Medical devices manufacturer addresses the data challenge to target savings
Turning financial numbers into high quality procurement spend data
A Private Equity owned manufacturer and distributor of products for the diagnosis, treatment and monitoring of respiratory conditions was looking to address the challenge of accessing spend transparency in order to inform cost reduction opportunities.
With global revenues of $800 million, financial data had historically been drawn from a number of different systems and data sets throughout an extensive base of international operations. Controlling procurement costs would become increasingly important as the business continued to grow, but accessing high quality procurement spend data was proving hard to come by.
Creating global spend transparency
The prime objective was to build a spend analysis to provide complete transparency of the total global spend of the organisation, from the perspective of all factories and subsidiaries worldwide.
To achieve this, the first task would be to collect and combine multiple data sets from the various business units and factories around the world. Once cleansed and validated, a bespoke categorisation platform could be developed and the spend data effectively categorised.
The Procura ProIntell Spend Analysis Platform was used to provide complete transparency of global spend; by subsidiary, business unit and cost centre and by supplier, supply market category and contract.
The data was also delivered back into the organisation’s own Tableau reporting tool with structured data architecture created to enable ongoing ‘spend mapping’.
“Switching the light on”
For the very first time in its history, the organisation achieved complete visibility of all supplier spend – including all direct and indirect categories. As summarised by the CFO, the experience felt like “switching the light on for the very first time”.
- Key common strategic suppliers were identified and targeted for a programme of Supplier Relationship Management (SRM)
- Newly acquired procurement insights led to the targeting of three sourcing projects in Logistics, MRO and IT & Telecoms covering $40m of annual spend, with savings of over $3m identified
Points to consider
• Procurement spend data is the foundation of procurement capability – it enables profit improvement and is crucial during times of rapid growth and expansion
• The larger organisations are, the bigger the challenge – with multiple data sets, ERP’s and geographic boundaries requiring consideration
• If procurement spend analytics is a challenge, consider expert help