Spend Transparency
Like parched travelers in the desert who chase after every mirage, many companies engage in massive SAP or Oracle projects, hoping to come up with the perfect integrated solution that can supply any desired corporate data at the press of a button. At this time of seemingly never-ending mergers and acquisitions, however, it is simply not possible to achieve such a goal. Large-scale IT projects will always lag behind corporate reality and—especially in the post-merger phase—will never answer the question that most interests procurement : Who buys what from which supplier?
What is needed is an alternative solution that can provide precisely this information with the aid of a spend cube, using the three dimensions of “location,” “product,” and “supplier.” The cube itself enables intersections to be made on all planes and allows initial fundamental analyses to be carried out—for example, identification of bundling potential between sites, comparisons of the number of suppliers, or the proportion of sourcing in countries with high-cost factors. All the data needed for creating this sort of cube can already be found in the internal system. The cube itself can be created using various methods.
The choice of tools depends on the complexity of the company and the desired sustainability of the cube. If the company has a homogenous, uncomplicated structure, the data needed for the cube can normally be retrieved from existing systems using standard interfaces. In cases of this kind, the only tool normally needed is a standard spreadsheet program.
In heterogeneous and complex companies, on the other hand, highly sophisticated tools are often required. Many companies only produce a small volume on the basis of parts lists; these companies have much higher expectations with regard to data transparency. This is often accompanied by a wish to “dynamize” the cube—that is, to update the data it contains at periodic intervals (often monthly). In this way, the cube acquires great importance as a management tool. As a periodically updated tool, it allows the tracking of procurement at individual sites; in addition, procurement management can use it to monitor compliance with master agreements. A spend cube's capabilities can vary widely, with the expense involved differing accordingly.