CASE STUDY

Spend Analysis Solution Helped a Microelectronics Manufacturer to Improve Spend Visibility and Achieve Annual Savings of $35 Million

Jul 5, 2019

Most organizations aim at increasing profitability and optimizing cost. In fact, a cost-effective procurement process can help them achieve significant savings. However, organizations need to analyze their spend before cutting unnecessary costs and turn to spend analysis to achieve long-term savings.

Challenges Faced

The client is multi-billion microelectronics manufacturer headquartered in Germany. Owing to the ongoing digitalization of industrial production and increasing use of microelectronics in Industry 4.0, the client decided to develop a spend analysis plan. The plan aimed to assess the organization’s expenditures, increase R&D investments, and run an RFP for new suppliers to address the demands of the electronics and microtechnology (E&M) sector. However, the client’s spend data was not up-to-date and they were engaged with strategic activities such as developing mechatronics technologies to make Industry 4.0 a reality.  Naturally, the client needed to engage with a company that could help them analyze spend data, identify risks associated with current and new suppliers, ensure regulatory compliance and manage complex contracts.  By realizing their need to leverage procurement spend analysis services, the client chose to partner with SpendEdge to address their spend related woes.

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Our Approach

The experts realized that the client wanted to transform data into actionable information and devise an effective spend strategy. Therefore, they obtained data from different sources and consolidated it into a central database.  They cleansed the data, involved suppliers, and grouped purchases made from same suppliers to conduct a proper supplier spend analysis. This helped them to categorize their direct and indirect spend and determine where the money was being spent. The improved spend analysis process helped the client to negotiate the best contract deals per supplier.

SpendEdge’s experts developed a detailed commodity structure, which was tailored to the client’s requirement, for both direct and indirect spend categories and then mapped the spend to the correct category based on vendor names and product descriptions. The spend analysis solution delivered enabled the client to gain detailed insights into the spend category and devise strategies to improve savings in those categories.

Conducting spend analysis requires companies to collect and analyze a huge amount of data. Contact our our experts and gain detailed insights to improve the process.

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Results

The spend analysis solution offered helped the client to:

  • Devise spend analysis template and understand the current state of spend.
  • Identify suppliers who can provide top-class technological performance.
  • Adopt the best contracting practices and negotiate the best deals with advanced technology providers.
  • Gain detailed insights to determine the amount spent on research and development annually.
  • Achieve an annual cost savings of $35 million in annual cost savings for the overall spend.
  • To gain detailed insights into the spend analysis solution offered, request for more information.

Benefits of Spend Analysis Solution

Improve spend visibility: Leveraging spend analysis solution allows companies to gain valuable information and greater visibility on money spent on different functions. It helps analyze expenses for purchasing materials/services and costs incurred by suppliers and helps companies to formulate an effective spend strategy.

Enhance category level analysis: It helps companies to adopt a category management approach and analyze data spend per category. It further helps organizations to divide the categories into sub-categories and perform a more detailed analysis, providing an overview of overall spending and enabling better cost control.

Improve processes: Companies leveraging spend analysis solution can better utilize spend data to make informed decisions about how processes can be improved within the organization. Also, they can identify opportunities for process improvements and significantly improve ROI. 

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