tomorrow, we have no idea what we want, and no knowledge of the market. It is time to pass this to the procurement team. Let’s buy some Cauliflower.

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Spend (Supply Chain) Analytics Day I

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  1. Spend (Supply Chain) Analytics Day I

  2. Why do Companies have a Procurement Department ? In conclusion, our major contract expires tomorrow, we have no idea what we want, and no knowledge of the market. It is time to pass this to the procurement team.

  3. Let’s buy some Cauliflower

  4. Why you end up paying more? `5.00 `20.00 `2.50 • Cauliflower is sold double the rate at APMC after adding transport charges • Cost in retail markets • A farmer is paid this amount to buy a kg of cauliflower

  5. Spend Analytics… An average company can save 11% with a modern spend analysis system. ~Aberdeen Group

  6. Spend Analytics: The Whole Spectrum • 2. Supplier assessment • 1. Spend analysis • 3. Supplier identification • 8. Invoicing, reconciliation and payment • 4. Sourcing • 7. Order fulfillment • 5. Contract management • 6. Procurement

  7. Spend Analytics… • Top 6 Reasonsfor Spend Analytics

  8. 1 Know exactly how much does your company spend with the supplier before negotiating a contract.

  9. 2 Negotiate with the final legal entity not the subsidiary.

  10. Final Legal Entity … ICRA Group Companies Management Consulting BPO Credit Rating Software & Analytics ICRA Techno Analytics Ltd 100% wholly owned BPA Technologies Inc ICRA Sapphire Inc.

  11. Final Legal Entity … Adatis(UK) Adatis(Italy) 90% Owned Adatis(Canada) 60% Owned Adatis(US) 90% Owned Adatis(Germany) 45% Owned Adatis(France) 50% Owned Adatis(Switzerland) 50% Owned Adatis(Canada) 40% Owned

  12. How to obtain the Final Legal Entity … • Bureau Van Dyk • Dun and Bradstreet • DUNS Number • How Clean is your data?

  13. 3 Concentrate your effort on the large suppliers

  14. 4 Categorize your spend to know where to go

  15. Categorize the data … • What will be the category? • UNSPSC: United Nations Standard Products and Services Code • Segment or Market Sector • Family or Market Sub Sector • Class or Commodity Group • Commodity • How to categorization ? (Create Rules?) • ? • ? • ?

  16. 5 Who buys What from Whom and When and Where

  17. Buy What? From Whom? Supplier Commodity Who Cost Center Result of Filtering by Cost Center Result of Filtering by Supplier Result of Filtering by Supplier & Cost Center Result of Filtering by Supplier, Cost Center & commodity

  18. 6 Stop Maverick Spend Maverick: Someone who is independent and not a follower

  19. Assignment (10 marks) . . . • Collect a bill from one of the chain stores like: • Metro • Spencers • Big Bazaar • Etc • The bill should contain at least 10 line items. (else use multiple bills) • Identify the UNSPSC Code of the line items. • Submit a scanned copy of the bill(s) along with your analysis.

  20. Project (30 marks: 15 fixed + 15 relative) . . . • The excel file contains a list of suppliers for Bad Idea Company. • Cleanse the data (PDF provided). • Use a distance algorithm (like Levenshtein) to calculate the distance between the suppliers. • Identify the suppliers that can be similar by selecting suppliers whose distance are less than a threshold (use a threshold around 5). • Verify from Google that these are not independent entities. • Your project should contain the following: • List of similar suppliers and their distances. • R Code or Rapid Miner Process

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