Last week we considered a number of the findings from Taulia’s recent survey of 3,800 suppliers using its network. The findings we previewed contain a number of key (highly positive, in our analysis) data points to suggest that the potential for adoption of invoice discounting programs within a diverse supply base is material indeed. Today we continue our analysis of the supplier survey data that Taulia shared at its event and conclude with key takeaways for practitioners, providers and lenders to maximize invoice discounting enthusiasm, uptake and savings.more ▸
Thanks to the rise of purchase-to-pay (P2P) software, we hear quite often about “supplier networks” and “business networks” as the next big thing that will link buyers with vendors. But what about the concept of a “supply ecosystem” that goes further? This is the premise in a forthcoming Journal of Business Logistics article authored by Penn State’s Christopher Craighead, Auburn University’s David Ketchum and the University of Tennessee’s Russell Crook. Based on the author’s definition, these new supply ecosystems appear to more closely resemble giant industrial conglomerates or trading firms, but without necessarily having corporate parent/child ties between members (think Toyota, Mitsubishi, Samsung and to a lesser degree Siemens and GE).more ▸
Invoice Discounting Programs and Supplier Uptake: Exploring Behaviors of 3,800 Surveyed Suppliers on the Taulia Network (Part 1)
The adoption of both e-invoicing and invoice discounting programs is still very much in its infancy. Good data is difficult to find when it comes to the following types of questions: With what frequency do suppliers log on to portals designed to provide invoice approval and related information? What types of suppliers are most likely to take a discount? At Taulia’s recent customer event, Spend Matters learned the results of actual data answering these types of questions (and many more) based on the practices and survey responses of more than 3,800 suppliers. In this two-part Spend Matters PRO research brief, we share the highlights of what suppliers on the Taulia network can teach us to maximize invoice discounting and e-invoicing adoption. The findings are fascinating, surprising (in many cases) and pragmatic in helping us build more effective P2P, invoice discounting and trade financing programs.more ▸
Spend Matters welcomes this guest post from Meghana Rajamane of GEP. Once you have a competent supplier on board is the job of procurement done? Most companies today are tending toward complex supply chain ecosystems with an increased dependence on key supplier relationships to satisfy and delight their customers. Given this environment, it is imperative for an enterprise to be able to assess supplier performance. A supplier evaluation process is a must today for maintaining compliance, increasing competitiveness, identifying inefficiencies and driving improvement measures that impact the process.more ▸
The Spend Matters team recently sat down to digest a very comprehensive study, Creating Payment Energy – Unlocking the Value of B2B Payment Networks, (n=1,000+) conducted by MasterCard and Basware on the topic of payments from both an AR and AP perspective (see our background coverage on the study here). As our analysis of the research continues today, we will turn our attention to the impact of persistent late invoice payments.more ▸
Earlier this month, the Mastercard and Basware teams shared with Spend Matters and Trade Financing Matters a very comprehensive survey-based research study the two firms (and partners) had completed over the summer months. The study, based on responses from more than 1,000 finance professionals (on both the accounts receivables and accounts payables side of the fence), provides a very global view of where cash management and payments stand today (respondents from 10 countries are represented in the data set, and each country had approximately 100 responses). The survey participants were best represented by the SMB market segment (e.g., only 11 percent of respondents had 5,000 or more employees). In a series of posts exploring the data and findings, the Spend Matters team will highlight some of the more useful elements that the research surfaced as well as select analysis and recommendations by the authors. We’ll share some of our insights as well.more ▸
This post continues our exploration into shade No. 3 of our 50 Shades of Pay series. In this PLUS post, Pierre Mitchell discusses what happens when you aggregate all your supplier master data alongside the aggregation of your spend transaction data. According to Pierre, you will find "wonderful things" like your supplier master field names will be called different things and suppliers will be classified in all sorts of dimensions by different groups. Read on to learn more.more ▸
In Shade 2 of this spend analysis series, we looked at analyzing total cash disbursements to suppliers through the lens of basic A/P data. In doing so, we touched on the issue of data quality, and in the particular, the data coming from the supplier master file (or vendor master if you use that terminology). Obviously, if the supplier master data is bad (i.e., dirty, sparse, duplicated, non-standardized, etc.), the spend data will show it. But, the highlighting of bad data isn’t about improving data hygiene unto itself, but rather is about fixing the data problem to highlight value creation opportunities that you didn't see before. The most frequent example of this is supplier master duplication where multiple supplier records exist for the same supplier.
