Monthly Archives: December 2013

When Outsourcing for Onsite Service, It’s Very Important To Remember …

… to check Employment and Visa Status as well as Nationality of any worker who will be working on your site. The last thing you want is for the IT contractor in the middle of an upgrade to your Enterprise Resource Planning (ERP) System, or the highly trained system engineer with the rare skill required to fix your production line, to be deported in the middle of the project!

Due to the low limit on H-1B Visas from the American protectionists, it is a strong possibility that it could happen, as SI really doubts that Infosys was the only outsourcer to abuse the system and illegally bring workers in on B-1 visas to work on client IT projects. (On October 30, Indian tech giant Infosys agreed to a $34 Million civil settlement with US authorities to “resolve all allegations” and end visa-fraud investigations and have the serious criminal charges that could be brought against the company dropped after federal prosecutors in Texas found it had committed “systemic visa fraud and abuse”. As per this detailed article over on First Post, Infosys agreed to the settlement after prosecutors, as a result of a two-year investigation, unveiled its accusations that Infosys “knowingly and unlawfully” brought Engineers into the US on B-1 visitors for onsite client projects that actually required H-1B visas.)

So when you are outsourcing your projects, if you want to make sure this doesn’t happen to you, demand to know the following with respect to any contractor who will be working on site:

  • Full Legal Name
  • Nationalities
  • Unique Government Identifier for at least one Nationality
    such as Passport ID, Drivers License ID, etc.
  • Current Legal Status in the Country where the work will be performed
  • If the legal status is not citizen, proof of legal status (to work)

And if any of this information is not provider to you, with sufficient time for you to verify such, before the contractor is brought on site, deny the contractor access to your site. Maybe you’ll have to wait a few extra days, or pay a little more, but you won’t have to worry about being an accomplice to illegal activity or losing a critical resource at the worst possible time in the middle of a project.

What’s the Most Often Overlooked in e-Procurement Solution Selection?

This is a tough question, but SI knows one feature that’s almost always overlooked:

Order Automation Integration

A good e-Procurement Solution will contain, or integrate with, a good invoice automation solution because the average organization takes at least 16.3 days to process an invoice and spends somewhere between $30 and $40 on that invoice, if everything is A-OK with the invoice. If it’s not, the invoice could take months to get processed and the processing could well exceed $200. Furthermore, manual data entry of (e-) paper invoices can account for as much as 75% of overhead in an Accounts Payable department, and if the organization gets hundreds of thousands, or millions, of invoices a year, less than 10% will get any reasonable level of review or validation. (For a deeper insight into the value of invoice automation, download SI’s recent white paper, sponsored by Nipendo, on An End-to-End Invoice Automation Framework: Benefits & Best Practices, registration required.)

You’ve got your invoices under control, and this is good. But where are these invoices coming from? Your suppliers. And why are they coming from these suppliers? Because you’re issuing your suppliers hundreds of thousands, or millions, of purchase orders a year. Hundreds of thousands, or millions, of purchase orders that these suppliers have to get, process, and push into their fulfillment systems in order to fulfill the orders for you.

If you need these invoices received, acknowledged, processed, and fulfilled quickly, then the supplier has to be able to get these orders into their system quickly. And if you happen to be sending a supplier 20,000 purchase orders a day, because you’re a retail or restaurant chain with that many locations that needs product refilled on a daily basis due to space constraints and freshness requirements, you need to know that if an order is sent 30 minutes before the cut off, it’s going to be processed when it gets to the supplier.

The only way the supplier that is getting tens of thousands of purchase orders a day is going to be able to process and acknowledge the order as soon as it is received is if the order is in a file format compatible with their order automation system and is picked up by the order automation system as soon as the order is received.

This indicates that a key requirement of a good e-Procurement solution is support for the file formats used by the popular order automation systems and support for the protocols used by the popular order automation systems to transport the invoices and accept the acknowledgement, or error messages, that then need to be appropriately handled by the e-Procurement system.

Supplier Portal, Supplier Network, and e-mail delivery of orders only works if you are delivering a small number of orders to a set of suppliers without order automation who have a few days, or more, to process the orders — not a few hours.

Are Your Invoices Still out of Control? Ready to Do Something About it?


