FORM – 2

THE PATENTS ACT, 1970
(39 of 1970)

COMPLETE SPECIFICATION
(Section 10, rule 13)

SPEND ANALYSIS SYSTEM AND METHOD

Zycus Infotech Pvt. Ltd

an Indian Company registered under the provisions of the Companies Act, 1956,

with our Corporate office at GJ-07, SEEPZ++, SEEPZ SEZ, Andheri (East), Mumbai – 400096. , Maharashtra, India.

THE FOLLOWING SPECIFICATION PARTICULARLY DESCRIBES THE NATURE OF THE INVENTION AND THE MANNER IN WHICH IT IS TO BE PERFORMED: -
FIELD OF THE INVENTION:
This invention relates to the field of information and computation systems.

Particularly, this invention relates to the field of information and computation systems in relation to procurement costs.

Particularly, this invention relates to procurement method and system to facilitate optimization of procurement cost.

BACKGROUND OF THE INVENTION:
The present invention is generally related to techniques for procurement of material and services in organizations. Procurement costs (also called as “spend”) are often an important aspect of overall production and/or operational efficiency of the organization. It thus becomes desirable to optimize the procurement costs.

The procurement costs are also often tied to the market dynamics of the underlying commodities. Hence, optimizing the procurement costs often includes actions prompted by these market dynamics. To facilitate these actions, the procurement professionals need visibility into how the market dynamics affects the procurement costs.

The present invention provides improved technique(s) for procurement cost analysis, which facilitate optimizing the procurement costs in light of the market dynamics.

PRIOR ART:
US patent application no. 20030088481 relates to a system for providing purchasing metrics that are used to identify purchasing costs savings opportunities that includes multiple databases, processing component, and a reporting component wherein databases receive and store purchasing data from numerous client applications; the processing component cleanses and categorizes data in at least one of the databases and the reporting component enables users to select and display reports on procurement sources, wherein the reports identify purchasing cost saving opportunities.
Said invention uses multiple databases and connector component that is executed by a batch process.

US patent application no. 20030130878 relates a method of managing spending. It further relates to supply chain management, in particular, to a systems and methods for managing spending associated with a procurement process.

US patent no. 7,165,036 describes a method of managing contracts. Further, said method is a method and system for facilitating parts procurement and production planning processes among supply chain partners in a multi-enterprise environment.

US patent application no. 20090024491 relates to a system for and method of managing procurement of assets and to a system and method to predict or forecast needs to purchase or rent assets, and to optimize the capital and operational expenses of an enterprise.
The system comprises tracking element operable to generate a signal representative of a location of asset; and a controller in communication with the tracking element. Further, the controller includes a processor in communication with a memory, said processor operable to execute a plurality of program instructions stored in the memory. Said plurality of program instructions are representative of the acts of measuring a utilization of asset having a unique identifier over one time interval, calculating a projected need of the asset over a predetermined future time interval dependent on the utilization of the asset, calculating a mode of procurement of the projected need of the asset dependent on the projected need of the asset, and displaying the mode of procurement to the user.
The method comprises the acts of measuring a utilization of the asset having a unique identifier over one time interval; calculating a projected need of the asset over a predetermined future time interval dependent on the utilization of the asset; calculating a mode of procurement of the projected need of the asset dependent on the projected need of the asset, and displaying the mode of procurement to the user.

The present invention meets the needs by providing a spend analysis system and method.

OBJECTS OF THE INVENTION:
An object of the present invention to provide a spend analysis system and method.

Further object of the present invention is to provide system and method that facilitates optimization of procurement costs.

SUMMARY OF THE INVENTION:
It is an object of the present invention to provide a spend analysis system and method. The techniques for spend analysis according to the present invention advantageously facilitate analysis of the procurement cost vis-à-vis market dynamics of the underlying commodities. This in turn can facilitate optimizing procurement costs, projecting future procurement costs, negotiation leverage with suppliers and so on.

Moreover, in an embodiment, the present invention provides the spend analysis system that is based on readily available computing technologies.

