On Thursday, October 14, 2021, hundreds of procurement professionals & business heads from across the world joined us for the webinar where I, CRO and co-founder Ignite Procurement, and my colleague, Hanna Miller, Account Executive Ignite Procurement talked about how to:
- Use best-practice analytics to identify savings opportunities
- Realize those savings by effectively using data and analytics
If you have been looking for ways to ensure procurement savings and drive down costs (and learn more about how easy-to-use analytics can help you achieve those) but are not sure how to do so, watch this on-demand webinar here: A Practical Roadmap to Procurement Savings.
Answers to Questions Asked During the Webinar
Q. Savings definition tends to be diluted by a different view from the business. I think of them in terms of Contracted Savings & Realized Savings. Realized Savings are reported and visible on the EBITDA impact. Thank you for the comment - that is a robust approach that enables transparency with the finance team.
Q. Is the platform interfacing with SAP? Yes, Ignite can be connected to SAP (and other ERPs) through API integration or SFTP.
Q. How is realized savings normally calculated? Companies have their own methodologies when it comes to calculating savings. The most frequently used one is calculating avg prices of one time period over the other and multiplying the difference with quantities you bought during that period. However, there are many nuances to accommodate in it. For example, if you would like to isolate the effects of commodity price increase or currency fluctuations, you can take that out of the equation. Also, if you lack item-level data, you can create simple formulas for calculating your realized savings.
Q. I have 1000s and 1000s of items. But a good way to look at this would be through Pareto analysis as well as the 80/20 rule. Absolutely, that is an excellent approach to narrowing down to the most relevant items. There are many ways to "slice & dice" the selection of items, so you identify the most relevant ones. You can also apply other lenses, such as looking at the same view focused on key suppliers, or even look at the overall impact of price changes aggregated on a category level to let you focus on the categories where the impact is the highest.
Q. This was very insightful; however, we have a big challenge with data quality. Especially on supplier normalization. Where should we start? It is one of the most common challenges we come across. To your surprise, what we generally recommend is to start using your data because unused data stays as bad data. With some of the examples we shared in the webinar, you do not need detailed data to arrive at those perspectives. We understand, at some points, you have challenges trusting the numbers you have, like the supplier normalization issue you mentioned. So, you can leverage third-party data enrichments for this specific topic and/or utilize cloud-based AI solutions like Ignite for data cleaning. Like to solve the supplier normalization challenge, Ignite uses AI algorithms like fussy matching to clean the data and official supplier information through Dun and Bradstreet to enrich the data.
Q. If we are using Microsoft Dynamics NAV for our procurement operations then can we transfer our NAV data into Ignite Procurement? Yes. We would then configure Ignite for your data foundation and subsequently automate data feed through API or SFTP.
Q. I am using the Kraljic Matrix for our Procurement functions. Where I have divided our products and suppliers according to this matrix. Are you following that matrix as well? Kraljic matrix is a great way to address the categories systematically, and you could classify categories accordingly in Ignite.
Q. Great perspectives shown. However, they do not show everything we need. How flexible are you to tailor towards our needs? What we showed in the presentation and demo are just examples. With Ignite, it is simple and quick to tailor whatever perspectives you would like, both in terms of the type of analysis you want and how it can be visualized as per your needs. Our flexible solution has libraries of perspectives to choose from + custom analysis builder where you can slice and dice your data as per your requirements and likes.
We can share more in a personal conversation or demo, so feel free to contact us here: Request a Demo!
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