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Oracle Set to Release New Tool for More Accurate Spend Analyses
Oracle is planning a summer release for a new product to help organizations more accurately analyze their procurement activities to find opportunities for reducing costs and negotiating favorable contracts with suppliers.
Called Oracle Spend Classification, the tool will work with Oracle Business Intelligence Applications 7.9.6 to ensure transparency of procurement trends by correctly categorizing of procurement transactions and preventing the use of catchall “miscellaneous” groupings.
“One of the best ways to reduce costs in today’s economic environment is to create a detailed picture of spend history so that sourcing professionals better understand areas of leverage needed for negotiating or renegotiating more favorable agreements,” says Ashish Pathak, Oracle principal product manager. “But if the spend data isn’t categorized properly, sourcing managers won’t see an accurate picture.”
For example, a company that procures LCD screens might group the displays and their more expensive controller units into one broad “LCD” category. “This would inflate the spending for displays and downplay the importance of controllers,” Pathak explains. “As a result, this would reduce the company’s capacity to negotiate better deals with suppliers by encouraging it to strike volume deals with the display suppliers, when instead it should be focusing on bigger-ticket controllers.”
Spend Classification mitigates these problems by combing through spending data to find misclassifications and then suggest corrections. Procurement managers have the option of accepting or rejecting the suggestions.
The classification tool feeds the validated classifications to Oracle Business Intelligence Applications, which displays information in special dashboards to help managers analyze their procurement activities. “When procurement professionals look at dashboards with the corrected classifications, they see an accurate picture, which gives them much more leverage when dealing with suppliers,” Pathak says.
Spend Classification accommodates data sent from most ERP systems, including the Oracle E-Business Suite, Oracle PeopleSoft Enterprise, and JD Edwards EnterpriseOne, as well as third-party and legacy platforms.
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