While many organizations believe that savings originates from a good contract, it really comes from good execution. A negotiated rate reduction of 5% is just a hypothetical savings number if the organization fails to implement and then capture the savings in practice. On average, Spend Matters research suggests that companies typically do not capture 30% or more of negotiated savings. There are a variety of reasons for this, including maverick spend and expedited shipping, but a big reason is simply overspending based on a failure to align functions and systems.
Category Archives: Procurement Financials
In this final edition of our spend compliance miniseries, we get into some implementation considerations for spend compliance. There is no perfect prescribed pathway for the compliance analytics highlighted in this series. And spend compliance itself sits within a much broader evolution in a journey from forensic “spent analysis” to predictive strategic supply analytics as shown below. In a perfect world, spend flows to suppliers, such that the processes and spend are both compliant with rightsized controls and contracts designed cross-functionally to optimally meet policies derived clearly from customer, shareholder, and regulatory requirements. But it’s not a perfect world. And it’s complicated.
Finance and Procurement: Let’s Talk Savings From E-Invoicing, Supplier Performance and Vendor Intelligence
One of the best ways to insure savings is to install an electronic invoicing system that can match invoices to goods receipts and to purchase orders or contract rate tables. Then, when an invoice comes in, the system can automatically verify that the goods have been delivered and have been billed at an appropriate rate.
Please also see the first and second parts in this series.
Despite all of the talk of alignment in trade publications or solution provider marketing content, procurement and finance are rarely on the same page. The reason is simple: Procurement sees its job as acquiring goods — and increasingly services, too. Accounts payable (A/P) sees its job as processing invoices in-line with finance's guidelines in the most efficient way possible. Too often, purchasing and A/P alignment doesn’t happen, though the savings realization would improve it if did.
Well, Black Friday and Cyber Monday are over, and we have a $6 billion hangover to show for it. But, hopefully the money was well spent on a gift for a loved one or someone in need. And most importantly, we got an excellent deal on it! Forget the fact we spent 4 hours fighting the crowds or scouring the web. Forget the fact that the ridiculous list prices were set by a hallucinating clown and a dart board. You, my friend, are a spaver extraordinaire.
As we rapidly approach the end of the year, and as the witches and wizards appeared on our streets in October and the nights lengthen, can our three Spend Matters stock-pickers turn their performance around and beat the market over the final months of the year? We’re talking about our portfolio of procurement-related stocks, of course, and whether myself, Jason Busch and Nancy Clinton can beat the overall weighted portfolio that contains all 24 of the firms with a procurement interest. We had a reasonable month of October, with our portfolio following the market and up some 7%, although it is still some 8.5% below where it started on Jan. 1.
September was a quiet month overall in terms of our Spend Matters Stock Portfolio and most major global stock markets. The Spend Matters portfolio of all 24 firms lost about half a percent of its initial Jan. 1 value during September. Our portfolio follows the progress of quoted companies that operate in whole or part in what we call the procurement solutions market. We are tracking the performance of these shares on various stock markets from Helsinki to New York via Paris and London. Check out the full post to how these procurement companies performed last month.
A few weeks back, I participated in a Spend HQ webinar, The Spend Visibility Curve: Where Do You Stand. During the discussion, I introduced a spend visibility maturity model that I’ve been thinking about for some time – and which I’ll introduce today and cover in more detail in subsequent posts in this series. At the core of the model is more of a definitional question itself: What is the difference between spend analytics and spend visibility?
Join us Tuesday, September 29, at 10 A.M. CDT for the webinar, Procurement Savings We Promise You've Missed. We will be joined by Tungsten for a tutorial on the significant savings opportunities located in purchase order and invoice information. Transactional data is the key to unlocking it all. You will also learn how to complement traditional spend visibility and audit recovery approaches, how to quantify your exact opportunity based on live data and business case examples and much more. Register now!
Spend Matters welcomes this guest article by Kunal Shah, manager in the operations advisory practice at KPMG.
As we emerge from the recession, companies are holding a record amount of cash. This has resulted in an increase in cash deployment through investments and acquisition made by corporations to improve and expand their business. In the continued effort to increase cash available and provide liquidity to make strategic decisions, a company must properly manage its working capital.
Spend Matters welcomes this guest article by Jim Wright, vice president of sales at Corcentric.
One of the biggest changes in midsize firms across corporate America has been a shift toward a procurement-centric buying process. Yet surprisingly, many companies don’t necessarily have sophisticated procurement departments to handle this efficient way of doing business.
The impetus behind this paradigm shift is the cost savings that can be realized when moving to a purchase-order based system. Relying on new technologies, companies can now automate the procurement process by putting rules in place that govern purchasing decisions throughout the organization.
Beyond Transactional P2P: Exploring Buy-Side and Sell-Side Trade Financing Techniques For Supplier Early Payment
When it comes to the intersection of purchase-to-pay (P2P) and financing options, there is no shortage of available techniques to address early payment programs to suppliers. As David Gustin notes in the Trade Financing Matters research paper, Accelerating Early Payment: Techniques and Approaches for Accelerating Cash in the Supply Chain, these techniques can be generally segmented into buy-side and sell-side categories. Buy-side approaches suggested include: p-cards, dynamic discounting, static discounting and reverse factoring, commonly called supply chain finance. Further, “On the buy-side, large and mid-sized corporates want to optimize payment terms and maximize their working capital, while not punishing suppliers by making sure they have options to liquidate their receivables. Buy-side solutions require an approved invoice from the company to release cash.”