Category Profile (SPD-PS002b) Spend Analysis Template

1. Category Profile (SPD-PS002b) Spend Analysis Template Example-MRO Issue Date 10/1/06 SPD-PS002b

2. Spend analysis • Overall Opportunities • Subcategory Opportunities

3. Example Georgia Spend Cube Data Sources of Spend Cube Data AP & P-Card Data - $106 MM PO Data - $19 MM • No line item detail • Contains the aggregate spend for a transaction with an Agency/Vendor • Data sources include AP without PO visibility, P-Card, GSFIC • $52,412,947 of the spend falls under “No Agency Listed” • $104,098,316 of the spend fall under “NO NIGP” code • Contains Line Item Detail • Item Description, Quantity, Unit Price, Buyer Name/ID • Contains PO Type Description • Open Market, Statewide Contract Release, Agency Contract and Releases, Construction-PW-A and E, Sole Source-Per GPM, Exempt-Per OCGA 50-5-58, Sole Brand-Per GPM, Mandatory-CS, GCI, GEPS, GIB, Intergovernmental Agreement Combination of various sources indicates $125 MM in unadjusted MRO spend Source: AP&P-Card data; PO Data from State of Georgia, 2005

4. Example Spend by Entity • 106 entities are represented in data. • University of Georgia, Georgia State, Georgia Tech and the Medical College of Georgia are not included in the spend current spend cube. • GSFIC represents $52 Million in spend cube and has no identifiable entities. Source: SAO and Regents A/P and PO extracts, BoA P-Card extracts, and SAO General Ledger for FY’05

5. Example Georgia MRO Spend Data 20 Vendors account for 64% percent of MRO Spend (1) Notes: (1) 20 vendors account for $54,797,460 of $85,916,611 of the total MRO spend - 64% Source: SAO and Regents A/P and PO extracts, BoA P-Card extracts, and SAO General Ledger for FY’05

6. Example MRO Spend Currently Sub Categorized Top 15 MRO Sub-Categories(1) by Spend and Number of Vendors (Spend in $MMs) • All sub categorized spend represents $63 Million of the $85 Million is MRO spend • Industrial Gases is composed of a single vendor, Linde Gas. Linde Gas’ current contract was estimated at $53,000 (2) • $16 Million in Pipes, Valves and Fittings is 1 transaction with no detail to American Piping Supply • Molded Plastic Parts does not contain information regarding the agency, regent or item (s) that were purchased • Industrial Supplies via distributor is largely Grainger spend via the Western States Contract Alliance • Major Retail spend is Home Depot, Lowes, Ace Hardware, Wal-Mart, Target, etc. • Light Bulbs are currently under contract. However, Bulb Direct, a non-contracted vendor, has the most spend • The average spend per supplier of the top 15 categories is $105,141 Notes: (1) 15 categories (408 vendors) in chart account for $59,451,531 of $62,769,098 of the total sub categorized spend (2) Monthly vendor reporting to DOAS Source: SAO and Regents A/P and PO extracts, BoA P-Card extracts, and SAO General Ledger for FY’05

7. Example Miscellaneous MRO Spend • $23 MM of the $85 MM is miscellaneous, local (supplier) and rogue spend in industrial supplies • The average spend of the 3,184 suppliers is $7,270 • 21,761 of 27,621 items are without line item detail • Likely that a majority of items could be purchased on Grainger WSCA contract if mandated (Grainger offers over 500,000 items via Western States Contract Alliance) • Next steps are to continue sifting through detailed portion of the data to subcategorize the spend; however, it is unlikely that any major nuggets of spend or new categories will be found Source: SAO and Regents A/P and PO extracts, BoA P-Card extracts, and SAO General Ledger for FY’05

8. Example Current State-Wide MRO Contracts Total spend on state-wide contracts… • $10,320,262 is not a significant amount of total MRO spend, but presents a large opportunity for contract compliance and the development of new contracts • Linde Gas spend reports are grossly less than the spend cube - $52,589 versus $17,007,312 in spend cube • Seven of the nine contracts are expiring in next six months • In the short term, A.T. Kearney recommended extending the Liners, Paint and Dishwashing Compounds • Other contracts will be evaluated for sourcing, consolidation, renewal and extensions Source: Contract and spend information is from vendor reporting to DOAS

9. Spend analysis • Overall Opportunities • Subcategory Opportunities

10. Potential Opportunities Key Questions — Total Cost of Ownership can be Reduced by... Example There are a number of potential ways in which additional value may be created for Georgia in the MRO category Increase Leverage • Creating contracts for large sub-categories currently not available on contract • Re-biding long standing contracts and contracts approaching expiration • Using contract mandate and volume to re-negotiate deal with Grainger Increase use of Existing Contracts • Redirecting large amounts of spend from the open market to current agreements when available Practice Standardization • Encouraging the use of P-Cards for purchasing MRO items • Providing MRO buying guide with contract coverage and supplier contacts Consolidation • Reducing 3,900, or 90% of vendors, by putting contracts in place and mandating them Specification Standardization • Standardizing specifications and reducing the number of SKUs/ suppliers of commodity items Source: A.T. Kearney Analysis

11. Spend analysis • Overall Opportunities • Subcategory Opportunities

12. Example Sub Category – Industrial Gases

13. Example Sub Category – Pipes, Valves and Fittings