Category Archives: Best Practices

PrimeRevenue – Priming Your Financial Supply Chain for Success

PrimeRevenue is a provider of Supply Chain Finance solutions that provides supply chain finance solutions to over 12,000 customers in 40 countries and that processes Billions of dollars of transactions each year. Like other providers of supply chain finance solutions, they provide a platform that helps suppliers access financing for their receivables when they need it. With over 40 leading financial institutions on their platform, it is a platform that every buyer and supplier should consider for their finance needs. But that’s not why we’re covering PrimeRevenue today. We’re covering PrimeRevenue because they go beyond just providing a funding platform to meet your cash needs – they also provide an analysis platform to help you figure out how best to meet your cash needs.

In particular, they provide a solution by the name of SciMap that provides a consolidated and classified analysis of your spend, enriched by insights from PrimeRevenue’s global database, based on detailed and updated market intelligence. This allows you to make better buying decisions as well as negotiate optimized payment terms, putting the power to improve your working capital in your hands.

In particular, this platform provides you information on:

  • average payment time for the commodities you buy,
  • average financing terms for suppliers with similar credit ratings, and
  • average financing terms for companies with a similar credit rating to you.

Based on this you can figure out

  • whether you are paying faster or slower than the market average,
  • what financing your supplier is able to get, and
  • what financing you are able to get

and then you can figure out whether you should be looking to

  • extend or reduce payment terms, depending on whether
  • the supplier can get better financing or
  • you can get better financing.

Then, if it is the case that the supplier can afford to be paid later and paying earlier threatens to increase the overall supply chain cost, then you have a valid reason to negotiate with (or, if necessary, mandate to) the supplier for a later payment, helping it to obtain the lower financing you know it can obtain if necessary.

When it comes to supply chain finance and working capital analysis, the PrimeRevenue SCiMap solution is unique in the supply chain finance space and a solution you should really be looking at if you want to get your supply chain working capital optimized.

You Should Never Pay Your Supplier Late … Unless

paying late is actually the right thing to do.

SI has said since day one that you should never pay a supplier late, and it still believes this, but the reality is that sometimes late is not late. So when is late not late? Simply put, when paying the supplier late hurts the supplier less than it hurts you.

The whole point of paying suppliers on time is to not only keep them financially sound, but to reduce the cost of your end-to-end supply chain. If your supplier depends on your business and needs that cash to buy raw materials, pay its workers, and fund its overhead costs, and it has to wait for that cash, then it has to borrow money to buy those raw materials, pay its workers, and fund its overhead costs. And if it’s cash strapped, chances are it’s not going to get a good rate. Furthermore, if it’s small, or doesn’t have an A credit rating, it’s not only going to get a bad rate, it’s at risk of getting a very bad rate. Some suppliers often have to borrow at 20% to 40% to stay in business while they wait for your payment, which sometimes doesn’t come until 120 days after the product has been provided to you. If such product takes 60 days to make and ship to you, that’s 180 days the supplier is waiting for payment and the cost has been effectively increased 10% to 20%. And who do you think is paying for that? You are!

However, sometimes we have the opposite situation – a buyer who is strapped for cash waiting to get the next product to its customers and a large supplier, who does business for a lot of large companies, that is in a relatively cash rich situation. In this situation, the buyer might be forced to borrow cash at a relatively high rate of interest, which could easily be 12% to 18%, while the supplier could go another 60 days without payment with no adverse effect. Paying the supplier on-time in this situation is ultimately as damaging to the supply chain as a whole as paying a cash-strapped supplier late. Anything that increases the cost ultimately increases the price to the end consumer. And anything that increases the price risks decreasing the customer base, and the overall revenue that keeps the supply chain going.

So, if you do have the opposite situation, despite the supplier’s grumbling, you should pay late. But ONLY if you have this situation, which, generally speaking, occurs less than 10% of the time. So how do you know if you have this situation?

Come back tomorrow to find out.

iValua: Proving Their Mettle with Source to Settle, Part IV

In Parts I through III, we noted that when we last covered iValua in 2010, they were one of the few providers tackling end-to-end sourcing and procurement in a single suite of integrated modules built on one common platform. We noted in Tackling End-to-End Sourcing and Procurement, Part I that this French company had capabilities that, at least to some degree, addressed each of the core phases of the basic sourcing-and-procurement cycle except decision optimization and tax reclamation. Since then, they have added advanced tax tracking capability, and a boatload of other features that include SIM/SPM, Risk Management, Project Management, Enhanced Analytics, and Extensive UI customization. Today, we will continue our coverage of the platform, which includes modules for Supplier Management, Sourcing, Contract Management, Catalog Management Procurement, Invoice Management, Expense Management, and Reporting that were covered in Parts I through III; and Administration that will be covered today as we wrap up the series.

