Webinar – Procurement and the Circular Economy: P2P Implications

The circular economy concept is increasingly gaining its share of proponents in business, economic and political circles (as background on the circular economy, see an initial definitional background post that we published last week). On Wednesday, Feb. 18 at 1 p.m. CST, Tradeshift’s Christian Lanng and I will be debating the merits of the circular economy and what it means for procurement, finance and supply chain organizations during a live webinar (procurement practitioners and Plus/PRO subscribers can register here).

The circular economy is particularly interesting due to the ways it will involve suppliers more deeply in the buying, total cost/lifecycle management and financing aspects of overall supply chain relationships. At the core of this will be its impact on P2P, invoicing and trade financing. For example, in a circular economy model, suppliers will take greater ownership of SKU-level content in catalogs by providing increased information on corporate social responsibility (CSR), reuse and other line-level attribute details. They will steer customers to make better decisions through a guided buying approach within e-procurement tools – based largely on providing additional attribute, benchmark and other information about their products into smarter procurement systems that steer users based on this information and their own demand and consumption patterns.

From an invoicing perspective, emphasis will be placed on creating greater alignment and incentives across the supply chain as well as dynamic payment values. For example, in addition to the escalation and de-escalation clauses today in many contracts that involve lower-tier material purchases (e.g., metals, plastics, etc.), contracts and linked invoicing and payment environments will include other dynamic elements as well, which will determine at what value an invoice is paid. This could include certain incentives or thresholds tied to end-customer usage and low levels of warranty claims involving the materials/parts/components that a supplier provides.

In summary, in a circular economy, P2P environments will:

  • Require suppliers to provide greater SKU and related attribute information such as CSR data within catalog environments
  • Involve suppliers more deeply in steering buyers to make optimal decisions
  • Enable dynamic invoicing and payment environments based on creating and aligning the right set of incentives throughout the supply chain

These are just some examples of the P2P and circular economy use cases. We invite you to join our webinar. Register here.

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