PRO Review: Private Equity Taps Procurement Techniques, Tradeshift’s Supplier Enablement

A few weeks ago, Jason Busch was quoted in this NYT article, which highlights how private equity firms are moving procurement strategies into their daily operation processes -- and saving a lot of spend in doing so. The article sparked a series on Spend Matters PRO:

Private Equity and Procurement: Building a Lasting Savings Foundation Requires Getting Operational (Part 1) -- In other words, the NYT really did its homework this time, presenting a deep and fair view into an important procurement topic. Yet GPOs such as CoreTrust, mentioned in the story, offer only one type of savings lever for private equity firms looking to create sustainable returns for their portfolio companies. Still, as the Times notes, GPO "savings can add up. Blackstone says it has saved $600 million since 2006 through CoreTrust, direct supplier relationships and an equity health care group, which applies the same group purchasing principles to employee health insurance plans. K.K.R. pegs its total savings at north of $700 million."

Private Equity and Procurement: Building a Lasting Savings Foundation Requires Getting Operational (Part 2) -- In the first installment of this research series, we considered a number of common tactics and investments private equity (PE) firms are making to drive cost savings leverage through better procurement across their portfolio companies. Today, we will turn our attention to areas that are just starting to capture the attention of forward-thinking PE operational partners, in many cases as second wave areas to drive additional savings and compliance opportunities across their investment portfolios.

We also started in on a series about Tradeshift -- and whether or not the big players like Ariba and OB10 should be worried about them as a solid competitor. More to come on this one, but here are excerpts from the first two posts:

Tradeshift's Supplier Enablement Strategy for E-Invoicing – Should Ariba and OB10 be Worried? (Part 1) -- Earlier this summer, Tradeshift unveiled a new program called Fast Track to get companies transacting invoices electronically for a relatively low price per document, including all supplier enablement costs and fees for an unlimited number of suppliers. TradeShift shared that the base level bundle for $15,000 per year or $1,500 per month includes 25,000 documents annualized (including invoices and credit notes) and support for invoicing across "standard TradeShift countries." This includes those in the European Union as well as the United States. TradeShift also notes that, "detailed country specific e-invoicing and e-archiving compliance verification have been made for Austria, Singapore, Netherlands, and the UK, EU, and US." Pricing per document decreases independent of any other factor as users add more documents beyond the standard 25,000, reaching as low as 40 cents per document under the Fast Track program.

TradeShift's Supplier Enablement Strategy for E-Invoicing – Should Ariba and OB10 Be Worried? (Part 2) -- Managing and launching supplier onboarding and management campaigns using the TradeShift toolset is a relatively simple endeavor. However, a simple UI masks the underlying complexity of what is really a supplier information management, contact management and CRM application combined into one for vendor-facing outbound contact and data management activity.

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