Category Archives: Procurement Innovation

2 in 5 Fleet Owners Suspect Fuel Invoice Errors. What About the Other 3?

A recent article over on TruckingInfo that wanted to know if you are Staying On Top of Your Fuel Invoices noted that only 40% of respondents to a recent survey by FuelQuest suspected errors in their fuel invoices. SI’s question is, what about the other 60%?

According to the article, unaddressed, bulk fuel invoice error rates tend to hover around 25%, but some companies have rates as high as 55%. This is due to complex fuel and freight contracts as well as manual or sample-based reconciliation processes. This is because they lack the processes and technologies to insure complete, consistent, and effective invoice matching and review.

Furthermore, the lack of proper processes and technologies results in the business impact from invoicing errors including overpayments, increased operational costs, and lost trust in suppliers being significantly underestimated. If a large fleet company is consistently being over billed 3 cents/gallon, that’s up to $12 of over-billing on every fill up and up to $2,000 a year of over-billing for every 18 wheeler (with an older model getting an average of only 5 mpg). If you have 50 trucks in your fleet, that’s an over-billing at a rate of 100K/year until it is detected. And how much will be recovered?

Even if you are a 3PL/Logistics Carrier you need end-to-end invoice automation, m-way matching, and exception-based management. Otherwise, you don’t know how much money is being needlessly burned by your fleet.

We First Rocked Around the Clock 60 Years Ago Today …

… but how long have you been rockin’ your supply chain?

As Christopher Sciacca insists, supply chains don’t have to be boring. You don’t have to sing the blues. You can twist and shout.


Put your glad rags on and join me, hun,
We’ll have some fun when the clock strikes one
We’re gonna save some money tonight.
We’re gonna save, save, save ’til broad daylight

Modern e-Sourcing Technology allows you to identify savings you never knew existed.
Spend Analysis and Decision Optimization identify year-over-year savings in excess of 10% when properly deployed.
New market intelligence solutions identify changing commodity prices in near real time.
Six Sigma and Lean solutions allow you to improve processes to reduce manpower costs.


When the clock strikes two, three and four,
if the float goes down we’ll save some more
We’re gonna rock around the clock tonight,
We’re gonna add value ’til broad daylight

Visibility solutions identify potential risk and allow for mitigation and prevention.
Sustainable options increase brand value and minimize long-term costs.
Recognized brands add value to your own.


When the chimes ring five, six and seven,
we’ll be right in seventh heaven.
We’re gonna rock around the clock tonight,
We’re gonna innovate ’til broad daylight

Collaboration tools allow for joint product design.
VMI allows for joint inventory management.
e-Document Management allows for procurement and sales support.


When it’s eight, nine, ten, eleven too,
I’ll be goin’ strong and so will you.
We’re gonna rock around the clock tonight,
We’re gonna start again at broad daylight

Savings, Value Generation, Innovation is a continuous process — and supply chains support it!


We’re gonna rock, gonna rock, around the clock tonight!

Magic & Logic (i.e. Marketing & Procurement) Through the Years [2014] (Collected Links)

PREAMBLE

Magic & Logic

The Creative Challenge

Efficient Sourcing in Marketing

How Do You Support Marketing and Get a Grip on Agency Lifecycle Management?

Too Many Marketing Fingers in the Procurement Pie?

BONUS

Procurement Key Issues from the Hackett Group, Part II

Last month, the Hackett Group, as part of its Procurement Executive Insight series, released its “2014 Procurement Key Issues” report on Rethinking How Procurement Defines Its Value, Balances Risk, and Gets the Most from Technology Investments. It had some very interesting findings, including the fact that Procurement in 76% of companies surveyed indicated that a top priority was to expand procurement’s scope/influence. This is logical, but a little unexpected giving that the top Management priorities are to grow revenue and improve margins / profitability, at 66% and 61%, and most companies still see margin improvement in an uncertain market as cost reduction since limited or no-growth markets don’t generally take favourably to cost increases.

It seems that, as Hackett notes in its insight, we have the situation where many of the Procurement groups in Hackett’s survey stable have reached the upper limit of cost reductions possible in categories they actively source today and are interested in taking on new spend categories in an effort to unearth additional savings and meet the savings targets they are still being (implicitly) given for the organization to achieve it’s margin improvement.

