...MODULE 2 SESSION 1 STUDENT ID # 2001691 GOODS SPEND ANALYSIS ASSIGNMENT Goods spend Analysis is the process of organizing a company’s spend, leveraging spend data for the purpose of gaining visibility into cost reduction, performance improvement and uncovering hidden savings opportunities. Spend Analysis consist of three different components which are; Suppliers, Customers and Commodities and Services. Each component should be measured in dollars and number of transactions which should be a potential source of improvement and cost saving. I believe spend Analysis serves three internal user groups in a company which comprises of: ❖ Leadership of the organization usually the chief executive officer and chief Operating officer who needs up-to- date reports to drive strategic direction. ❖ Managers, Accountants or Chief Financial officer who need to drill down into a spend data set to explore specific areas of interest or track down payment specifics. ❖ Sourcing power users who need to locate, drive, and monitor the next set of savings initiatives. Goods spend Analysis consists of both direct and indirect spend and my organization deals with both. I will be discussing the various steps I will use in conducting goods spend analysis in my organization. The first step is to identify the system containing spend data in my organization; there are many systems...
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...Individual Exercise Goods Spend Analysis in Your Organization Describe components of a goods spend analysis for your organization. Please feel free to bring any relevant information about your organization to class. There are three components to the exercise that must be handed in: 1. Show the steps you would use to conduct goods spend analysis for your organization. PO Mgmt Dept Fulfillment Buyer Accounting Payable Procurement Manager Procurement Category Buyer CFO Provide Primary spend data Accountably sign Spend analysis Approve Spend Analysis Draft Spend Analysis Verify Primary data Steps to conduct goods spend analysis Internal Goods Users 2. Describe specific key triggers and why you chose them. In general, we conduct goods spend analysis based on company management, procurement management and some other special reasons. Company management purposes: * Cost analysis * Budget, Forecasting and Planning Procurement management purposes: * Periodical summary, e.g. quarterly, monthly, semi-annual, annual * Top suppliers cognation for long-term relationship development * Quarterly major suppliers review of purchasing volume, capability and performance PO amounts and price review under Master agreement or stage prices * Negotiation/bidding preparation, e.g., category volume, suppliers’ history PO amounts, delivery, etc * KPIs as cost saving, purchasing amounts, workloads, etc. Special...
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...1. Why are data analysis skills and thinking so important to spend analysis? Can’t software applications be used to generate the information needed automatically? In today’s world, advanced technology has provided us with a lot of tools to help sift through and process huge amount of data. However, in spite of all this, the fact remains that data is useless without the skills to analyze it. Critical thinking is still a skill inherent only to humans. Software applications are much capable of generating data automatically, however, only one equipped with data analysis skills can translate that data into information that can support corporate decision-making. Equipped with the right data analysis skills, one would be able to select the significant data from the wide array available and turn it into actionable information. These skills are important in spend analysis as the most critical stage is making sense of the output and deriving strategic solutions based on the information available. The employment of data analysis skills and critical thinking in spend analysis is necessary to reach the goal of enjoying the benefits of spend data management which include reduced material and services costs, better supplier and product management, and lower inventory costs. 2. How might a structured process such as Six Sigma methodology be useful here? The Six Sigma Improvement Model known as DMAIC can be used in implementing spend management in the enterprise with the aim of continuous...
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...Spend analysis is performed in an organization to manage the spend tactically and strategically. The main objective of performing spend analysis in Rexel Canada is to achieve cost savings and to determine with which vendors it will be beneficial to maintain long term relationship in order to get better pricing and to get maximum service. Rexel Canada is an electrical components distribution company dealing with around 3500-4000 vendors. Thus it becomes very necessary to do good spend analysis to monitor organization spending. Spend Analysis is also important for various business strategies such as budgeting, inventory management and spending patterns. Steps used to conduct Goods Spend Analysis • Procurement department coordinate closely with accounts payable department to collect the data on annual spend for products and services at divisional level and matches with our ERP. • Gathered data is divided into Direct Spend and Indirect Spend Direct Spend includes organizational spending on goods and services related to business. Indirect spend includes spending on operational expenses such as stationeries, overhead expenditure etc. • Data collected is cleansed to rectify the error of duplication such as supplier's names spelled differently and treated as different suppliers. • Making sure the companies listed in our ERP recently merged with other listed vendor is not considered as separate vendor and thus considered as one vendor. • Converting the amount spend into...
