• The client’s existing decentralized procurement structure for indirect materials was inefficient.  
• The client’s financial analysis packages and reporting software could not easily be used to apply the detailed categorization structure needed to perform the analysis. A more sophisticated solution was needed for identifying indirect categories of spend and to cleanse and normalize the data across global plant locations and business units.
• There was limited information about the current commodity structure for indirect spend. It was also difficult to infer the subcategories of spend within the hierarchy structure. A more detailed category structure was needed for indirect spend.
• There were significant missed opportunities to aggregate spend and leverage pricing for vendors and suppliers of indirect services and materials. Company efforts to strategically source indirect categories lagged behind those for direct categories.

The plan was to classify all spend into a detailed commodity structure, and then analyze indirect category spend. After the indirect spend was categorized, Enporion performed analyses and developed reports that helped the client prioritize, plan, and implement numerous sourcing initiatives within the supply chain organization and across multiple global plant locations. This approach enables the client to meet the objectives of identifying millions of dollars of savings through supplier aggregation as well as identifying which categories of indirect spend to centralize. Finally, the most effective mix of spend would be implemented to achieve hard dollar savings quickly.

• Enporion requested 3 financial quarters of spend data from the client’s Accounts Payable (A/P) system. The A/P data became the basis for the spend analysis category assessment and strategy development. The A/P data was loaded into Enporion’s Spend Analysis Tool, and after data cleansing and normalizing, global spend was classified by company, plant site, and local currency.
• Enporion developed a detailed commodity structure, tailored to the client’s industry, for indirect categories of spend, and then spend was mapped to the correct category based on a vendor names and item descriptions. Spend at plant sites was examined to separate into direct and indirect categories and to determine if those categories were to be managed centrally.
• Major indirect categories were identified and analyzed; these included Energy and Utilities, Construction, Facilities Maintenance, Contract Labor, Electronic Components, MRO, and more. Comprehensive spend profiles were developed for each category with information on spend sub-categories, spend by different locations, and portions of spend sorted by supplier. With these reports and analyses, Enporion provided instrumental subject matter knowledge to develop the sourcing strategy for each indirect category.
• Using the Spend Analysis Tool, Enporion developed a customized market basket report. This market basket report allowed the client to quickly generate itemized spend and usage detail for each spend category and it significantly shortened strategic sourcing cycles.

• The client received detailed sourcing strategies to realize over $20M in annual cost savings for indirect spend.The resulting Spend Assessment reports and detailed analyses became critical inputs to the client’s domestic and global indirect spend sourcing strategy and supply chain initiatives. 

• Enporion's work advanced the client’s ability to align internal organizational responsibilities for indirect spend and implement a comprehensive indirect category sourcing strategy.
• For some indirect materials categories of spend, Enporion utilized the market basket report to obtain favorable supplier pricing, which was used to develop Enporion Sourced Agreements (ESA) for the client.  ESAs are group sourcing agreements that leverage the buying power of many to substaintially reduce costs to the buyer. Enporion has ESAs in many categories of spend, and they are easy to “join” and allow a company to start realizing savings right away.
• The client realized immediate savings and process efficiencies from the ESAs for categories such as Computer Peripherals, Office Supplies, and MRO.  The analyses and savings identified led to a comprehensive MRO category sourcing effort and an inventory optimization initiative began.