Richard Barraclough (Head of Spend Analysis) 7th October, 2010.

Richard Barraclough (Head of Spend Analysis)7th October, 2010

What is it?

It is an Excel workbook.

Inputs and outputs

Spend analysis• A three-year project between @UK PLC

– The University of Reading, and

– Goldsmiths’ College (University of London).

• Artificial intelligence engine for:

– matching companies,

– matching products, and

– classification to eClass and to NSV.

• Highly automated system for fast turnaround.

• Analysed £96bn to date.

What it does

Matching

• Companies

• Products– Unit of measure.

– Re-sellers.

• Item level detail– allows like-for-like comparison, which means that

– opportunities for savings can be detected such as:

• price variance,

• price benchmark, and

• contract opportunities and contract leakage.

Classification• By ‘classification’ we mean

– assigning a product

– to a category or ‘class’

– by matching the product description to the class description.

• eClass is

– based on NSV,

– is a three-level category tree, and

– has ~2,000 categories.

eClass examples

Classification

• Automatically classify products

– to eClass (or NSV)

– from free-text descriptions on purchase order lines.

• Techniques include

– Bayesian statistics,

– decision trees, and a

– rule engine.

• Consistent application across organisations.

• Also applied in @UK plc marketplace.

Carbon analysisSpend analysis

Carbon analysis

Analysing spend

Analysing spend

• Purchase order spend is

– classified to eClass, and

– analysed at product level.

• Invoice spend is analysed using either:

– the product profile of the supplier;

– the category code for the supplier, including

• SIC database and

• Coding International; or

– scale by average carbon profile (last resort).

Demonstration

Suppliers

Supplier

Categories

Category

eClass

Products by eClass

Products by Supplier

Richard Barraclough (Head of Spend Analysis)7th October, 2010