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...Spend Analysis Lisa Fitzsimons BUS 307 Instructor Peter Thuleen 02/23/2015 Spend analysis is a process that an organization can perform that will allow them to identify wasteful spending and increase company profits. A spend analysis will also show spending patterns and bottlenecks that occur, which will increase company long-term savings (Sharfaei, 2013). This process may be difficult and time consuming, however, with cooperation with each department and proper data analysis and presentation, a spend analysis will be extremely beneficial in the long run. The following information describes what a spend analysis is, skills and tools needed for the data analysis, how a Six Sigma methodology will help with a spend analysis, and what makes up the analysis team who will work to create the spend analysis. What is a Spend Analysis Spend analysis is the application of quantitative techniques to purchasing data in an effort to better understand spending patterns and identify opportunities for improvement. This process involve collecting, cleansing, classifying, and analyzing the expenditures within an organization with the purpose of reducing procurement costs, improving organizational efficiency, and monitoring organizational compliance (Bozarth & Handfield, 2012). A spend analysis can be used to identify a number of different questions regarding where is the bulk of company spending, how much is the organization spending with their suppliers, and does the organization...
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...managing procurement. Below is a list of commonly used strategic procurement tools that will aid decision-making and support the efforts of commissioners. 1. Spend analysis 2. Collaborative procurement 3. Procurement strategy and plan 4. Category Management 5. Supplier Relationship Management 6. Supply/Value Chain Analysis 7. Competition 8. e-Procurement 9. Standard Terms and Conditions of Contract 10. Framework agreements 11. Preferred supplier lists 12. Sustainable procurement In addition the following section contains information on how to apply the tools above: 13. Applying Strategic Procurement Tools in Practice 1. Spend analysis When used at a strategic level this is a powerful and invaluable tool for identifying and manipulating detailed spend data by, for example, category, provider, cost unit and time period and combinations/permutations of these. This information is the key foundation for other strategic procurement decisions such as category management, supplier relationship management and the procurement strategy. It forms an important part of resource mapping and planning as it allows organisations and their commissioning partners to identify where financial resources are being allocated currently, and commitments in the future. Spend analysis will be particularly useful if carried out regularly and the information is kept up-to-date at a corporate level. If this has not been done then it should be...
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...Why are data analysis skills and thinking so important to spend analysis? Can’t software applications be used to generate the information needed automatically? Not all data presented to you may be important to make strategic decisions. One can make sense out of a large data when data analysis skills and thinking are employed. These skills help one identify the more meaningful information and understand patterns, consistencies or irregularities, to make sound decisions. Flanagan of Pepco Holdings, in the article provided, shared that one will be better able to assist internal clients in planning spend strategies and also better understand supplier’s cost proposals. Analysis is important because most automatically generated results do not provide the information needed. It is important to know what data is meaningful and understand what the output of the data means and how to employ it in a real world application How might structured process such as Six Sigma methodology be useful here? Data analysis is important for a company’s continuous improvement efforts. Six Sigma is a business process improvement tool to significantly minimize mistakes at a stringently high level. The methodology of Six Sigma itself, when followed correctly (i.e. DMAIC), will allow a person to identify process inefficiencies and address them to generate cost savings, deliver quality of service and achieve more consistent good results. Why is it important to get other functional areas,...