When you find duplicate supplier master records, you can obviously begin to see where there is additional volume leverage that you can gain within strategic sourcing. This is a key capability for justifying the ROI of investing to get to this level of capability. However, spend analysis is not just about feeding the strategic sourcing process! When you find duplicate supplier master records for the same supplier, it can lead to a whole slew of root causes that should be addressed. This includes a lack of clarity/controls in the supplier master setup process (e.g., who can add/change/delete what fields in the supplier master file) or poor “supplier discovery” inquiry capabilities of suppliers from your own existing supplier network.
Up until now in this series, much of what we have talked about can be done on your own, albeit inefficiently, but in the area of data de-duplication, cleansing, enriching, auto-classification, and harmonization, the tools can really help. But, this area is also where supplier content providers of many forms can be used (i.e., content firms, MDM providers, supplier/business networks, analytics vendors, supplier management application providers, procurement suite providers, etc.). Such firms can also assist in the de-duplication of effort using a combination of fuzzy logic (pattern matching), proprietary databases, and rules-based analyzers to help with this key task.more ▸
Auto News recently reported that Magna International, one of the top three auto suppliers based in Canada, has been rethinking its supply chain of late, noting that “local strategy and efficiency improvements as key cost-saving measures within its supply chain.” In particular, supply chain localization was one of three trends within Magna’s supply chain identified by Carrie Van Ess, vice president of procurement for the Americas, at a recent industry briefing. Van Ess said a new supply chain model is emerging in which “goods are produced, sold and consumed in the same geographic region,” according to the article.more ▸
In a previous Spend Matters post titled Does Increased DPO Actually Destroy Enterprise Value?, I highlighted some analysis where, in 12 of 14 manufacturing industries I analyzed, I found negative correlations between days payable outstanding (DPO) and enterprise performance (e.g., debt you may incur to raise cash to invest in high payback initiatives such as B2B trade financing where early payment discounts and/or supply chain finance programs are established). In this Spend Matters PRO article, I’ll dive into the industry details and also provide some additional insights based on some recent research that we conducted with the Institute for Supply Management (ISM).more ▸
My old employer The Hackett Group sent me the results of their latest annual study on working capital performance (a downloadable version of the study can be found here). Hackett’s subsidiary REL Consultancy (or “REL” for short) annually extracts, adjusts, and reports on the working capital performance (and overall financial performance) of the top 1,000 publicly traded firms in the United States. For context, the average firm turnover is $11 billion in revenues and median turnover is $4 billion.
REL runs its business primarily based on a singular assumption and value proposition: Reduce your Days Working Capital (DWC) because less working capital is better for the business. Cash that is “liberated” from balance sheets can be used for stock buybacks, R&D, M&A, etc. Improving working capital is a no brainer, right? Unfortunately, this story is just that: a nice story.more ▸
In this research brief, Jason Busch and David Gustin (Managing Director of Trade Financing Matters) explore why a unique need for payment capability fully integrated into the B2B sector is long overdue. Our research suggests a strong need exists to be able to bring all disparate players together, add a real-time payment capability, and have it all make sense for buyers and suppliers in the supply chain. This is where Traxpay comes in by enabling structured (e.g., invoice, purchase order) and unstructured data (e.g., photos, pdfs, etc.) to travel between buyers and sellers to make and reconcile payments in a dynamic fashion. They bring a core banking system (funds sit with the German Bundesbank), a secure B2B transaction model and platform-as-a-service (PaaS) approach to the payments space. [CORRECTION: AN EARLIER VERSION OF THIS SUMMARY LISTED THE AUTHORS INCORRECTLY. DAVID GUSTIN AND JASON BUSCH ARE THE AUTHORS OF THIS BRIEF].more ▸