The Struggle: Hidden Costs & Inefficient Spend Analysis

A global e-commerce company was bleeding money without realizing it. Their supply chain expenses were scattered across multiple suppliers, product categories, and sourcing channels, making it nearly impossible to pinpoint cost-saving opportunities.

Without a structured approach to spend analysis, cost containment efforts felt like a guessing game. The organization lacked visibility into:

• Supplier Performance: Were they overpaying for materials or services?
• Product-Level Costs: Which stock keeping units (SKUs) were driving the highest costs?
• Sourcing Efficiency: Were there better procurement strategies available?

Traditional reporting methods failed to connect the dots. The business needed a scalable, data-driven solution to reveal hidden savings and reduce their supply chain costs. That’s when executive management turned to Elliott Davis for help.

The Turning Point: Power BI & Advanced Spend Analysis

Enter Power BI, a game-changing business intelligence tool that transformed raw data into actionable insights. The Elliott Davis team deployed a 3-phase, 12-week approach to spend analysis and cost containment:

Phase 1: Discovery (4 Weeks)

Using Power BI, the Elliott Davis team conducted a deep dive spend analysis across:

• Suppliers
• SKU categories
• Regions & business units
• Contracted vs. off-contract spend
• Budget targets & margin benchmarks

The data was visualized in customized Power BI dashboards, revealing inefficiencies and pinpointing areas for cost reduction.

Phase 2: Diagnose (2 Weeks)

A Pareto Analysis, otherwise known as the 80/20 rule, (80% of outcomes originate from 20% of causes) uncovered critical cost drivers:

• 80% of total spend came from just 15 SKUs—a huge opportunity for cost containment.
• ABC Analysis (analyzing inventory spend by segmenting suppliers, products, or SKUs into values based on their significance or weighted contribution) categorized products to prioritize cost-cutting efforts.
  • A-Styles: 80% of spend, 20% of SKUs → High-priority cost-saving targets
  • B-Styles: 15% of spend, 10% of SKUs
  • C-Styles: 5% of spend, 70% of SKUs → Low return on investment (ROI) for cost-saving efforts

This analysis redirected procurement efforts toward the highest-value opportunities.

Phase 3: Disclose (4 Weeks)

The Elliott Davis team designed targeted cost containment strategies, including:

• Demand Aggregation: Consolidating supplier orders to leverage bulk discounts.
• Should-Cost Benchmarking (comparing the costs of products, components, labor and/or raw materials against a target cost established by industry standards, research, or competition): Setting price expectations based on data-driven insights.
• Duty Minimization: Strategic structuring of global sourcing to reduce tariffs and logistics costs.
• Vendor Performance Metrics: Creating key performance indicators (KPIs) for supplier efficiency and cost reduction.

The Resolution: $1.2 Million in Discovered Savings

By the end of the engagement, the client has $1.2 million in identified cost-saving opportunities with a roadmap for continuous improvement.

Key Results

• Improved supplier negotiations with clear spend data.
• Reduced SKU costs by targeting high-impact categories.
• Created Power BI dashboards for real-time cost tracking.
• Implemented strategic sourcing to enhance margins.

With this data-driven, repeatable framework, the company gained long-term control over spend assessment and cost containment, turning insights into sustained savings.