Compliance reports are a crucial part in assuring that savings are continued through the length of a contract. Utilizing compliance reports makes a difference.
In short, compliance is the act of being in alignment with guidelines. It’s about ensuring the company is receiving the optimized savings they contracted for with the supplier. This is an important step towards confirming a strong category management.
A compliance report shows a company how they are spending money within a category, and how much of that spend is with the preferred supplier. The report should show how much spend they are directing towards the preferred contract and how much leakage is still going to other suppliers. The point of the report is to provide the data for the member to see where their spend does not go through our contract so they can make corrections, which should help them optimize savings. As a Group Purchasing Organization (GPO) CoVest provides compliance reports with this information to our members on a quarterly basis.
How does it work?
In order to complete a compliance report, all spend data from all suppliers in the category needs to be collected. Then the various data needs to be put into a clean consistent format. For some companies their data is all in one system, others have various sources of data. One of the benefits of CoVest is that we can clean up that data and make it more workable). Next, the member will be presented a summary (charts & graphs) that illustrates how much spend is with the preferred supplier and how much is with other vendors. We can give a breakdown by month to show the progress of driving more spend to our contracts as we go through implementation of a contract, and can give additional breakdowns by location, product category, etc. to let the member narrow down where the issue in compliance is.
What are the benefits?
- Understand more clearly where (with which supplier) their spend is
- Provide the specific data for the member to be able to push buying changes that get more compliance to a preferred contract
- Helps optimize savings by directing spend from non-preferred contracts and local ‘Mom & Pop’ stores that often have worse pricing
- At CoVest, the more spend that is under our contracts provides us clean data to help in crafting and updated core lists
Analytics is one of our core competencies; we are skilled at analyzing messy data and putting it in a usable format. What makes CoVest Sourcing Network’s approach different is that we aim to produce compliance reports throughout the term of the contract. That way, we are maintaining our members’ savings during the life of the contract and taking any corrective action on a timely basis. We also make the most of the data. We cross reference the data with our preferred suppliers’ items to show them lost savings opportunities (Learn more about Lost Savings Opportunities Reporting in our next blog!)
Read next blog: The Benefits of Lost Savings Opportunity Reporting
Photo credit to Flickr user: Splash Universe Water Parks
Before creating a compliance report, a savings report should be developed.
Click the image below to download a sample of a Savings Report!