In a specific embodiment of the present invention, there is provided a computer based system for spend analysis, the system comprises:
a processor unit;
a computer readable medium storing instructions executable by the processor unit, said computer readable medium comprising:
identifying means for identifying a spend category;
associating means for associating a cost component model to the spend category, the cost component model indicating one or more cost contributors to the spend category;
receiving means for receiving market information associated with at least a subset of the one or more cost contributors in the cost component model; and
outputting means for outputting an analysis of spend associated with the spend category in relation to the cost component model, based at least in part on the market information.

Typically, the cost component model further includes indicating means which indicates relative significance of the one or more cost contributors to the spend category.

Typically, the associating means includes matching means for matching a classification code associated with the spend category to a classification code associated with the cost component model.

Typically, the associating means includes matching means for matching a classification code being a UNSPSC (United Nations Standard Products and Services Code).

Typically, the associating means includes selecting means for selecting a cost component model from a plurality of pre-configured cost component models.

Typically, the associating means includes selecting means for selecting a cost component model from a plurality of pre-configured cost component models, said selection being responsive to a user input.

Typically, the associating means includes formulation receiving means for receiving formulation of the cost component model via a user input.
Typically, the outputting means includes a trending analysis means for trending analysis of the spend in relation to the cost component model.

Typically, the computer readable medium storing further instructions executable by the processor unit performs the steps of:
comparing the spend with cost projected by the cost component model; and
generating an alert when difference between the spend and the cost projected by the cost component model crosses a pre-determined threshold.

In another specific embodiment of the present invention, there is provided a method for spend analysis, the method comprises:
identifying a spend category;
associating a cost component model to the spend category, the cost component model indicating one or more cost contributors to the spend category;
receiving market information associated with at least a subset of the one or more cost contributors in the cost component model; and
outputting an analysis of spend associated with the spend category in relation to the cost component model, based at least in part on the market information.

Typically, the cost component model further indicates relative significance of the one or more cost contributors to the spend category.

Typically, the associating the cost component model includes matching a classification code associated with the spend category to a classification code associated with the cost component model.

Typically, the classification code being a UNSPSC (United Nations Standard Products and Services Code).

Typically, the associating the cost component model includes selecting a cost component model from a plurality of pre-configured cost component models.

Typically, the selecting being responsive to a user input.

Typically, the associating the cost component model includes receiving formulation of the cost component model via a user input.

Typically, the analysis includes a trending analysis of the spend in relation to the cost component model.

In another specific embodiment of the present invention, the method further comprises:
comparing the spend with cost projected by the cost component model; and
generating an alert when difference between the spend and the cost projected by the cost component model crosses a pre-determined threshold.

In another specific embodiment of the present invention, a method for spend analysis wherein the method comprises:
identifying a spend category;
associating a cost component model to the spend category, the cost component model indicating one or more cost contributors to the spend category; and
receiving an analysis of spend associated with the spend category in relation to the cost component model, wherein the analysis is based at least in part on market information associated with at least a subset of the one or more cost contributors in the cost component model.

Typically, the analysis includes a trending analysis of the spend in relation to the cost component model.

These and other various objects, features, advantages, and benefits of the present invention can be more fully appreciated with reference to the detailed description and accompanying drawings that follow.

BRIEF DESCRIPTION OF THE ACCOMPANYING DRAWINGS:
The invention will now be described in relation to the accompanying drawings, in which:

Figure 1 illustrates an exemplary computer network environment.

Figure 2 illustrates an exemplary computer apparatus.
Figure 3 illustrates an exemplary schematic of a system for spend analysis.

Figure 4 illustrates an exemplary flow of steps in a method for spend analysis.

Figure 5 illustrates an exemplary computer screenshot to facilitate user to formulate a cost component model.

Figure 6 illustrates an exemplary cost analysis output for the cost component model.

Figure 7 illustrates an exemplary spend analysis output.

DETAILED DESCRIPTION OF THE ACCOMPANYING DRAWINGS:
Purchasing professionals in organizations often look for ways to optimize the procurement costs (spend). These costs are often tied to costs of the underlying commodities. As a result, commodities market dynamics has significant impact on the spending in the organization. Accordingly, the present invention provides techniques for spend analysis, which facilitate analysis of the impact of the commodities market dynamics on the procurement costs. This in turn enables the purchasing professionals to take actions to optimize the spend.

