SAS cloud procurement cockpit assesses merger risks

Fluvius uses SAS cloud procurement cockpit to assess merger risks

Procurement processes have a direct impact on a business. They involve the acquisition of all goods, services and work that is vital to an organization. By continuously monitoring procurement data and systems, risks are identified at an early stage. This can prevent financial loss and reputational damage. When the Belgian grid operators Eandis, Infrax and Integan merged into Fluvius, the new company turned to SAS for an analytics solution to screen their procurement systems.

Fluvius is the independent grid operator for electricity and natural gas in all municipalities in Flanders. The company is the result of a merger between two former Belgian grid operators: Eandis and Infrax. Since 2018, Fluvius is the one and only grid operator in Flanders. More than 5.000 employees guarantee the smooth circulation of energy in the northern half of Belgium. In many places Fluvius is also responsible for public lighting, cable television and sewerage.

“A merger always brings about a lot of uncertainties”, says Joost Van Slycken, Head of Supplier Management at Fluvius. “Some of those uncertainties can be quickly removed. For example, it did not take long for Fluvius to become a familiar name in Flanders. By February 2019, all references to Eandis and Infrax had been removed and replaced by the new company name. For procurement processes, however, a merger is much more challenging. We also have a clear mission to work as cost-effective as possible.”

Quantifying & detecting procurement risks

Procurement risks often go unquantified or undetected, but they can have a direct impact on the organization’s bottom line. The outbreak of COVID-19 has led to financial uncertainty which changed behaviors both within and outside the organization. This environment creates opportunities for increased fraud, abuse and waste. Procurement departments are under a great deal of pressure to establish a balance between sourcing and managing supplier dependency risks. In the case of Fluvius, it was important to develop a procurement cockpit that screens the systems of all merged grid operators and identifies potential savings opportunities while reducing fraud, waste and abuse.

SAS – market leader in analytics – assisted Fluvius with the analytical challenges of the merger. The new company needed to gain insights in two different systems and investigate risks and potential savings. Fluvius also wanted a single view of its procurement activities in the new system.

“Merging both systems is not as straightforward as applying a patch. The same transactions can occur in different systems. Traditional solutions also require a lot of time-consuming workshops”, says Joost Van Slycken. Fluvius has the ambition to be a state-of-the-art supply chain organization in the utility sector. The company therefore wants to spend less time on operational transactions and more on strategic and innovative initiatives that drive value for business partners. To enable this path to growth, they looked for new techniques such as data analytics.

Procurement integrity scenarios

The solution includes a procurement analytics data model, specific scenarios and a large set of predefined rules based on decades of procurement forensics experience. “When SAS started collaborating with Fluvius, there was no need to spend several months on workshops to find out what would be the best procurement case. We already knew which scenarios could bring value to the organization”, says Sander Huysmans, Digital Procurement Integrity Lead at SAS Benelux.

It started with the ingestion of internal data such as employee and supplier master data. SAS is a data agnostic company, which means it can extract data from any source. This can then be combined with external data from, for example, the National Bank or credit bureaus. In the next step, entity resolutions were performed through ETLs and fuzzy matching. “This eventually led to a network that can detect mistakes. In the beginning, we do not know if abnormal behavior is a mistake, a potential saving or something intentional”, says Sander Huysmans.

“Data analytics is no magic. We deploy all scenarios with a dashboard to provide immediate insights, but it takes time to verify if something is on purpose or an honest mistake. With the help of internal auditors, we investigated whether our analytics were leading to direct savings. After only a couple of weeks, the first results were already available.”

Results for Fluvius  

The procurement cockpit at Fluvius identified several top risks. “All those risks have now been investigated by Fluvius”, says Joost Van Slycken. “Fortunately, most alerts appeared to be under control. This means that the uncertainty of the merger was largely removed by the screening.” The solution helped Fluvius to save a lot of time which could be invested in more strategic initiatives. “One of the most important benefits is the fact that we gain quick insights. When we had a question about a vendor in the past, we always needed to ask our data scientists to produce a series of Excel sheets containing all the data. Now we have a dashboard that allows us to look at the data ourselves.”

“The solution provided us, for example, with proof that one-time vendors create major risks and we really needed to tackle the problem in the new Fluvius system. Thanks to the screening we are now certain that fraud detection and optimization are under control”, says Joost Van Slycken. The use of data analytics at Fluvius will probably not end here. “We currently focused on the merger instead of adopting new processes and tools for Finance & Purchasing. However, there are several features that are nice to have, so we will re-investigate this after our merger project is completed. We really feel that finance and purchasing can reinforce each other by working together on the data.”.