Rule setting/hierarchy
Onventis Analytics is built to empower organizations to turn their data into insights. One of the biggest obstacles many organizations face today is the lack of high-quality data. The categorization is usually not a problem if you have high-quality data and can be done on item or purchase order row level. So, each purchased item have their unique categorization rule.
However, most organizations have a majority of suppliers that lack that kind of granular data. Historically that has meant categorization each supplier into a category on a 1:1 basis. In most cases, that is fairly accurate, but for suppliers with broader portfolio products and services, there might be a need to split the spend into different categories somehow and have it done even though you do not have the detailed item-level data.
Onventis Analytics manages all these scenarios by having a categorization structure based on three different rule classes:
Rule setting in Analytics
Overriding rules
The top rule is first to be applied to the spend. Often used to clean up data, exclude VAT accounts and internal transactions. It can be used to categorize spend but should only be used in cases where you have a very accurate rule, e.g., for your direct material, you have a detailed product group structure where each item belongs to a product group that is in your transaction data. Then you can use that product group to categorize spend. But use Overriding rules very sparingly as they prioritize all other rules, so the accuracy of an overriding rule should be very close to 100 percent.
Data driven rules
If you have a product catalog, using UNSPCS-codes or having pre-categorization in your spend data on line level, you are able to categorize your supplier by using the data to make data driven rules in Onventis Analytics.
Have the rules setting in your spend file and apply it into Onventis Analytics
Connect the category tree to a supplier product catalog
Mapping different coding systems, like UNSPCS-codes or SNI-codes etc.
Supplier rules
All spend rules not managed by the Overriding rule goes on to Supplier rules. It is the most commonly used rule. With this rule, a supplier can be either fully categorized into a single category or divided into several categories. An example of the latter could be setting up a rule that says:
Supplier B shall be categorized as Consultancy Costs
Except
If supplier B has a transaction in GL-account X, then it shall be categorised as Tech Consultants
Or
If suppler B account has a transaction in GL-account Y, then it shall be categorized as Account Consultants
Default rules
Default rules are the last rule that will only be applied for spend not categorized by Overriding or Supplier rules. Default rules intend to handle the tail spend, several suppliers with a low level of the spend. This rule is based on GL accounts, Cost centers, Business Units involved, Supplier names, etc. The kind of rules you can set up for Default rules is the same as those you can set up for Overriding rules.
The major difference is that for Overriding rules, you should only create rules with very high accuracy, but in default rules, since they are the last to apply, you can have rules with lower accuracy.
For example, if you have a GL account for “Office stationery”, in reality, about 80 percent of the spend is office stationery, the other 20 percent various other office-related services. Since it only applies to spend that has not been categorized, it would still make a good default rule even though it is only 80 percent correct. The alternative to not having the Default rule would have no categorization for the spend in question, and in that scenario having it 80 percent accurate is preferable. Also, bear in mind that if you compile a new Supplier rule for a supplier whose spend was previously managed by the default rule, the new Supplier rule will take precedence.
Default rules can be convenient when used correctly. For example, a rule instructing to categorize all suppliers containing the name “Taxi” into the category Taxi would probably be very accurate. The default rules can save a lot of time and energy.