The following detailed description of the invention refers at various places to the accompanying drawings and specific environments, applications, platforms, examples, computer screenshots, and implementations. The detailed description is provided for thorough understanding of the present invention and is illustrative rather than limiting.

Figure 1 illustrates an exemplary networked computer system 100 which can provide an environment to practice certain specific embodiments of the present invention. As shown in Figure 1, multiple end user computer systems 104 and multiple server computer systems 106 can be coupled to a computer network 102. For example, the computer network 102 can be a private network of the organization. In alternative embodiment, the computer network 102 can include the local area network (LAN); and in yet an alternative embodiment it can include the Internet. The end user computer systems 104 can include without limitation desktop computers, laptop computers, personal digital assistant (PDAs), and smart phones. The computer systems 104, 106 etc. can exchange information using the computer network 102.

The servers 106 store digitized content which can be accessed (e.g., read, downloaded, searched, changed etc. as appropriate) over the computer network. A specific portion of the content is often identified using a hyperlink. The content stored in one server can also be accessed by another server and by the end user computer system. Popular techniques for accessing the content include HTTP and (HyperText Transfer Protocol) and HTTPS (HypterText Transfer Protocol Secure), though other techniques can also be used. Access to some portions of the content may require authentication and/or authorization for access.

Depending upon embodiments of the present invention, the servers 106 and the computer systems 104 can be configured to perform certain acts. For example, the servers 106 and the computer systems 104 can include software which can facilitate performing these acts. These acts can include various acts performed by the “spend analysis module”, by the “user interaction module”, for interaction between the “spend analysis module” and the “user interaction module”, for interaction between the “spend analysis module” and the “spend management module” etc.

Figure 2 illustrates an exemplary implementation of any of the servers 106 or any of the end user computer system 104, according to an embodiment of the present invention. The bus 202 permits communication among the components. The processor unit 204 may include one or more microprocessors, microcontrollers, RISC processors, CISC processors etc. The processor unit can interpret and execute instructions. The memory unit 206 may include any type of one or more volatile storage devices, for example, random access memory (RAM). The memory unit 206 may in addition or alternatively include any type of one or more persistent storage devices, for example read only memory (ROM), read write memory, hard disc, flash memory etc. The memory unit stores information and instructions for execution by the processor unit 204.

The input devices 208 may include one or more mechanisms that permit an operator to input information, such as a keyboard, mouse, pen, magnetic drives, optical drives etc. The output devices 210 may include one or more mechanisms that output information to the operator, including a display, a printer, a speaker etc. The communication interface 212 may include any transceiver mechanism that enables communication with other devices and systems via a network. For example, the communication interface can include Ethernet interface, optical network interface, wireless interface etc.

Figure 3 illustrates an exemplary schematic 300 of a system for spend analysis according to an embodiment of the present invention. As shown in Figure 3, the system 300 comprises various modules. Each of these modules can be a hardware module, a software module, or combination thereof. Moreover, depending upon the embodiment, each of the modules can reside on a single computer system or can be distributed across a plurality of interconnected computers. The user interaction module 310 provides interface between user and machine, and performs acts such as receiving input from user and providing output to the user. The spend management module 320 typically stores procurement information, which can identify various spend categories along with their past procurement records and future estimates. The spend analysis module 330 can perform various acts associated with analyzing the economics of the spend category.

An exemplary flowchart 400 illustrating steps in a method for spend analysis according to an embodiment of the present invention is shown in Figure 4. As shown in Figure 4, the method can identify a spend category at step 410. According to an embodiment of the present invention which utilizes computer apparatus, the spend category can be identified by way of input from the user in a computer screen (for example, as facilitated by the user interaction module 310). In an alternative embodiment utilizing computer apparatus, the spend category can be identified by way of information received from the spend management module 320. In this embodiment, the spend analysis module 330 can issue one or more electronic queries to the spend management module and the spend management module can respond to the one or more queries identifying one or more spend categories.
Further at step 420, the method can associate a “cost component model” to the spend category. Preferably, the cost component model indicates one or more cost contributors to the spend category. The model can also indicate weightage or significance of a particular const contributor. As merely an example, the cost component model for the ball bearing can indicate the cost contributors are stainless steel, labor and electricity; and their weightage or significance of contribution to the cost can be 40%, 16% and 10%, respectively. As yet another example, cost component model for a specific type of legal service can include hourly rate of lawyers as primary component and administrative overheads as secondary one.