Administration

Administration is very extensive in the iValua platform. Administrative users can manage users, tables, workflows, reporting indicators, units of measure, currency, alerts, menu options, content, templates (for RFX and Auctions), import, scheduled processes, notifications, (re)assignments, and information sources (as the platform can pull in RSS and XML feeds from various web sources for display on the dashboard).

The ability to define arbitrary data tables and import the data for analysis into the system is quite powerful. It makes the built-in analytics capability much more useful as the data can be augmented and enriched to also include data from the payment platform, third party supplier assessments, and optimization events conducted external to the iValua system. A classic limitation of many Sourcing and Procurement systems was the inability to import arbitrary data not accounted for in the existing schema. The iValua platform took a best practice from leading spend analysis platforms and made sure a user could import whatever data she needed anywhere in the supported source-to-settle process. The ETL screen is comparable to an advanced version of Microsoft Excel import (familiar to every Microsoft Office User) that allows the user to define the first line index and last import row, column and line separators, text qualifiers, encodings, and field template (that defines the fields and their names). The user can also define how long the data should be kept (and throw-away one-time analysis data or archive payment data indefinitely), who can see it, and what modules, plans, or anomalies the data should be associated with.

Design Mode

Design Mode is a new capability in the iValua platform that allows a user to dynamically redesign the layout of their menus, screens, and dashboard widgets. Each user can customize the look and feel of the application in a way that makes them most productive using simple drag-and-drop and checklist-based / mouse-click component and option selection. It is quite slick. It also allows iValua to customize a configuration for a new client extremely rapidly based upon the particular needs of the different users of the application.

In summary, the iValua is a very extensive Source-To-Settle platform and an extremely viable option for a mid-size or large organization that is looking to update their sourcing and procurement capabilities in an integrated end-to-end source to settle platform. It is especially suited to a multi-national that has to operate in a significant number of countries and languages as iValua, which already supports 15 different languages, is used daily by more than 150K users and 500K suppliers in over 70 countries.

Which Ideas Should You Have Stolen in 2013? Part III

Back in January, Stores Magazine wrote an article on “20 Ideas Worth Stealing in 2013” that had some ideas worth stealing by your Supply Management and Marketing organizations. But were they all worth stealing?

These articles sounded good on the surface, and were also good when you dug in. SI would definitely recommend stealing these ideas if you haven’t already:

  • Engage the Whole Customer
    Don’t just focus on products or services – create a blend that meets the customer’s needs with a single solution. If necessary, create an optimized, servitized supply chain.
  • Bring Catalogs to Life
    Leading Supply Management organizations integrate catalogs into their e-Procurement systems in smart ways that allow buyers to find the contracted items that meets their needs and acquire them effortlessly and that help Sales and Marketing acquire the technological solutions that will give customers access to leading, virtual, catalog technology for the end consumer that will highlight the benefits and features of the products being sourced for sale.
  • Turn Pins into Purchases
    For an organizational user making a purchase of a contracted item through the e-Procurement catalog, it should be as easy as pinning a photo on Pinterest. Similarly, the shopping cart technology on the organization’s e-Commerce website should be as easy to use.
  • Reward Smart Choices
    It’s not short term savings that matter, but long term value generation. Spending a dollar today to save two tomorrow is just good sense if you want the organization to be around for the long-haul. Don’t be afraid to tell Wall Street where to go. Their short-term focus is doing irreparable harm to the economy.
  • Invest in the Community
    Invest in supply management organizations, research institutes, and educational programs that will train your staff and advance the state of the discipline as well as investing in sustainable community programs that will benefit your customers.
  • Location Apps, Location Apps, Location Apps
    At any given point in time, you need to know approximately where your product is. You need this visibility as you need to know as soon as possible that you are not going to get that shipment on time unless you take action. It’s pointless to provide a consumer with a mobile set and product tracking if you can’t even ship the product.

So, in the end, thirteen (13) of the ideas were quite good and may even stand the test of time. Get implementing!