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...2012 Spend Analysis I. Introduction The current condition of the economy in the United States (US) and increased economic pressures has reinvigorated many companies to rethink their purchasing practices. One of the best ways for a company to evaluate its spending patterns is through a spend analysis. “A spend analysis is the process of determining what is being spent, with whom and for what” (Hingorani, 2010, p. 58). In order to accomplish this task companies must use software programs to import and aggregate data from multiple systems. This paper will explore several components of the spend analysis process including the risk of using software programs alone to analyze spending patterns; how Lean Six Sigma processes might be useful when developing a spend analysis process, and why it is important to involve multiple functional areas, most notably finance. II. Relying on Software Alone While software programs offer a great platform for organizing data they do not provide a method of cleansing data. What I mean is, spend data can be housed in many different databases, and trying to consolidate the data correctly can prove to be very difficult. Ever heard of the saying “garbage in, garbage out”? That is exactly what you might get relying solely on software programs to complete your spend analysis. This is where analytical skills and critical thinking become very important when setting up a spend analysis process. First, you must determine...
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...Spend Analysis & Data Analysis Robert Knieriem BUS 307 Professor Ray May 21, 2012 In today’s fast paced, technology heavy corporate world, data that pertains to any and every business aspect, regardless of size has become ever more important in daily operations and decision making. The data that results from these operations and decisions and its collection, analysis and concluding into upcoming decisions will have a deciding factor in how well or how poorly the company operates in the future. This data is made on its own, but putting it together and making sense of it all remains the challenge today’s companies have and continue to deal with. Data analysis and critical thinking skills are important to spend analysis because this information put out requires a human element to understand what is really being put out. As mentioned by Purchasing, data is only data until it’s analyzed and acted on, and only then does it become valuable information to the company. Further, today’s companies who actively collect data are finding themselves looking for those with the knowledge and skill to analyze this data and allow the company to act upon it (Bozarth & Handfield, 2008). Even with today’s most powerful software which simplifies the task of collecting and maintaining this data, the process of analyzing and understanding of this data requires the human touch and only someone with this background and knowledge can put the data into easy to read, easy to understand...
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...this paper will take the article, Demographic Analysis for Consumer Spend in Communications, and list the factors contributed to the change of supply and demand with regards to communications. Defining Economics The study of economics consists of a broad range of meaning. A brief definition can be that economics is a social science concerned with the study of economies and the relationships between them (Unknown, 2010). In reality, economics studies the production, distribution, and consumption of goods and services in a social setting. To further understand economics and the principles of supply and demand, the branch of microeconomics must be defined. Microeconomics is the study of how a household spends its money. Microeconomics also studies the way businesses determines how much of a product to produce and what pricing strategy to use. Microeconomics also studies how individual markets and industries are organized, what patterns of competition they follow, and how these patterns affect economic efficiency and welfare (Unknown, 2010). Microeconomics is the branch which business sways the consumers by appealing to the wants and needs of individuals. This principal of economics concentrates on the laws of supply and demand. Law of Supply The law of supply is a relationship between the amount of good that a supplier is willing and able to supply, offer for sale, and all of the different possible prices at which the good might be sold. The law of supply further...
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...neck was dark gray, the backs of his hands were rusty, and his fingernails were black deep into the quick.” (Lee 29) Analysis: This quote shows that not all the kids in Maycomb have the best hygiene. This could be due to not having the money for it. Which ties back to the fact that a good majority of people in Maycomb live in poverty. This shows the reader that both Maycomb and the civilians living in it that it probably isn’t the cleanest environment. This help the reader be able to connect to the characters and understand where they are coming from and why they might act the way that they do. Lee uses diction in is choice of filthiest and rusty. Lee also uses hyperbole in that same text. Quote:“It’s against the law alright… but when a man spends his relief checks on green whiskey his children have a way of crying from hunger pains.” (Lee 34)...
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...Other areas 4 Supplier management: No established preferred supplier list leading to long lead time. Lack of supplier evaluation leading to lower quality 2 Logistics organization: Decentralized organisation with limited oversight from HO ~20% spend influence. Limited volume pooling and cost savings. 5 Procurement Strategy Procurement Organization Strategic Sourcing Operating process management Supplier Relationship Management Material management: Formal planning and communication could be improved. Lack of material categorisation to determine category level storage strategy 3 Strategic sourcing / Operating process: High time requirements, leading to suboptimal budget realization (80% PGN source-able(1) spend, compared to ~20% currently 1 Strategic Sourcing & Category Mgmt 1 Strategic Sourcing • Conduct strategic sourcing activity for center led categories 0 Category Management 13 1 Contract Management 1 • Establish sourcing plan and strategy for center led categories • Establish frame contracts for center led categories Strategic Sourcing team will progress to become Category Managers • Monitor price agreements and compliance to frame contracts • Conduct supply market analysis and benchmarking activities for the respective...
