Manage Spend & Savings with Data Visualisation
The cost-cutting focus of many organisations requires effective use of pre-negotiated contracts to maximise both the opportunities and the potential savings these bring.
By providing an attractive, easy-to-use business-wide dashboard view of all spend we helped a large corporate to improve internal and external collaboration that in turn, helped to improve spend transparency, increased use of contracts and a focus on cost saving.
Case Study: Manage Spend & Savings with Data Visualisation
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BusinessMinds recently completed a Procurement Dashboard Project for a large European Bank with an annual spend of $1 billion (USD). The bank, which operates in 15 countries, wanted to be able to capitalise on the potential savings and other benefits resulting from robust reporting and good, trustworthy data that allowed them to quickly visualise, review and compare spend covered by pre-negotiated contract (preferred) against spend not covered by contract (not preferred) across all spend categories, geographic regions, suppliers, time periods etc.
The key focus of the project was threefold:
- 1. Analyse spend covered by contract vs non contract
- 2. Improve data quality: Transparency and trust
- 3. Track savings initiatives
The bank needed to ensure complete transparency and trust in the data so procurement management and staff could take their day to day focus off data quality and place it on contract management and cost saving initiatives. In addition, they wanted to ensure that transactions were under pre-negotiated contracts wherever possible.
Focus 1 – Spend Covered by Contract vs Non Contract
The bank’s primary focus point was identifying how much spend should be under pre-negotiated contracts where discount rates could apply. The bank knew that to maximise spending efficiency, contracts with suppliers were key but had no reliable way to ascertain how much spend was outside of contract and where/when this expenditure was occurring.
The main dashboard (CPO dashboard), designed specifically with the requirements of the Chief Procurement Officer (CPO) in mind, allows the company to immediately identify areas of spend not covered by contract and therefore focus their attention on improving contract coverage. (See Figure 1. CPO Dashboard.)
This dashboard also has a variety of clickable selection and drill-down capabilities therefore most questions (e.g. ‘which vendors?’ or ‘what categories?’ can be quickly resolved without the need for additional reports or ad-hoc extracts.
Overall spend covered by contract is represented in aqua. Spend not covered by contract is represented in yellow.
Figure 1. CPO Dashboard
Focus 2 – Data Quality: Transparency and Trust
The CPO was concerned that the organisation was utilising many different spreadsheets as a basis for decision making. Many of these different reports had the same purpose and yet showed different numbers. Being able to consistently reconcile with the general ledger and other financial reporting was becoming crucial.
The CPO Dashboard has a data quality focus which reconciles with the general ledger and other financial reports. With only a few clicks users can drill down to look at cash flow, profit and loss, invoices, orders and staff responsible. Information can be easily selected and exported by users without the need for additional reports. Any discrepancy to the financial reporting can be immediately detected and quickly remedied. This dashboard tool also allows stakeholders to view the agreed range of criteria around contract coverage and quality and immediately see where criteria are not being filled.
This dashboard is valuable and reusable beyond the procurement department. Other business units are able to utilise the dashboard to gain insights with permissions easily set so users see only the data relevant to them.
Focus 3 – Track Savings Initiatives
Key for this company’s overall procurement strategy is focus on savings initiatives. The bank maintains a master Sharepoint list of all savings initiatives and the Savings Tracking dashboard is used to effectively plan and track these. (See Figure 2. Savings Tracking Dashboard.)
The Savings Tracking dashboard shows information about savings and avoidance initiatives. Savings initiatives are ones where the spend goes ahead but is reduced. Avoidance initiatives are those where previously planned spending doesn’t need to proceed. The dashboard shows both realised and savings and potential savings for future focus.
This dashboard also has an efficient click drill-down function to refine queries to show for example if the procurement department was involved, whether the initiative is new or existing, responsibility, savings over time, individual performance, etc. The insights gained from this tool are invaluable for budgeting and discussions with finance.
Overall realised savings are represented by dark aqua. Overall realised avoidance amounts are shown in grey. Overall potential extra savings and avoidance amounts shown in light aqua.
See Figure 2. Savings Tracking Dashboard.
Cost Effective Solution
The number of resources required for the project (people and time) was very small. One consultant worked with a procurement team member over 4 months to complete the data integration and have the main dashboard ready. (Note: key to this success was the involvement and business sponsorship of the CPO.) The solution can be maintained without IT involvement and runs automatically with daily updates. Despite the dashboard accessing millions of accounting items to create the reports, the interactive performance is very good and therefore encourages the users to use the system more often for all queries.
This procurement project has led to increased savings company wide. It is now easy for the CPO to see exactly what spend is not being covered by contract and take remedial action.
Prior to the dashboards being available the CPO did not have trust in the data or access to reliable information about contract usage. Now the procurement team can focus on the key roles of achieving savings rather than spending time on producing and reconciling a myriad of Excel reports and ad-hoc extracts.
Saving initiatives can be easily planned and monitored with a view to a cycle of continuous improvement so the solution will continue to bring additional savings.
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