In an embodiment of the present invention which utilizes computer apparatus, the cost component model can be associated to the spend category by way of input from the user in a computer screen. In this embodiment, one or more pre-configured cost component models can be provided in the apparatus. The user can select the cost component model from these which is appropriate for the spend category of interest. In this embodiment, the user can also modify the selected pre-configured cost model to better suit the spend category. In an alternative embodiment, the user can formulate the cost component model for the spend category by way of selecting individual cost contributors and assigning weightages to them (as illustrated in section 520, in the exemplary computer screenshot 500 in Figure 5).

In an alternative embodiment, the cost component model can be assigned to the spend category based upon classification code for the spend category. As merely an example, UNSPSC (United Nations Standard Products and Services Code) is a coding system to classify products and services for use in electronic commerce (e-commerce).

In this embodiment, the user can input the classification code for the spend category in a computer screen and the cost component model for that classification code is then associated to the spend category (as illustrated in section 510, in the exemplary computer screenshot 500 in Figure 5).

The process of assigning the component cost models based upon the product/service classification codes is particularly advantageous to automatically assign the cost component models to the spend category information received from the spend management module as described before. In this embodiment, the spend management module can store the spend category information along with the classification codes for the spend categories according to a predetermined convention (such as UNSPSC); while the spend analysis module can store the cost component models for the classification codes (such as UNSPSC).

At step 430, the method can receive market information associated with the commodities in the cost component model for the spend category. The market information can include current cost of the commodity, historical cost of the commodity, future projected cost of commodity cost etc. In an embodiment of the present invention which utilizes computer apparatus, the market information can be received by the spend analysis module over the computer network. In alternative embodiment, the market information can be retrieved from electronic media such as compact disc, hard disc, flash memory, RAM etc. and be made available to the spend analysis module.

As merely examples, the market information can be obtained from sources such as U.S. Energy Information Administration (EIA) which provides market information on petroleum and energy commodities/products, U.S. Department of Agriculture (USDA) which provides market information on agricultural commodities/products, U.S. Department of Labor Bureau of Labor Statistics (BLS) which provides market information on producer price index (PPI), consumer price index (CPI), labor rates and so on. The market information can also be obtained from other parties which aggregate and/or generate such information on their own. The market information can also be obtained from specialty market information providers which may focus on specific commodities/products. The sources of market information cited above are exemplary rather than limiting.

Moreover, at step 440 the method can output a spend analysis. The analysis can include spot analysis and/or trending analysis. The trending analysis can include past and/or future trending. In an embodiment of the present invention which utilizes computer apparatus, the analysis output can be provided to user by methods such as displaying on a computer screen, providing a file for downloading, providing a file for printing, emailing, archiving etc.

Certain exemplary analyses 600 and 700 outputted by the system according to an embodiment of the present invention are illustrated in Figure 6 and Figure 7, respectively. Figure 6 illustrates trending analysis for the cost component model, including trending for individual cost contributors as well as aggregate trending, over a period of time. In an embodiment, the aggregate trend is obtained by combining individual trends in proportions of their significances to the cost contribution.

Figure 7 illustrates trending analysis comparing the spend with the cost component model, over a period of time. The spend can be actual spend on the spend category performed in the past or it can be projected future spend, depending upon the embodiment. This exemplary illustration shows how the analysis output can be valuable to purchasing professional. Based on this example, the purchasing professional can tell that the spend was higher than it should have been in year 2009. This could be indication of overcharging by the supplier, supplier inefficiency etc.

