Mark Bowen Director of Purchasing Why the University of Oxford embarked on spend analysis.

Mark BowenDirector of Purchasing

Why the University of Oxford embarked on spend analysis

Purchasing department

• An insight into the challenges we faced and why we started spend analysis.

• An opportunity to see the types of report available by using line item data.

• An insight into how we used this data.


What were the challenges we faced?

Typically we delivered savings by annual adversarial price negotiations.Over time this strategy is a diminishing returnNeed to deliver sustainable savings

To achieve the above we needed to change our strategyIntroduce Category ManagementIntroduce Supplier Relationship Management

To achieve both of these aims we needed to understand our spend data.


• Typically we weren’t in a position to know whether the coded spend was correct or not

Level 1 Level 2

Consumables

Laboratory

Dell.

We could find IT supplier in Laboratory.

Only our knowledge of the supplier would allow us to then code correctly.

This was time consuming and expensive.

What did our data tell us?


Clearly we had challenges• Our spend was supplier centric which was limiting

What good is it to know we spent £2 million with supplier X?• We didn’t know what products we bought?• We didn’t know which categories those products belonged too?

• We needed to be more granular.

How could we overcome these challenges?• Establish a taxonomy• Initially we started with the UNSPSC taxonomy.


• Establish a hierarchical Category structure we could work with

• Map supplier spend into this structure .

• Analyse the resultant data.

• Provide robust information to Purchasing team and end users.

We soon realised this was too complex for all our spend.


P-Code Hierarchy

Not derived from our GL coding structure but it is mapped to GL structure.


Purchasing Category Mapping to UNSPSC

Category DescriptionDescription -

Level 1Description -

Level 2UNSPSC

Segment codeUNSPSC Family

codeUNSPSC Class

codeUNSPSC

Commodity code

301.3101

Scientific and Medical Equipment & Supplies -

Chemicals, Chemical Elements & Chemical

Reagents

Scientific and Medical Equipment

& Supplies

Chemicals, Chemical Elements

& Chemical Reagents

12000000 Chemicals

including Bio Chemicals and Gas Materials

All relevant sub codes, excluding

12130000 Explosive Materials

All relevant sub codes, excluding 12142000 Noble

Gases and 12142100

Industrial Use Gases

All relevant sub codes

301.3016Scientific and Medical

Equipment & Supplies - Pharmaceuticals

Scientific and Medical Equipment

& Supplies Pharmaceuticals

5100000 Drugs and

Pharmaceutical Products




102.1021 Construction - Architects Construction Architects

102.1022 Construction - Engineers Construction Engineers


Purchasing Category Mapping to ProcHECategory Description

Description - Level 1

Description - Level 2

Proc HE Code Proc HE Description

202.2021Supplies & Stationery - Stationery

& Office SuppliesSupplies & Stationery

Stationery & Office Supplies

SJ

General Stationery (envelopes, files, diaries,

sundries, etc)




SH Pre-printed Stationery




SF

Paper (Photocopying, pre-printed, listing, labels,

continuous) etc

401.4012IT - Desktops, Laptops and

TabletsIT

Desktops, Laptops and Tablets

KH

Desktop Computer (PC's) Purchase, Maintenance,

repair and hire


TabletsIT


KF

Workstation/Mini-computer Purchase,

Maintenance, repair and hire


TabletsIT


KK

Portable/Laptop Computer Purchase, Maintenance,

repair and hire


Supplier Name Spend £ Pro HE CodesScrewfix 6,871.00 WH / WD

3,221.00 WC

8.00 WK

33.00 WI

40.00 WX

311.00 HD / HB / HJ / HK / HP

642.00 HF / UD / HC / HS

15.00 UB

216.00 UM / UJ / UE / UK

10.00 UC / UH / UN

19.00 UF

Enrich our EMM return.


University PO Spend split by Purchasing Category FY14/15

Purchasing Category Spend FY14/15

102.Construction £97,481,780301.Scientific and Medical Equipment & Supplies £95,146,780401.IT £28,999,422103.Premises £28,332,032105.Utilities £12,769,402703.Consultancy £11,225,915701.Professional Services £11,000,953803.Travel & Subsistence £8,296,980104.Facilities £8,135,447501.Publications & Library £7,279,955Remaining 23 Categories £64,713,117

102.Construction£97,481,780

301.Scientific and Medical Equipment &

Supplies£95,146,780

401.IT, £28,999,422 ,

103.Premises£28,332,032

105.Utilities£12,769,402

703.Consultancy£11,225,915

701.Professional Services

£11,000,953

803.Travel & Subsistence£8,296,980

104.Facilities£8,135,447

501.Publications & Library

£7,279,955

Remaining 23 Categories

£64,713,117

An opportunity to see the types of report available.


IT PO spend split by sub category and number of suppliers.


