Tungsten Analytics – “Real-time” Data Opens Up Savings Opportunities

This week, we are featuring four - yes four - briefing and research papers we've published recently. We know you're busy, but if you want to stay at the forefront of procurement thinking and knowledge, we think our papers are a quick and relatively painless way of doing that. They are sponsored by solution providers, but we guarantee they are always written from an independent perspective. Why not take a few minutes and make sure you're well informed about the latest in procurement technology, strategy, and process.

Today, a paper titled Tungsten Analytics – Insight From a New Approach to Spend Analytics. In this paper, we interview Stefan Foryszewski from Tungsten to get the latest on the new approaches that are being taken by the firm and their clients.

Tungsten is best known as an eInvoicing and supply chain finance provider, the firm having grown out of OB10, the market leading eInvoicing firm (Stefan was one of the founders). But their analytics offering is gaining interest as it opens up some new applications that are not readily available from “conventional” analytics platforms. You can download the paper here, free on registration. Here is an extract to whet your appetite.

Tungsten Analytics – Insight From a New Approach to Spend Analytics (extract)

It is clear that the biggest difference between the Tungsten offering and the traditional spend analysis approach is the real-time nature of the data that is being analysed. That leads on to the various opportunities discussed later ...

Cost avoidance

Foryszewski describes the opportunity like this. “The concept is to help avoid future costs by identifying clearly and precisely what is being bought, which enables procurement functions and line managers to use that information to improve value”.

As an example, in one exercise, the platform highlighted that the buyer bought a wide range of products from a particular supplier catalogue. Around 30 items were covered by negotiated and discounted "contract prices". These 30 items were assumed to account for the vast majority of the spend made via the catalogue.

But the Tungsten Analytics data showed that there were around fifty further products that were being bought in significant quantities, at full list price. The buyer was able to go back and negotiate discounted contract prices for those as well, achieving immediate savings and future price stability even in volatile market areas.

In another case, the analysis showed one supplier accounted for millions of spend, but spread over a very diverse product range of over 14,000 different items - with no negotiated pricing. The data enabled the buyer to identify the top 100 or so major items, and again negotiate improved contract pricing.

"We are simply providing the tools to identify what is being bought on a regular basis", says Foryszewski. That sounds basic, but many organisations are nowhere near having that sort of up-to-date knowledge and understanding.

The virtually real time nature of the data is bringing new opportunities here. Buyers can see daily price variances, and compare prices back over the last two years, getting an instant price history for the item in question. The platform can provide a daily "worksheet", which enables the buyer to go back and challenge the supplier on any unexplained variances or discrepancies - all before the invoice has been paid. That puts the buyer in a much stronger position than if the challenge to the supplier comes months after they have been paid!

 

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