Analyst Eye on unleashing procurement’s strategic impact and driving working capital optimization

Working capital optimization is not merely a financial strategy; it is the lifeline of business operations. It encompasses the management of short-term assets and liabilities to ensure liquidity, meet financial obligations and support growth initiatives. Typically, people may assume this area of activity belongs purely to Finance. 

However, S2P solutions, such as GEP, SAP Ariba, Ivalua and others, have been increasingly investing in building capabilities that directly or indirectly support working capital optimization. For instance, SAP's acquisition of the working capital optimization solution Taulia in 2022, which we covered and analyzed at the time. Additionally, companies like GEP, Jaggaer, and Ivalua have extended support for supply chain management, while Coupa has integrated its Treasury module with its Payments and AP automation solution. But even in more subtle cases, it becomes clear after some thought that procurement’s impact on operational efficiency and savings would play a pivotal role in working capital optimization. But understanding and maximizing that influence requires some further conceptual work. 

It should be noted from the outset that these are not final, definitive conclusions. Rather, it would be best to treat thoughts as a starting point to consider how working capital can become better optimized with procurement’s help.