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In every SPM project I invariably get asked the same questions, what is DSE? is it part of the product?  I will try and answer these questions here.

 

So what is DSE?

Data Standardization and Enrichment ensures the reliability of your spend analyses.  DSE compiles global market data from external sources including diversity and risk, in order to validate and enrich your suppliers and classify your transactions.

 

1.Validation & Enrichment

Supplier identities are often vague due to poor data quality and lack of content.  It’s tough for an enterprise to maintain consistency across multiple systems involving supplier data.  Let alone maintain parent/child relationships across the entire list of suppliers they work with.  And because of this, procurement organizations are not able to analyze their spend by suppler and they cannot leverage total spend with a supplier parent. 

Supplier validation and enrichment is the process of transforming unstructured and incomplete supplier data into valid, enriched information for reliable analyses and greater leverage.   DSE standardizes the format and content of your suppliers, removes duplicates and then validates them against a global business directory.  Once validated, the supplier records are enriched with information such as legal name, trade names, corporate ownership, risk indicators, and so on.

Before validation & enrichment

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplier ID

 

 

Description

 

 

Spend

 

 

SAP001

 

 

SAP America

 

 

$5500.00

 

 

BOBJ01

 

 

Business Objects

 

 

$3500.00

 

 

SAP002

 

 

SAP

 

 

$2200.0

 

 

 

After validation & enrichment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Supplier ID

 

 

Description

 

 

Cleansed Supplier

 

 

Spend

 

 

SAP001

 

 

SAP America

 

 

SAP Inc

 

 

$5500.00

 

 

BOBJ01

 

 

Business Objects

 

 

SAP Inc

 

 

$3500.00

 

 

SAP002

 

 

SAP

 

 

SAP Inc

 

 

$2200.00

 

 

By creating linkages between supplier corporate parents and their children, procurement organizations will be able to realize that all spend is against the same supplier. 

Additional enrichment facilitates strategic decision-making such as diversity status (e.g. Minority-owned, Women-owned, Veteran-owned), credit/financial risk, and other attributes supporting corporate initiatives.

 

2.Data Classification

Classification is the process of assigning purchases to a standard structure such as UNSPSC, eCLASS or Custom Structure.  The issue at most organizations is that a single classification structure is not used for classification across all procurement and financial transaction systems.  Hence procurement organizations are unable to effectively analyze their category spend across the entire enterprise.  The benefits of using a single classification structure are:

  • A standard view of all goods and services purchased across the enterprise
  • The ability to leverage total spend to drive cost savings, monitor compliance, and rationalize suppliers

 

Below is a good example of data classification

 

Unclassified Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product   ID

 

 

Description

 

 

Supplier

 

 

ERP   Category

 

 

Spend

 

 

X08092010

 

 

Shoes

 

 

Athletic

 

 

Clothing

 

 

$5000.00

 

 

AJRD2009B

 

 

Shoes

 

 

Balance

 

 

Footwear

 

 

$2500.00

 

 

TP2008CRV

 

 

Blackberry

 

 

A-Mobile

 

 

Fruit

 

 

$3500.00

 

 

PX2009BD

 

 

Blackberry

 

 

B-Mobile

 

 

Telephone

 

 

$2300.00

 

 

Classified Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Product   ID

 

 

Description

 

 

Supplier

 

 

ERP   Category

 

 

Standard   Category

 

 

Spend

 

 

X08092010

 

 

Shoes

 

 

Athletic

 

 

Clothing

 

 

Footwear

 

 

$5000.00

 

 

AJRD2009B

 

 

Shoes

 

 

Balance

 

 

Footwear

 

 

Footwear

 

 

$2500.00

 

 

TP2008CRV

 

 

Blackberry

 

 

A-Mobile

 

 

Fruit

 

 

Telephone

 

 

$3500.00

 

 

PX2009BD

 

 

Blackberry

 

 

B-Mobile

 

 

Telephone

 

 

Telephone

 

 

$2300.00

 

Note:  Supplier description is not the only field with which categorization is done.  Depending on the vendor and the engine they use it involves lot many fields to correctly categorize your data.

 

Looking at unclassified data business is not in a position to find what is the total spend in Footwear or Telephone category, but once the data is classified this question can be answered correctly and accurately. 

Although not mandatory it’s very beneficial to use DSE process.  So it’s very important to talk to your business users and explain to them how DSE improves leverage.  This is one of the important decisions that will drive project timelines.  The next logical step is to decide which vendor you would like to work with.

 

As you have realized by now DSE process is not part of the SPM application.  This is an additional service that data goes through.  Which means (in most cases) you will need to send your unclassified data out of the SPM application to your 3rdparty vendor for DSE process.  Each vendor has their own way of processing data.  Following are some questions that you might want to ask yourself and your DSE partner to ensure the process is smooth:

  • How frequently do you want to send your data for DSE process
  • How extensive is your DSE vendor’s business directory (number of businesses, geographic distribution, type of content)
  • What supplier enrichment attributes are needed by your business users (diversity, risk, sustainability, clinical, parent/child linkages, franchises, sales, geocodes, etc.)
  • What categorization structure (UNSPSC, eCLASS, Custom Categorization) would business like to use
  • How long does it take your DSE vendor to pass your data through their engine for the first iteration and how long does it take for subsequent iterations.
  • Last but not least what do they charge you for this process

Note: Usually DSE partners do take more time during the first iteration as their engine is still trying to learn your data.  Subsequent iterations generally take less time.

 

In my next blog I will talk about how the SPM application handles all this DSE in its data model.

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3 Comments

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  1. Prashant Mendki
    Good Article Rohit on DSE with simple way of telling the story. I could see lot of material available on SPM – which essentially gives a nice analytical reporting capabilities to buyer to slice and dice spend – but what if your data is fractured, inaccurate or in “dirty” shape, or not consoldiated? All analytics is there – but with not so good results. So Data Standardization and Enrichment is certianly a backbone of any analytical tool. But there are more than just data cleansing and standardization to it. I would like to put that someday in some
    (0) 
  2. Engbert-Jan Koersen
    Hi Rohit,

    Very nice and clear blog,

    However, I still have 1 question. Next to the supplier data enrichment I miss information about how the markt prices are being retreived within SPM. Could you tell me how this works?

    Thanks.

    (0) 
    1. Rohit Kamath Post author
      Hi,
      When you say market price if you are referring to the Spend amount, this is coming over from the invoice amount and have nothing to do with DSE.  DSE does not and will not change these values.  Enrichment is primarily working with master data.

      Rohit

      (0) 

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