Spend Intelligence: Spend Awareness Follow

Our users have large amounts of spend data and need to know how their total spend breaks down into different perspectives. To that end, Spend Awareness is the default page of Spend Intelligence.

Filtering the Data Presentation by Time Period

The first thing a Spend Awareness user will want to do is set the current period and the reference period in order to have a target comparison (e.g. year-to-year or quarter-to-quarter) that they want to cross-examine the spend. Spend Awareness is meant to compare two time periods.

(1) The Scope Filter that is standard across the top of the LevaData Platform interface applies across the Spend Awareness page and more clearly indicates calendar/fiscal quarters if your organization uses fiscal offsets. In addition, all presentation metrics reflect the chosen scope.

(2) The default presentation of Spend Awareness data is arrayed to present the spend relationship between Contract Manufacturers and Manufacturers (which respects your organization's naming convention for your manufacturer).

Timeline Selection Business Rules for Spend Awareness

When selecting time periods in the scope filter, the following rules apply and are dynamically updated in the Spend Awareness interface as soon as the selection is completed:

1. If the User selects two or more time periods, then the oldest time period will be considered as the reference time period and the newest time period will be the current time period.
2. If the user selects only one time period, then the system will consider it as the current time period and relative previous time period will be considered the reference period.
3. The Current and Reference time period will always be in the same unit of time, i.e comparison will be between Year-over-Year (YoY) or Quarter-over-Quarter (QoQ).
4. If the user selects multiple units of time, then quarter will take precedence over year.

In the example above, the user has selected Q3 2022, Q4 2022, and Q1 2023.

• Following rule 1 above, the oldest time period (Q3 2022) is the reference time period and the newest time period (Q1 2023) is the current time period.
• Following rule 4 above, since the user has selected both years and quarters, quarters take precedence and are used for the comparison. This is indicated in Step 1 on the interface where it indicates "Latest Fiscal Quarter" is the period being referenced.

If the user had only selected 2023 and 2022, then Year 2023 would be the current time period and Year 2022 would be the reference time period.

Awareness of Core Metrics

At the top of the page are Core Metrics of Spend Awareness that define supply chain complexity including:

• Spend Under Management is the total for all time periods selected in filter.
• % Spend Change is the percentage comparison in spend amount between the two time periods selected with that amount being the major metric in focus and the reference period and amount being the minor metric on each side.
• % Demand Change is the percentage comparison in demand amount between the two time periods selected with that amount being the major metric in focus and the reference period and amount being the minor metric on each side.
• The counts are listed for CM/ODMs, Commodity Managers, and Manufacturers, and they are grouped together.
  • Manufacturers has a Normalized count adjacent to it to inform you of how many Manufacturers you have loaded into our platform versus how many we have in our normalized manufacturer naming conventions where LevaData aggregates common naming conventions for the same manufacturer.
• Unique MPN and CPN Counts with MPN to CPN Ratio. This helps to mirror topline values from your own internal spend systems while breaking them down by key values to present awareness you would not otherwise have.
  • MPN to CPN Ratio is the featured middle metric under the sub-heading Part Resilience.

As mentioned in the time period selection section you just read, comparisons displayed are always between a current period and a reference period and those two periods are either a set of years or quarters depending on what you selected in the scope filter. The figures for the more recent calendar year/quarter will always be larger and featured. The figures for the older calendar year/quarter are included in some figures in a smaller adjacent area to compare the difference.

If you click any other element of the Spend Awareness interface, the top line core metrics will update to reflect that filtering.

For example, selecting just the $13.711 million in spend on Mechanicals in Commodity Overview will update the top line metrics to reflect only that specific Mechanicals spend. As you navigate through the Spend Awareness interface, keep an eye on the impact to your core metrics.

Contextual Perspective

In the middle is the Contextual Perspective of key metrics with change amounts for specific time periods, allowing the user to view network flow by a variety of dropdown values. Using this tool provides insight into Pareto of Spend and Change to uncover any spend surprises which may need attention.

Toggling views of spend and segmentation (via the view by dropdown) enables cross-analysis of sourcing areas which need attention. Tracking the flow of spend across each step-by-step selection in the dropdown interface permits deeper context of where spend is directed and what liabilities may exist.

The center value of the Chose My Overview section and the total value of the Supply Chain Flow section will both reflect the total spend from the date range selected by the user.

Examine a Contract Manufacturer

For example, to look at the spend for our top contract manufacturers we can (1) set both dropdowns to Contract Manufacturer (CM) and then (2) click into the example with the highest total spend on either Overview or Top Spend to filter the rest of the results.

