Procurement cannot thrive without advanced

analytics

Recently, KPMG was named Vanguard Leader by ALM Intelligence in their Procurement Operations Consulting report. KPMG was awarded this position because KPMG, according to ALM Intelligence, assists clients in improving their transparency and process flow through digital tools, such as its recently developed procurement analytics tool KREO. KREO can process and harmonize procurement data from across different sources, visualize flexibly as a state-of-the-art front end, and provide immediate transparency – from C-level to in-depth views. This approach leads to an improved understanding of the added value of procurement to the C-Suite, and encourages increased integration of procurement as a key lever for business strategy success.

John Tros, responsible for the Procurement practice within KPMG, explains: “Unfortunately many Dutch organizations, I would put the figure over 60 percent, don’t have transparency on supplier spending. The more indirect their spending, the more blurred their insights are. Even a spend analysis once a year won’t cut it in case Procurement wishes to show the value they brought. Therefore KPMG is looking to revolutionize procurement and provide our KREO Procurement Analytics as a service to customers.”

Procurement analytics
In the vision of Tros, companies should focus on the bigger picture. That means saying goodbye to spend analytics, and welcoming the more comprehensive procurement analytics. Whereas spend analytics can give companies important – yet basic – insights, procurement analytics will go several steps further by offering insights in, among other things, the procure-to-pay process, contract and supplier compliance, master data inconsistencies and savings possibilities. Within KPMG, Tros is responsible for KPMG’s KREO Procurement Analytics solution, which is part of KPMG’s Sofy Suite platform.

KREO Procurement Analytics is a comprehensive and easy-to-use online platform that automatically extracts, classifies and analyzes transactional data from a company’s single or multiple ERP systems. It provides organizations not just with near realtime spend information, it also determines risk and comes up with savings proposals and recommendations.

Tros: “Procurement used to be about periodically keeping score of what we buy and from which supplier. Then came procurement 2.0, which gave realtime insights, but was still based on the information at hand. We’re now at procurement 3.0. That’s all about monitoring compliance, identifying conflicts, preventing mistakes, and analyzing trends – not just within the organization, but in the outside world as well.”

Payment terms
If that is the case, KREO Procurement Analytics is definitely a ‘next generation’ procurement tool. Among other things, the system automatically compares payment terms. If a company has different payment terms for the same supplier – which may occur in case these terms are entered (and changed) in separate locations of the same ERP system – KREO Procurement Analytics will detect these differences, and thus give Procurement the opportunity to proactively monitor and correct these disparities.

Volume discounts
In addition, the system analyzes invoices. Sometimes departments within the same company purchase almost identical products from the same supplier, without being aware of it. KREO Procurement Analytics will reveal this, and by doing so, it will enable the company to (re)negotiate volume discounts and payment terms. The same holds true for suppliers operating under more than one name (i.e. subsidiaries). KREO Procurement Analytics automatically classifies all spending under the same company banner, whereupon volume discounts – which previously went undetected – can be earned. All supplier data is cleansed allowing inaccuracies to be noticed and, at the same time, avoiding costly mistakes.

Invoices that are paid incorrectly
Companies that deploy KREO Procurement Analytics get access to a convenient dashboard that presents a realtime overview of the organization’s procurement. With just a few mouse clicks, this information can be visualized at the most detailed levels possible: which department is spending how much? What volumes are we buying? What are the average payment terms? How do they compare to last month, or last year? KREO Procurement Analytics does a lot of these analyses itself. “It determines, for example, if an invoice matches the approved quote or contract”, Tros says. “This thus amounts to immediate cost savings, since 0,5 to 1 percent of all invoices are paid incorrectly, or twice.”

Because of KPMG’s accounting expertise, KREO Procurement Analytics goes well beyond just spending. Tros: “It can verify whether tax rates on invoices are in accordance with the applicable tax rates in different countries. It also covers legal risks, compliance and forensic indicators. The platform’s approach is much broader and goes much deeper than any other solution on the market today.”

Foundation
All departments within an organization will benefit from KREO Procurement Analytics. Procurement gains unparalleled insight in spending, trends, and opportunities, while the CFO, Corporate Control and Legal can rest assured that all spending happens in accordance with strategy, agreements, laws and regulations. Companies that have already deployed KREO Procurement Analytics have seen a reduction in spending (in the range of 1 to 4 percent, on average) and an improved compliance management.

Although some companies are reluctant to change their way of working, Tros is encouraged by the countless other organizations willing to learn and improve with the support of analytics. “Advanced insight in spending and master data is the core foundation for every organization that’s looking for less risk and a higher ROI. KREO Procurement Analytics provides exactly that.”

Do you want to learn more? Or do you have any questions, let us know and contact us.

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