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.

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

In Parts I and II, 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, and Catalog Management that were covered in Parts I and II; Procurement, Invoice Management, Expense Management, and Reporting that will be covered today; and Administration that will be covered tomorrow in the series finale.

Procurement

Procurement, in the iValua suite, is the process of creating requisitions (and having them approved), managing the resulting orders, managing budgets, managing receipts, and managing services deliverables. Requisition management, order management, and budget management are standard fare for Procurement platforms and work as you would expect, but the ability to create and mange receipts and manage service deliverables is a more unique offering for a Procurement platform. This allows for m-way matching in the platform, which is key to ensuring that not only are negotiated savings realized, but that overpayments, and more importantly, fraudulent payments, are not made.

Invoice Management

Invoice Management revolves around invoice creation, management, and reconciliation to receipts. It all works as you would expect, and there is nothing fancy here. Just a well-designed platform designed to make the process as smooth as possible.

Expense Management

Expense Management is the process of requesting cash advances, managing requests, creating expense reports, reviewing expense reports, rejecting lines or entire reports, and approving lines or entire reports. The expense management process is fully defined, and consists of creation, validation, accountant validation, threshold checking, finance or external department approval, (final) accounting approval, and settlement. As with invoice management, the process, and the application, works as you would expect.

Reporting

Reporting is the process of creating analysis reports, browsing them, creating queries, managing them, and then, as a result of the analyses, creating strategic action plans. The analysis capability is quite good. Users can create their own cross-tabs and pivot tables in the browser by dragging-and-dropping dimensions into chosen row and column positions. The analysis can be on any type of data stored in the system — surveys, questionnaires, RFX bid events, e-auctions, budgets, invoices, etc. But the most unique capability is the ability to create strategic action plans, which can serve as the foundation for future sourcing events. Like improvement plans, they can be quite detailed and are generally setup to support savings initiatives.

Each strategic action plan / savings project has a breakdown that allows a user to quickly access the definition data, the team and associated tasks, the financial overview, and detailed analysis through a sequence of tabs. The definition data will indicate the current status, related sourcing projects, and notes added by the team. The financial overview will capture the budgeted savings when the project was approved, the planned savings at project initiation, the current savings forecast, and the amount of savings captured to date. The actual savings (and forecast) will come from the data gathered during Procurement and be calculated using a user-defined formula (which could be as simple as $1 per unit, based upon negotiated rates).

Come back tomorrow when we’ll cover Administration and wrap-up the series!

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

Yesterday, in Part I, 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 a module for Supplier Management, that we covered in Part I; Sourcing, Contract Management, and Catalog Management, that we’ll cover today; and Procurement, Invoice Management, Expense Management, Reporting, and Administration that will be covered in the remainder of the series.

Sourcing

Sourcing consists of sourcing project creation, schedule and workflow creation, RFX, and e-Auctions. As noted above, there is no decision optimization, but that is literally all that is missing in their sourcing module.

Project creation in iValua is very powerful as you can not only define the project, but set up the end-to-end workflow, define a schedule, assign team members, and track every step. A project has an identity which captures basic project information, associated documents, a sequence of tasks or actions that will fulfill the project, an assigned team, a schedule, and a forum where team members can collaborate and discuss issues. The tasks and actions supported are quite extensive – and include all of the standard source-to-settle steps such as requirements gathering, supplier selection, RFX preparation, response tracking, proposal evaluation, response analysis, award, and contract. From each task, the users can jump off to the appropriate module in the iValua suite to complete the task. The workflow engine is quite fine-grained.

Contract Management

Contract Management is the creation and management of contract templates, contracts, and signature transactions for e-signing. The gem here is iValua’s online drag-and-drop contract creation capability (with complete audit trail functionality) that works in the browser and fully integrates with Microsoft Word. The view, which has the section index on the left, the section texts on the right (each in their own editable box), and Word-compatible editing options on the top, makes it really easy to construct a contract. The tabs allow for quick access of the header, the team involved in the process, deadline (and auto-renewal) dates, exhibits, main clauses, items and services, negotiated terms, the associated contract scorecard, and the current status of the contract with respect to the defined lifecycle.

Catalog Management

Catalog Management is the process of importing catalogs, creating and managing catalog items, and managing services procurement. Catalog management works as you would expect, and the hidden gem in here is the extensive services procurement management capability, including timesheet capability. The services procurement module allowed for the creation of services profiles (like templates for services requisitions), price structures, and requisitions — which could be fee-based or timesheet-based. The platform has extensive support for services requisitions, and the unique requirements for services requisitions, that require proposed delivery details, schedules, proposed team members, rates, payment schedules, and insurance requirements. It’s not quite as extensive as the capabilities in the Contingent Workforce Management platforms (like FieldGlass) or Agency Lifecycle Management platforms (like DecideWare), but is more than sufficient for the majority of services-based sourcing projects that a typical Supply Management organization will need to address. It is definitely the 80% solution.

We’ll cover the remaining parts of the platform in the remainder of this series. Come back tomorrow!