In an embodiment, the present invention compares the cost component model trend with the spending trend. The different between the cost component model trend and the spending trend can be computed and compared with a pre-determined threshold. When this difference crosses the pre-determined threshold, an alert can be generated. Such an alert facilitates the purchasing professional to initiate actions such as: re-negotiate with the supplier or change the supplier if the cost component model indicates that the spending trend is higher, re-budget for the procurement if the cost component model indicates that the spending trend is below the cost component model etc. In an embodiment of the present invention which utilizes computer apparatus, the comparison can be performed substantially automatically and substantially regularly. In this embodiment the alert can be communicated to the user via email, display on computer screen and so on.
Accordingly, the present invention provides a spend analysis system and method. While specific embodiments are described herein, alternative embodiments will be apparent to person of ordinary skill in the art, in which one or more acts described herein can be modified, performed in different order, or omitted; without departing from the spirit of the invention. Moreover, one or more acts can be added to those described herein. Such alternatives and modifications are included within the scope of the present invention.

Based on the present teachings, person of ordinary skill in the art can contemplate various alternatives, variations and modifications to the illustrated embodiments within the scope of the invention disclosed herein.

We claim;
1. A computer based system for spend analysis, the system comprising:
a processor unit;
a computer readable medium storing instructions executable by the processor unit, said computer readable medium comprising:
identifying means for identifying spend category;
associating means for associating a cost component model to the spend category, the cost component model indicating one or more cost contributors to the spend category;
receiving means for receiving market information associated with at least a subset of the one or more cost contributors in the cost component model; and
outputting means for outputting an analysis of spend associated with the spend category in relation to the cost component model, based at least in part on the market information.

2. The system of claim 1 wherein, the cost component model further includes indicating means which indicates relative significance of the one or more cost contributors to the spend category.

3. The system of claim 1 wherein, the associating means includes matching means for matching a classification code associated with the spend category to a classification code associated with the cost component model.
4. The system of claim 1 wherein, the associating means includes matching means for matching a classification code being a UNSPSC (United Nations Standard Products and Services Code).

5. The system of claim 1 wherein, the associating means includes selecting means for selecting a cost component model from a plurality of pre-configured cost component models.

6. The system of claim 1 wherein, the associating means includes selecting means for selecting a cost component model from a plurality of pre-configured cost component models, said selection being responsive to a user input.

7. The system of claim 1 wherein, the associating means includes formulation receiving means for receiving formulation of the cost component model via a user input.

8. The system of claim 1 wherein, the outputting means includes a trending analysis means for trending analysis of the spend in relation to the cost component model.

9. The system of claim 1 wherein, the computer readable medium storing further instructions executable by the processor unit to perform the steps of:
comparing the spend with cost projected by the cost component model; and
generating an alert when difference between the spend and the cost projected by the cost component model crosses a pre-determined threshold.
10. A method for spend analysis, the method comprising:
identifying a spend category;
associating a cost component model to the spend category, the cost component model indicating one or more cost contributors to the spend category;
receiving market information associated with at least a subset of the one or more cost contributors in the cost component model; and
outputting an analysis of spend associated with the spend category in relation to the cost component model, based at least in part on the market information.

11. The method of claim 10 wherein, the cost component model further indicates relative significance of the one or more cost contributors to the spend category.

12. The method of claim 10 wherein, the associating the cost component model includes matching a classification code associated with the spend category to a classification code associated with the cost component model.

13. The method of claim 12, wherein the classification code being a UNSPSC (United Nations Standard Products and Services Code).

14. The method of claim 10 wherein, the associating the cost component model includes selecting a cost component model from a plurality of pre-configured cost component models.

15. The method of claim 14 wherein, the selecting being responsive to a user input.

16. The method of claim 10 wherein, the associating the cost component model includes receiving formulation of the cost component model via a user input.

17. The method of claim 10 wherein the analysis includes a trending analysis of the spend in relation to the cost component model.

18. The method of claim 10 further comprising:
comparing the spend with cost projected by the cost component model; and
generating an alert when difference between the spend and the cost projected by the cost component model crosses a pre-determined threshold.

19. A method for spend analysis, the method comprising:
identifying a spend category;
associating a cost component model to the spend category, the cost component model indicating one or more cost contributors to the spend category; and
receiving an analysis of spend associated with the spend category in relation to the cost component model, wherein the analysis is based at least in part on market information associated with at least a subset of the one or more cost contributors in the cost component model.

20. The method of claim 19 wherein, the analysis includes a trending analysis of the spend in relation to the cost component model.