We were discussing a situation in the last post https://faoblog.com/processes-ap-spend-analytics2/, where in, in an emergency, the material came at a high price.
Spend Analytics comes to the rescue here. The unit needs to analyze the quantity and price bought over a period of time. The back office / outsourced unit will build data on the purchases, the locations from where these materials came, the cost of transportation, any trends in the material requirement and a few other parameters. As a further step, they will try to assess the capacity of these suppliers, in discussion with them. Based on a combination of these data points, a trend chart will be created or some modeling tool will be used to create an optimal purchase pattern, making the process more predictable. If you involve a six sigma resource, he will be able to create a regression equation for the same. Some key things used for this analysis would be:
- Raw material demand by the client
- Total price of raw material to the client
- Component of transport charges and days to deliver
- Price offered by each supplier, both in slump and peak periods.
- Pushing some favorable suppliers in increasing output, especially in anticipated emergency periods.
Almost 15 years back, a premium computer manufacturer had actually ask their suppliers to relocate the raw material manufacturing units to a location within 50 km of their facility, and the inputs came from an extensive set of spend analytics.
We have enabled a button on the top of the first page, which will enable you share your posts. If you wish to write about any of the current streams, you can do it at https://faoblog.com/guest-post/. We will review your post and release it within 48 hours of your posting.