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...BUSINESS STATISTICS 10123046 SalmanRiaz MBA (3.5 years) FALL 2010 SUBMITTED TO: Mr. ABID AWAN SUBMISSION DATE: February 25, 2015 Correlation analysis of Three Universities Correlation analysis of GIFT University Tables 1 | ECA (X1) | HOURS (X2) | COURSE(X3) | Degree(X4) | CGPA(Y) | ECA (X1) | 1 | | | | | HOURS (X2) | 0.020546566 | 1 | | | | COURSE(X3) | 0.110931612 | -0.003577178 | 1 | | | Degree(X4) | 0.055096599 | -0.163985608 | -0.09382865 | 1 | | CGPA Y (Y) | 0.14111477 | 0.111037212 | 0.230369489 | 0.220496482 | 1 | Explanation: From the above calculated table value, we can see that the relation between independent variable X1, X2, X3, X4 and an dependent variable Y. X1 (ECA) and X2 (hours) shows that there is a 2.05% correlation between them which is a strong positive correlation. X1 (ECA) and X3 (course) shows that there is a 11.09% correlation between them which is a strong positive correlation. X1 (ECA) and X4 (marks) shows that there is a 5.50% correlation between them which is a strong positive correlation. X1 (ECA) and Y (CGPA) shows that there is a 14.41% correlation between them which is a strong positive correlation which indicate that our dependent variable CGPA depend on ECA also. X2 (IQ hours) and X3 (hours) shows there is a -0.35% correlation between them which is a negative correlation. X2 (IQ hours) and X4 (marks) shows -16.39% correlation between them which is a negative correlation. X2 (IQ...
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...Springfield Nor’easters: Baseball Springfield Nor’easters Case Study II Analysis Dr. Philemon O. Oyewole 1206 AMBA 650 1131 Gregory V. Brown Introduction Mr. Buckingham is a Marketing Director for a newly formed minor league baseball team located in Springfield Massachusetts. Mr. Buckingham has previous experience in marketing; however he was very inexperienced when executing the marketing plan for a baseball team. He started his research by using a survey conducted by a nationally noted firm in 2005. The results supported that the households with school aged adolescents were the type of consumers that were more likely to attend various sporting events. A significant statistic that he obtained verified from the survey confirmed that approximately 82% of the market in the Springfield area had incomes ranging from $22,500 to $75,000 (case study, exhibit 5). In an effort to ensure that the market was canvassed correctly, he needed more than three year old data to confirm a target market. Though the 2005 data was a good starting point, to complete a good analysis he need current data. Mr. Buckingham has a limited marketing budget, so the information will need to be specific and directed toward maximizing profits for the up coming season. How was Buckingham going to collect the appropriate information with limited resources? The objective was to predict how many people would come out to...
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...situation is very similar to how households are run since as in businesses things break down, food runs out, and floors need to be kept clean. Using strategies that global businesses use to help keep their MRO’s in check are also important strategies for households to consider. One of the most important techniques that business’s use is to understand how they spend their revenue. They use what is called spend analysis to gather information about where and how their money is going and from this they can utilize some risk management skills to help alleviate some poor spending habits. A great example of this is to help control maverick buying which is unauthorized buying decisions (Avery, 2009). In a household this also holds true. Typically there is the nuclear family setting where two parents collaborate on household needs. However, more often than not one or both of the parents (sometimes children or family members) will buy things without the others knowledge. A good spend analysis will help to showcase the damage this trend can lead to and how proper budgeting can actually benefit communication of funds. This leads into spend...
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