Then looking into the segmentation, by selecting Commodity we can see (1) the distribution of commodity spending for this CM and (2) how it breaks down across those commodities currently.

Note: Supply Chain Flow amounts reflect the total sum of all values displayed across time in the Segmentation View.  Clicking an item in supply chain flow is going to filter the lower view detail table.

In this sample data, we can see a large spike in electromechanical spending in Q1 2022 which persisted as a new baseline value until the current calendar quarter. If that share in spending is expected, no problem, but if it was an unforeseen increase in spending on a single commodity that may require action.

Examine Global Commodity Manager Performance

Users may want to examine spend across commodities and commodity managers to determine if there are positive or negative developments in their relative performance and what the underlying data indicates.

By (1) selecting Commodity in Step 1 and Commodity Manager in Step 2, we get a breakdown of the commodity spend and the commodity manager spend managed. Clicking to isolate the selection to just (2) Semiconductors allows us to look at the two example GCMs Dan and Ken who are responsible for Semiconductor purchases.

In this example above we can see that (3) Dan manages slightly more spend ($36M), but Ken has seen a greater decrease in spend (36% - indicated in Green). Why might that be?

Choosing the Segmentation of (1) Contract Manufacturer we can track how Ken and Dan's spending diverges. (2) All of Ken's spending is isolated to just one CM, while Dan's spending is split between 3 CMs.

In this case, Ken may have some single CM savings which are not getting passed on by the other two vendors. Even though Dan is managing more parts and has a better diversified sourcing strategy between multiple CMs. Ken is seeing better savings on the fewer parts he manages. This simple example is just one of many ways that users can analyze their spend data to gain awareness of what is driving cost savings and increases.

Prioritized Detail

At the bottom of the Spend Awareness interface is Prioritized Detail which allows you to see the most impactful changes identified to for confirmation or mitigation. The interface requires minimal clicks and configuration to direct to your ideal perspective for contextual insights and underlying filtered details are always available at any point.

Returning to our preceding example, let’s select Ken to filter and then review the Prioritized Detail Table

The prioritized detail table has (1) sliding filters on spend, spend % change, % change in MPN Cost, and demand % change. The objective of looking at spend detail at this level should be to try and find unexpected (2) spend changes.

All changes reflect the comparative time periods you have selected, and you can (3) modify that range in the time scope filter up top. The largest amounts of Spend in the detailed time period will be highlighted with blue backgrounds to draw your attention to them.

• Spend % Change = how much part spend has increased (positive) or decreased (negative).
• MPN Cost % Change = unit cost percent changes for a given part - increase (red) or decrease (green).
  • When looking at comparative years, the MPN Cost % Change will be calculated by the following Formula: percentDifference(median({MPN Cost}),[{fiscal_date} ASC],-1,[MPN,{CPN Description},{CM/ODM},Manufacturer,Supplier,uom])
  • In this formula, the median of the MPN Cost within the year is compared with the most recent fiscal year before that. The data is then grouped by MPN, CPN Description, CM/ODM, Manufacturer, Supplier, and Unit of Measure.
• Demand % Change = how much demand has changed - increase (positive) or decrease (negative).

If unit cost (MPN Cost % Change) hasn't changed (i.e. equal to 0%), then demand and spend have changed in equal measure. This is true of all the examples in the table above with MPN Cost % Change = 0%.

If demand has increased, you will want to see MPN Cost % Change decreasing as you are likely buying at greater bulk and should be seeing price discounts from vendors. This is true of the two part examples in the table above with demand increases.

When examining a part with significant cost increases in a time period, it is worth using the part search filter so you can isolate the causes of those increases:

By (1) filtering down to just this MPN is isolation, we can more clearly see that (2) the MPN Cost has seen a 6% increase from $0.3764 to $0.40 at the same time (3) unit demand has increased 65%. This is a clear sourcing problem, because with a 65% increase in demand, the GCM needs to negotiate some equivalent cost savings on this part or else his company is eating very significant cost increases across that new spend.

As a reminder, quarters take precedence over years, so if you have selected one or two quarters but then also selected another year, the table will display all of those values by quarter. For example, if you time filtered to “2022, 2023[Q1,Q2]” then the table would display Q2 2023, Q1 2023, and Q4-Q1 2022 from left-to-right / newest-to-oldest.

Resetting Spend Awareness

Users can refresh their browser to reset the screen to baseline values and remove all existing report filters.

Learn More

If you would like to see this feature demonstrated, please check out our video tutorial:

• Spend Intelligence: Spend Awareness (Video)