Paper, paper everywhere
all the desks do warp.
Paper, paper everywhere
enough to fill a thorp.

And it shouldn’t be that way. But, as per our previous post, despite the recent appearance on the market of some modern solutions that can revolutionize invoice management and automation at even the largest Fortune 500 and Global 3000 companies, the state of e-invoice and AP Automation today is dismal. The 2012 AP Automation Survey Report found that 9 in 10 organizations still deal with paper invoices and that 90% of invoices are paper-based in half of the organizations that responded!

Moreover, Aberdeen’s 2012 study of of 180 organizations, reported in AP Invoice Management in a Networked Economy, found that laggard organizations, which represent the bottom 30% of organizations, require an average of 16.3 days to process an invoice from receipt to approval. The good news: this is a significant improvement over their 2009 study on E-Payables: Invoice Receipt and Workflow that found laggard organizations required an average of 32.9 days to process an invoice. The bad news: it’s still a very large amount of time, especially if an organization wants the opportunity to take advantage of early payment or dynamic discounting.

As a result, the average organization spends somewhere between $30 and $40 just to process a single invoice! In other words, with the exception of best-in-class organizations that heavily employ modern invoice automation solutions and only spend an average of $3 to $4 to process a single invoice, invoices are out of control in 4 out of 5 organizations. But they don’t need to be!

There is an answer, and the answer is the end-to-end invoice automation, as detailed in SI’s new paper on An End-to-End Invoice Automation Framework Benefits & Best Practices, sponsored by Nipendo. (Registration required.) Download it today and find some of the answers you seek.

Do You Know the Value of Visibility In Your Supply Chain?

A recent manufacturing study found that 86% of organizations experienced significant supply chain disruptions in the last 12 months. In addition, a number of studies have proven that the rate of supply chain disruptions are increasing. This means at this point in time, the chances of your organization not experiencing a significant disruption in the next 24 months is 2% and dropping — fast!

It is true that certain disruptions, like those caused by natural disasters, cannot be prevented and others, like supplier failures that result from financial implosions as a result of undetected fraud or the unexpected loss of a major customer, cannot be predicted. But that doesn’t mean that there isn’t value in knowing about them as soon as they occur, because they can be mitigated, or at least minimized, with enough time to take appropriate action.

However, if your first indication of a disruption that happened months ago is when an expected shipment from a tier 1 supplier is 3 days late, it’s too late! If the disruption was the result of a natural disaster that wiped out multiple industrial parks in a region, and those parks produced over half of the world’s supply of the raw material or critical component that your goods require (such as storage drives for custom-built computer systems*), then by the time the shipment doesn’t show up, any excess supply has already been locked up by the competition.

There is a big value to visibility. How big? A recent IBM study, found that the average supply chain disruption is 6 weeks and that as a result of a disruption, sales decrease an average of 7% in the following year. If demand for your product was roughly constant over a year, that’s 1/8th or 12.5% of your sales wiped out overnight, plus additional losses of 7% in the following year as a result of customer defection, because it’s not likely that your customers are going to wait months for a product if your competitor has a similar product at a similar price point. In other words, kiss an average of 10% of your revenue on the affected product lines good-bye for the next two years.

However, if you can prevent the disruption, even if it means acquiring replacement inventory from a higher-cost supplier and using expedited shipping, you can prevent the vast majority of these losses. And even if your organization has to pay a 30% premium to prevent the supply chain disruption, given that the average organization spends 58% of revenue on sourced products and services, this means that the premium would be capped at 17% of affected revenue, or 2% of overall revenue vs the 10% of revenue that would be lost otherwise.

And if the only way to prevent the disruption is with enough advance warning, that says that the value of visibility in this example is 8% of the revenue at risk from a supply chain disruption. This is huge!

However, that’s just a small part of the value that Supply Chain Visibility can bring you. For deeper insight into the value of visibility, download SI’s latest white-paper on “The ROI of Supply Chain Resiliency: It’s More Than You Think” (Registration Required), sponsored by Resilinc. You might be surprised at how much hidden value you can extract from your Supply Management operations.

* As you might recall, the Thailand floods seriously damaged the factories that produced a significant number of the world’s hard drives, as Thailand is the world’s second largest producer of hard drives.