Webinar Notes: Good Data: Spend Analysis Tactics to Attack Supplier Performance Management

This week’s featured event was hosted by SciQuest and featured Spend Matters Lead Analyst Thomas Kase and a case study by German Torres of FMC Technologies, a $6B oil and gas company. You can view the event on demand here or register to download the accompanying white paper.

Spend analysis is often viewed as a flat, backwards-facing resource limited in its ability to improve total cost of ownership and supplier performance management. FMC Technologies managed to both of those things on a global scale without getting so lost in the figures that they weren’t actionable by driving user adoption to maximize impact.

Historically, spend analysis solutions have been used to collect and combine data across units in the enterprise, helping companies make sense of what they have bought. As the available solutions have matured, they have supported more data cleansing and augmentation from outside datasets. The reduced cost of storing and processing data has made analysis possible at a lower cost. This has made spend analysis affordable for companies of various sizes, not just the largest.

Despite this change, data quality continues to be an issue. Increasing visibility into more kinds of supplier data – both payables and qualitative data - enables better supplier performance management. Usability also continues to be a challenge – difficult to use solutions provide power without steering and results in a ‘go-flat’ of the spend analysis effort after go-live.

As German Torres, concisely shared, spend analysis is about turning data into information that is valuable to users. Getting good data into the hands of people in a timely fashion is what makes it actionable, especially once you get beyond procurement into the larger organization.

Implementing spend analysis at FMC required clarity and simplicity in the face of significant supply chain, specification, and measurement complexity. Defining issues such as scope (what do we want to achieve?) and audience (who needs this?) up front, made it possible to set and stick to a project timeline.

FMC’s primary data integrity issue was wrapped up in a combination of global and local suppliers. The spend data needed to be standardized right from the moment of capture. Category managers had been engaging with suppliers regionally with different metrics and SLAs. Becoming global required them to use the same performance ‘language’ with all suppliers globally.

As Brian Daniels, the lead for product vision and strategic direction of SciQuest's Spend Radar solution (SciQuest acquired Spend Analysis in 2012), said in a blog post about the event, “It’s graduation season, and like others before them, many in this season’s crop of college and high school grads will receive Dr. Seuss’ iconic book, Oh, The Places You’ll Go! It’s symbolic of the journey ahead of them.”

The same sort of journey must take place for organizations looking to fully leverage the competitive advantage of spend analysis – from capture, to visibility, to supplier performance management.