Category Profile SPDPS002b Spend Analysis Template

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Category Profile (SPD-PS002b) Spend Analysis
Template

• Example-MRO

Issue Date 10/1/06
SPD-PS002b
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• Spend analysis
• Overall Opportunities
• Subcategory Opportunities

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Georgia Spend Cube Data
Example
Sources of Spend Cube Data
AP P-Card Data - 106 MM
PO Data - 19 MM

• No line item detail
• Contains the aggregate spend for a transaction
  with an Agency/Vendor
• Data sources include AP without PO visibility,
  P-Card, GSFIC
• 52,412,947 of the spend falls under No Agency
  Listed
• 104,098,316 of the spend fall under NO NIGP
  code

• Contains Line Item Detail
• Item Description, Quantity, Unit Price, Buyer
  Name/ID
• Contains PO Type Description
• Open Market, Statewide Contract Release, Agency
  Contract and Releases, Construction-PW-A and E,
  Sole Source-Per GPM, Exempt-Per OCGA 50-5-58,
  Sole Brand-Per GPM, Mandatory-CS, GCI, GEPS, GIB,
  Intergovernmental Agreement

Combination of various sources indicates 125 MM
in unadjusted MRO spend
Source APP-Card data PO Data from State of
Georgia, 2005
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Spend by Entity
Example

• 106 entities are represented in data.
• University of Georgia, Georgia State, Georgia
  Tech and the Medical College of Georgia are not
  included in the spend current spend cube.
• GSFIC represents 52 Million in spend cube and
  has no identifiable entities.

Source SAO and Regents A/P and PO extracts, BoA
P-Card extracts, and SAO General Ledger for FY05
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Example
Georgia MRO Spend Data
20 Vendors account for 64 percent of MRO Spend
(1)
Notes (1) 20 vendors account for 54,797,460 of
85,916,611 of the total MRO spend -
64 Source SAO and Regents A/P and PO extracts,
BoA P-Card extracts, and SAO General Ledger for
FY05
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Example
MRO Spend Currently Sub Categorized
Top 15 MRO Sub-Categories(1) by Spend and Number
of Vendors (Spend in MMs)

• All sub categorized spend represents 63 Million
  of the 85 Million is MRO spend
• Industrial Gases is composed of a single vendor,
  Linde Gas. Linde Gas current contract was
  estimated at 53,000 (2)
• 16 Million in Pipes, Valves and Fittings is 1
  transaction with no detail to American Piping
  Supply
• Molded Plastic Parts does not contain
  information regarding the agency, regent or item
  (s) that were purchased
• Industrial Supplies via distributor is largely
  Grainger spend via the Western States Contract
  Alliance
• Major Retail spend is Home Depot, Lowes, Ace
  Hardware, Wal-Mart, Target, etc.
• Light Bulbs are currently under contract.
  However, Bulb Direct, a non-contracted vendor,
  has the most spend
• The average spend per supplier of the top 15
  categories is 105,141

Notes (1) 15 categories (408 vendors) in chart
account for 59,451,531 of 62,769,098 of the
total sub categorized spend (2) Monthly vendor
reporting to DOAS Source SAO and Regents A/P
and PO extracts, BoA P-Card extracts, and SAO
General Ledger for FY05
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Example
Miscellaneous MRO Spend

• 23 MM of the 85 MM is miscellaneous, local
  (supplier) and rogue spend in industrial supplies
• The average spend of the 3,184 suppliers is
  7,270
• 21,761 of 27,621 items are without line item
  detail
• Likely that a majority of items could be
  purchased on Grainger WSCA contract if mandated
  (Grainger offers over 500,000 items via Western
  States Contract Alliance)
• Next steps are to continue sifting through
  detailed portion of the data to subcategorize the
  spend however, it is unlikely that any major
  nuggets of spend or new categories will be found

Source SAO and Regents A/P and PO extracts, BoA
P-Card extracts, and SAO General Ledger for FY05
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Current State-Wide MRO Contracts
Example
Total spend on state-wide contracts

• 10,320,262 is not a significant amount of total
  MRO spend, but presents a large opportunity for
  contract compliance and the development of new
  contracts
• Linde Gas spend reports are grossly less than
  the spend cube - 52,589 versus 17,007,312 in
  spend cube
• Seven of the nine contracts are expiring in next
  six months
• In the short term, A.T. Kearney recommended
  extending the Liners, Paint and Dishwashing
  Compounds
• Other contracts will be evaluated for sourcing,
  consolidation, renewal and extensions

Source Contract and spend information is from
vendor reporting to DOAS
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• Spend analysis
• Overall Opportunities
• Subcategory Opportunities

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There are a number of potential ways in which
additional value may be created for Georgia in
the MRO category
Example

• Key Questions Total Cost of Ownership can be
  Reduced by...

• Potential Opportunities

Increase Leverage

• Creating contracts for large sub-categories
  currently not available on contract
• Re-biding long standing contracts and contracts
  approaching expiration
• Using contract mandate and volume to re-negotiate
  deal with Grainger

Increase use of Existing Contracts

• Redirecting large amounts of spend from the open
  market to current agreements when available

Practice Standardization

• Encouraging the use of P-Cards for purchasing MRO
  items
• Providing MRO buying guide with contract coverage
  and supplier contacts

Consolidation

• Reducing 3,900, or 90 of vendors, by putting
  contracts in place and mandating them

Specification Standardization

• Standardizing specifications and reducing the
  number of SKUs/ suppliers of commodity items

Source A.T. Kearney Analysis
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• Spend analysis
• Overall Opportunities
• Subcategory Opportunities

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Sub Category Industrial Gases
Example
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Sub Category Pipes, Valves and Fittings
Example