IT spend (PO) split by supplierSupplier Name

PO Ordered GBP Amount

Av of PO Amount (GBP)

Nr of PO

PO Ordered GBP Amount

Av of PO Amount (GBP)

Nr of PO

Dell Corporation Ltd 4,862,169 2,008 2,422OCF Plc 2,263,224 70,726 32Apple Distribution International

1,730,700 1,001 1,729

Unify Enterprise Communications Ltd

1,199,506 85,679 14

Oracle Corporation (UK) Ltd

874,607 43,730 20

Civica Services Ltd 857,340 7,724 111CAE Technology Services Ltd

819,038 7,313 112

Cadence Resourcing Ltd

786,900 35,768 22

Pervasive Networks Ltd 751,343 83,483 9Insight UK 551,970 219 1,977Remaining 1043 suppliers

2,583,795 1,371 1,885 11,718,831 3,020 3,881


IT Spend Split by Division

Contracted Spend by Division - £14,867,741

Off Contract Spend by Division - £14,131,681

Academic Services and University Collections;

£252,966.60Continuing Education;

£38,145.46

Estates Services; £54,439.71

Humanities Division; £158,755.18

Medical Sci-ences Divi-

sion; £4,141,405.4

2

MPLS Divi-sion;

£3,321,415.47

Social Sci-ences Divi-

sion; £900,235.56

University Administra-

tion and Services;

£2,600,903.47

University Chest;

£3,399,474.57

Academic Services and University Collections;

£746,191.70

Continuing Education; £43,775.83 Estates

Services; £338,762

.65Humani-ties Di-vision;

£258,454.18

Medical Sciences Division; £2,787,5

98.01

MPLS Division; £2,157,3

66.71

Social Sciences Division; £920,877.61

Univer-sity Ad-ministra-tion and

Services; £4,337,1

48.51

Univer-sity

Chest; £2,541,5

05.66


Off Contract Spend in Medical Services Division by department.Department PO Value % of

Total

Psychiatry 303,374 10.9%

Medical Sciences Divisional Office 257,417 9.2%

Wellcome Trust Centre for Human Genetics 202,037 7.2%

Clinical Trial Service Unit 165,474 5.9%

Tropical Medicine 161,090 5.8%

Clinical Neurosciences 135,691 4.9%

Weatherall Institute of Molecular Medicine 118,273 4.2%

Obstetrics and Gynaecology 107,703 3.9%

NDORMS 102,075 3.7%

Structural Genomics Consortium 100,288 3.6%

Remaining 31 Departments 1,134,178 40.7%


Who is buying off-contract by department.Department Name PO Requestor Supplier Name PO Ordered GBP Amount Nr of PO

Obstetrics and Gynaecology Ahmed A Jigsaw Systems Ltd 58 1Oxford Nanopore Technologies Ltd 779 1

Lesley C Flowjo LLC 1,501 1GraphPad Software Inc. 1,649 1

GV Multimedia Ltd 20 1

Rebecca D Systat Software UK Ltd 424 1

Philippa E Fry-It Limited 32,500 1Thomas I JBL Limited 231 1

Ann L Flashbay Ltd 1,436 2MedSciNet U.K. Ltd 53,350 3Neuroelectrics Barcelona S.L. 2,831 2

Posturite Ltd 179 1Simon L Fry-It Limited 12,480 1

Fullerscope Services Ltd 265 2Structural Genomics Consortium David D IT Support Business Ltd 55 1

Brian M Advanced Digital Dynamics Ltd 269 1Carbonite Inc. 523 1GraphPad Software Inc. 2,412 1

Molsoft LLC 71,839 1Oracle Corporation (UK) Ltd 2,421 1Schrodinger LLC 20,013 1VC Warehouse Ltd 968 1

Dinaben M City Audio Visual Ltd 270 1Romain T Identify Direct Ltd 524 1Garrick T Isocount Ltd 995 1


• Details shown by searching on a CE505A cartridge▫ Majority of spend on contract▫ Details by supplier▫ Identified potential opportunities

Cost implications – on/off contract spend

Insight UK – Off contract and more expensive: one to address with requesters

Potential savings by switching to on-contractQC Supplies Ltd appear cheaper than contracted on face value – one for investigation

Price difference between the two preferred suppliers


Improving our spend information

Providing purchasers with a more informed choice

Delivering additional savings

Negotiating better agreements

Benefits for us.

Supplier Relationship Management


How might this help you and your suppliers?

• Move away from the transactional relationshipIf like us you spend weeks agreeing price reviews

• Use that time to agree• Targeted category initiatives • Conduct regular supplier reviews to track progress

• Use your time more effectively and drive further value into your relationships with suppliers.


Opportunity to compare data

Negotiating better agreements

Delivering sustainable savings

Discussions on growing market share

Benefits for our suppliers.

Constructive relationships Win - WinMarket Share by Supplier – HPC Servers & Electronic Data Storage (Top Suppliers)


So how could you embark on the same journey?

Admittedly we threw resource at the problem.Arguments put forward -• We don’t have a sophisticated ERP system!• We don’t have time or resources to analyse our spend• My FD doesn’t believe it will benefit us.• We don’t have any spare budget.

Solution.• Agree on a hierarchy – use ProcHE• Ask your suppliers for your spend data – they have everything you need to know.• Use a third party to anaylse your spend – consortia agreement with Spend 360• Engage with your FD/colleagues show them the results.

In one category initiative we identified spend in laboratory consumables.• Products were sold by three distributors• We tendered these products • We achieved a cashable saving of 10%.This one initiative has paid for our investment.


Thank you for your time and listening

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Mark Bowen Director of Purchasing Why the University of Oxford embarked on spend analysis.

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