While I applaud the long-needed alignment from this group of Procurement organizations that are obviously in the above-average and best-in-class categories — because savings are a thing of the past with (hyper)inflation returning to historical norms, raw materials in many categories become scarce (and supply barely meeting demand), and transportation costs continuing to increase — I worry that the finance organization is not yet aligned with the need and, when push comes to shove, will resort to a strong arm instead of a gentle hand, putting Marketing, Legal, and other non-physical product organizations on the defensive.

Somewhere two fists are pounding
And they don’t care what’s correct
Somewhere somebody’s walking the wire
Without a safety net …

This will not only result in a push-back from the internal departments that Procurement needs to help, but from the vendors and third-parties that the Marketing, Legal, and other non-physical product departments rely on to keep the organization running. The disdain dripping from the forced smiles on all sides will be visible across the room …

Somewhere some buyer’s crazy
And some Rep’s half out of her head
Now the CPO’s fearless
And hopes they won’t wind up dead

You have to remember these are vendors who are used to doing deals with a wink and a smile in the back room or skybox of their favourite entertainment venue and sealing them with a firm handshake. Terms? Conditions? Agreed Upon Rates? Performance Requirements? Contracts? This is a whole new ballgame to a vendor used to doing the work and sending a one-line invoice when it’s done.

Where the rubber meets the road
Welcome to Procurement mode
Used to be deals were a firm handshake
Now the rubber meets the road

The vendors are going to try and bypass Procurement at every opportunity …

Rep in the front seat
Lawyer in the back seat
Gettin’ it on the dotted line
Got a snake in the bed
Lord, hissin’ on the headboard
Trying to lure you offside

… and if the Marketing, Legal, and other affected internal departments aren’t onside with the new process 100%, any chance of savings and spend control are going to fly out the window. Not only will a side-stepped process result in a deal that is at least as expensive as last year’s deal (and probably more as the incumbent preferred vendor will probably cry poor due to inflation), but nothing will be done to reduce the demand side volatility, threat of competition (which often requires true partners and not just preferred vendors), and supply volatility that are the top three business drivers that Procurement has identified as needing to be addressed.

In summary, the fundamental Procurement focus is right, but has the rest of the organization caught up? And does Procurement really have a firm handle on what it needs to do to extend its reach and deal with all of the external business drivers that are hitting it hard, which also include the need for more (trained) talent and the skills gap, the increasing regulatory risk around the globe, and risk of a truly global economic crisis? Looking at the technology priorities, SI is not certain that it does.

In closing, the 2014 Procurement Key Issues report on Rethinking How Procurement Defines Its Value, Balances Risk, and Gets the Most from Technology Investments is an interesting and thought-provoking read and you should add it to the top of your reading stack.

If Even a Canadian TelCo Can Use Payables to Add $3 Million To Their Bottom Line

Imagine what your company could do with invoice automation. As per this recent article over on Shared Services Link on how to turn payables into an opportunity and add $3M to your bottom line, Telus, a 10 Billion telecommunication products and services provider which typically receives 15,000 to 20,000 paper invoices per month, implemented a supplier portal, electronic invoicing, and a dynamic discounting solution that allows them to save 3 Million annually.

When you consider that 10 Billion is big, but not that big these days, that a lot of organizations receive 15,000 to 20,000 paper invoices a month, or more, and that a supplier portal is pretty primitive from an automated invoicing viewpoint, you quickly see that there is quite a lot of opportunity for your organization to save quite a lot of money from invoice processing. In some organizations, the overhead alone from manual processing exceeds a million dollars, and this barely covers a detailed review of 10% to 20% of the invoices. Proper automation insures m-way matching on 100% of invoices with exception-based processing on the 10% to 15% that contain issues or errors.

You see, when you implement the right invoice automation solution:

  • 98%+ of all invoices flow through the system,
  • 99%+ of all errors are caught,
  • 90%+ of all invoices are automatically processed without human intervention, and
  • 80%+ process savings are realized and maintained.

And then, instead of spending $30 to $40 to process an single invoice, you’ll be spending $3 to $4. So, if your organization is processing 10,000 invoices a month, you’ll see your overhead costs drop about $300,000 and you’ll save upwards of 3 Million a year before dynamic discounting or other supply chain financing solutions are put into the mix!

For more information on how your organization can save 3 Million, download Sourcing Innovation’s recent white-paper on An End-to-End Invoice Automation Framework – Ten Keys to Success (registration required), sponsored by Nipendo.