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Annie VaseekaranCreated by Annie Vaseekaran on Sep 23, 2015 in Spend Analysis

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The supplier hierarchy in Spend Visibility contains five levels.  The lowest level represents the ERP Supplier that was originally loaded into Spend Visibility.  For enriched suppliers, the remaining levels are the Supplier, Intermediate Parent, Domestic Ultimate Parent, and Global Ultimate Parent.  How these levels are related depends on the percentage of financial and legal responsibility between them.  In some cases there is no "linkage" or relationship between these levels because the supplier is a stand-alone business entity.  In other cases the suppliers are linked by majority ownership (>50% stock), either as a Subsidiary to Parent linkage or as a Branch / Division to Headquarter linkage.

 

The different types of suppliers are described below:

 

  • Parent - a corporation that owns more than 50% of another corporation's capital stock.
  • Subsidiary - a corporation whose capital stock is more than 50% owned by another corporation and has a different legal business name from its owning parent.
  • Headquarters - a business establishment that has branches or divisions reporting to it, and is financially responsible for those branches or divisions.
  • Branch (or division) - a secondary location of a business.  It is not a separate corporation, and therefore, has no legal responsibility for its debts.  A branch has the same legal business name as its headquarters, but usually operates under a different trade style.  A branch may be located at the same headquarters if it has a unique trade style and unique operations.  A division has a specific divisional name and operates like a separate, unique entity.
  • Stand-alone - a business entity that doesn't have any linkage relationships, it is the only location.

 

By examining the Location Status Code and Subsidiary Indicator on the enriched supplier, you can tell which type of supplier you have, as well as its relationship to other suppliers in the corporate hierarchy.

 

Location Source Code

Subsidiary IndicatorSupplier Type
Single LocationNoStand-alone.  The only location of the business.  No linkage upward or downward.
Single LocationYesSingle location subsidiary.  Stock is held upward by a parent.  No downward linkage.
HeadquarterNoGlobal Ultimate.  No linkage upward.  Linkage downward can be either branches or subsidiaries.
HeadquarterYesHeadquarters.  Stock is held upward by a parent.  Linkage downward can be either branches or subsidiaries.
BranchNoBranch / Division.  Secondary location of a headquarters.  Upward linkage to a headquarters.  No downward linkage.

 

If the enriched supplier is a stand-alone entity, then the remaining levels in the hierarchy will be populated with the supplier itself, otherwise they will be populated according to the supplier type as follows:

 

  • Intermediate Parent - the immediate entity above the supplier.  If the supplier is a subsidiary, then this is a parent.  If the supplier is a branch or division, then this is a headquarters.
  • Domestic Ultimate - the highest member of the corporate family within the same country as the supplier.
  • Global Ultimate - the highest member of the entire corporate family.

 

Although not directly related to linkage, there are some additional indicators that provide insight into the supplier's legal structure:

 

  • Legal Status Code - indicates the legal structure of the business as registered with government authorities.  Sole Proprietor, Partnership, Corporation, or Unknown.
  • Public Owned ID - indicates whether the establishment is a publicly held corporation or not.

Diversity enrichment is a separate add-on that provides socio-economic classifications to help you manage your diversity portfolio including: Woman, Minority, Veteran, Service Disabled Veteran, Small Disadvantaged Business, Historically Underutilized Business Zones (HUBZone), SBA 8(a), Historically Black Colleges and Minority Institutions, Small Business, and Labor Surplus.  When available, the solution also includes the specific ethnicity for Minority-owned businesses.  Furthermore, users can leverage detailed information such as the certificate number, issue date, expiration date, and source if available.

 

Spend Visibility Diversity enrichment comes from D&B and applies to US business entities only.  Business entities that are foreign owned, publicly held, non-profit, or have less than 51% ownership by a "diverse" officer are excluded.

 

D&B itself is not a certifying agency.  Instead, D&B aggregates and reports diversity information from hundreds of certifying and non-certifying sources.  Hence you should leverage the information you get from D&B, but you must still be actively involved to satisfy government reporting requirements.

 

Diversity enrichment enables you to manage your supplier diversity portfolio so you can:

 

  • validate and discover diversity among your existing suppliers
  • gain visibility into what you are spending with diverse suppliers
  • access summary reports to help you prepare for 294/295 reporting
  • know which agencies provide the diversity information
  • consider the confidence level of the diversity information (certified, validated, collected)

 

If you already subscribe to diversity content, please contact your Spend Visibility Project Manager with any questions.  If you would like more information about Diversity enrichment and reporting, please contact your Customer Engagement Executive.

Whether you use your own Custom Category or the out-of-box UNSPSC provided in Spend Visibility, it's important to keep the foundational Ariba Classification Taxonomy (ACT) up-to-date.  The latest version, ACT 9.5, incorporates over 30,000 new codes from both customer-specific requests and UNSPSC 15.11.01.  New codes have been added to all segments with an emphasis on:

 

  • Food Products
  • Live Plant and Animal Material
  • Manufacturing Components
  • Distribution and Conditioning Systems
  • Structures, Building, Construction & Manufacturing Components

 

Which ACT version do you have?  If you are not sure which version you have, simply ask your Spend Visibility Project Manager.  If you are on ACT 9.5, your UNSPSC dimension will contain over 58,000 codes.  If you are on the previous ACT 9.4, the dimension will contain over 24,000 codes.

 

How can you get ACT 9.5?  New customers as of Q4 2015, are automatically on ACT 9.5, however, existing customers will require an upgrade.  Your Spend Visibility Project Manager will orchestrate the upgrade, usually during a refresh.  Please work with your Spend Visibility Project Manager to make sure you have the latest version applied to your realm by Q2 2016.

 

Will any spend be impacted by the upgrade?  Roughly 3% of the ACT 9.4 codes have changed.  Depending on which codes were actively used to categorize your spend, you may see different descriptions, level changes, and/or merged spend.  The majority of changes relate to minor description changes.  For example, the 9.4 description for "7178 alloy" has changed to "Aluminum alloy 7178" in 9.5.  A few codes moved up or down a level in the hierarchy, and in some cases, they were merged.  For example, "Processed Peaches" and "Preserved Peaches" in 9.4 were merged to "Canned or jarred peaches" in 9.5.  As part of the upgrade process, your Project Manager can create a spend impact report comparing spend in both ACT 9.5 and ACT 9.4 categories.

 

Why is it important to be up-to-date?  Taxonomies evolve over time.  By staying current, you will avail yourself to the latest categories and additional levels of granularity as they are influenced by customers and standards councils.

 

Does this have any impact on the out-of-box UNSPSC in Spend Visibility?  No.  The out-of-box UNSPSC delivered with Spend Visibility will remain the same.

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