{"id":9692,"date":"2022-12-11T16:04:53","date_gmt":"2022-12-11T15:04:53","guid":{"rendered":"https:\/\/sourcing-force.com\/?p=9692"},"modified":"2023-01-05T20:10:52","modified_gmt":"2023-01-05T19:10:52","slug":"optimal-spend-analysis","status":"publish","type":"post","link":"https:\/\/sourcing-force.com\/en\/optimal-spend-analysis\/","title":{"rendered":"Optimal Spend Analysis – How to Leverage Multiple Data Classifications?"},"content":{"rendered":"

[et_pb_section fb_built=”1″ next_background_color=”#ffffff” _builder_version=”4.16″ _module_preset=”default” background_color=”rgba(237,237,237,0.82)” custom_padding=”||104px|||” bottom_divider_style=”slant” locked=”off” global_colors_info=”{}”][et_pb_row column_structure=”1_2,1_2″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_post_title comments=”off” featured_image=”off” _builder_version=”4.16″ _module_preset=”default” title_font=”Source Sans Pro||||||||” custom_margin=”|-50px||||” global_colors_info=”{}”][\/et_pb_post_title][\/et_pb_column][et_pb_column type=”1_2″ _builder_version=”4.16″ _module_preset=”default” global_colors_info=”{}”][et_pb_image src=”https:\/\/sourcing-force.com\/wp-content\/uploads\/2019\/07\/optimal-spend-analysis.jpeg” alt=”Optimal Spend Analysis” title_text=”ERP d\u00e9finition Sourcing Force” _builder_version=”4.19.4″ _module_preset=”default” custom_padding=”|||79px||” hover_enabled=”0″ global_colors_info=”{}” sticky_enabled=”0″][\/et_pb_image][\/et_pb_column][\/et_pb_row][\/et_pb_section][et_pb_section fb_built=”1″ _builder_version=”4.16″ global_colors_info=”{}”][et_pb_row _builder_version=”4.16″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” max_width=”750px” use_custom_width=”on” custom_width_px=”750px” global_colors_info=”{}”][et_pb_column type=”4_4″ _builder_version=”4.16″ custom_padding=”|||” global_colors_info=”{}” custom_padding__hover=”|||”][et_pb_text _builder_version=”4.17.6″ global_colors_info=”{}”]<\/p>\n

Focusing on Business Specific Category Sourcing Groups is key, with or without UNSPSC<\/a>.<\/span><\/p>\n

Transforming raw Spend and Supplier data from payment and purchasing systems and reclassifying it into com\u00admon, meaningful sourcing categories creates significant visibility and leverage into cost savings opportunities. <\/span><\/p>\n

Many companies agree this is a vital discovery process and it is the key to successful results, but how the data is classified can be a challenge.<\/span><\/p>\n

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\"Raw<\/p>\n

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Raw data and UNSPSC<\/strong><\/span><\/h2>\n

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Raw data can be classified in a variety of ways. <\/span><\/p>\n

One of the most common line item classification taxonomies is UNSPSC<\/a>, which stands for the \u201cUnited Nations Standard Products and Services Code\u201d. <\/span><\/p>\n

It is an 8 character code that breaks down 2-2-2-2 by segment, family, class and commodity. <\/span><\/p>\n

If an item is classified to all 8 characters, it provides a detailed description across over 43,000+ UNSPSC definitions. <\/span><\/p>\n

Reporting can also be segmented and rolled up by the 2, 4, 6, or the 8 character definitions. <\/span><\/p>\n

This can be an advantage to companies with many items, as they break down their Spend for sourcing opportunities.<\/span><\/p>\n

<\/blockquote>\n

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However, UNSPSC by itself does not roll up within its given structure to desired business-specific sourcing categories without multiple data classification technology.<\/span><\/p>\n

Not taking away from the power of utilizing UNSPSC as a baseline classification, what has proven to be of much more importance to Strategic Sourcing is to have\u00a0items classified to business specific sourcing categories<\/b>, aligned and organized specific to the business needs.<\/span><\/p>\n

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\"spend<\/p>\n

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That may be by buyer, by supplier offerings, by organization, etc. <\/span><\/p>\n

The key is to determine the business sourcing category structure. <\/span><\/p>\n

UNSPSC<\/a> can be rolled-up in <\/span>to these business categories via a mapping process<\/a>.<\/span><\/p>\n

In many cases and depending on the complexity of the data and business needs for analysis, UNSPSC is often not needed at all, and items can be classified directly to the business specific sourcing category. <\/span><\/p>\n

Directly classifying items to business sourcing groups is becoming more and more common, as it specifically accomplishes what organizations need to create \u2013 leverage-able sourcing categories specific to their business sourcing strategy.<\/span><\/p>\n

\n

It produces the same end result at less cost.<\/span><\/p>\n<\/blockquote>\n

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Spend Classification<\/strong><\/h2>\n

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Classification for some organizations entails building analysis around sourcing categories already in place, such as internal custom categories, or (i.e.) SAP material groups. <\/span><\/p>\n

SAP material groups or custom categories can be related to business Sourcing categories, maintaining a relationship between all classifications for internal purposes.<\/span><\/p>\n

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\"spend<\/p>\n

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Multiple classifications\/taxonomies like this can be done with more sophisticated tools like Sourcing Force. <\/span><\/p>\n

One or our customers wanted it all \u2013 UNSPSC detail item categorization, related to existing SAP material groups, with both classifications rolled-up to flexible Strategic Sourcing<\/a> groups. <\/span><\/p>\n

They\u00a0can now dissect their classified data in every way imaginable<\/b>, they gained a very deep capability to analyze and isolate savings opportunities, and they now have the ability to \u201clock down\u201d and track sourcing programs by many classifications.<\/span><\/p>\n

<\/span><\/p>\n

Conclusion<\/strong><\/h2>\n

The point of this post is that\u00a0there is no one way to classify and break down organizational data<\/b>. Every orga\u00adnization is different as to how they can create more sourcing leverage and more savings. <\/span><\/p>\n

The key to success however, is to have flexible business specific sourcing categories created from the line-item detail that align with the desired business sourcing model. <\/span><\/p>\n

This can be a direct classification of data to business sourcing groups, or a combination of classifications linked together, depending on the needs of the organization for detailed analysis of their Spend.<\/span><\/p>\n

As men\u00adtioned, a sophisticated Spend classification system<\/a> can give you the choice, and can handle multiple classifica\u00adtions for deeper Spend Analysis, performance management, and compliance management.<\/span><\/p>\n

 <\/p>\n

To learn How to conduct a best-in-class Spend Analysis, download your free e-book here:\u00a0<\/span><\/strong><\/span><\/p>\n

\"\"<\/a><\/p>\n

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Focusing on Business Specific Category Sourcing Groups is key, with or without UNSPSC. Transforming raw Spend and Supplier data from payment and purchasing systems and reclassifying it into com\u00admon, meaningful sourcing categories creates significant visibility and leverage into cost savings opportunities. Many companies agree this is a vital discovery process and it is the key […]<\/p>\n","protected":false},"author":2,"featured_media":24425,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"on","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[36],"tags":[],"class_list":["post-9692","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-spend-analytics"],"yoast_head":"\nOptimal Spend Analysis - How to Leverage Multiple Data Classifications? - Sourcing Force<\/title>\n<meta name=\"description\" content=\"Transforming raw Spend and Supplier data from payment and purchasing systems and reclassifying it into com\u00admon, meaningful sourcing categories...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/sourcing-force.com\/en\/optimal-spend-analysis\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Optimal Spend Analysis - How to Leverage Multiple Data Classifications? 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