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March 2020

BPO for SMB

Procurement BPO for SMBs

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SMBs Can Leverage BPO to Improve Procurement

As important as the procurement function is for companies to purchase the products and services they need in a compliant, cost-effective way, many businesses face the challenge of dedicating enough resources to procurement.

Fortunately, procurement doesn’t always have to be managed in-house. Just like other functions ranging from accounting to marketing to technical support can be outsourced to third-party partners, many companies — especially small and mid-sized businesses (SMBs) — benefit from leveraging business process outsourcing (BPO) for procurement.

Save Time and Money

Outsourcing procurement to a trusted partner can free SMBs up from challenges such as:

  • Finding qualified procurement staff
  • Implementing and managing procurement technology
  • Sourcing vendors
  • Analyzing spend
  • Assessing procurement risk

SMBs may also be able to customize their BPO relationships, so if they do want to be in control of analyzing areas such as spend through their in-house finance team, they can still benefit from letting their BPO partner focus on areas such as vendor risk management.

By not having to dedicate the resources to all of these areas, companies can save approximately 30% of their time and money, as employees can instead focus on core business functions such as sales.

Gain a Competitive Advantage

In addition to saving time and money through BPO, companies that outsource procurement can often gain competitive advantages by leveraging the expertise of their BPO provider.

Across outsourcing as a whole, beyond just procurement, a Deloitte survey finds that cost optimization is no longer part of the top-five criteria for outsourcing. Instead, companies are more often turning to outsourcing to gain a competitive advantage. In 2018, 49% of organizations moved more services to outsourced providers that innovate, compared with 20% in 2016, so this is becoming increasingly important.

With procurement BPO, service providers can help your organization innovate in many ways, such as helping you gain the products and services you need to target new market segments. A procurement BPO provider can also help you gain spend insights that can inform overall budgets and help you find innovative ways to reduce costs, such as by procuring technology tools that have a lower total cost of ownership over their lifetimes.

Elevate Your Procurement With Premikati’s BPO Services

Premikati is one of only six SAP® Ariba®BPO partners, and we have the experience and technology to handle your procurement needs. Leveraging SAP® Ariba®as the underlying procurement platform, combined with our in-house expertise, we can quickly help SMBs gain the services of a full procurement department in a cost and time-effective manner.

As you focus on your organization’s growth, we can provide the procurement support you need to scale up while staying on budget. And over time, if you decide to bring some procurement functionality in-house, we can adjust our service offering to meet your needs so that procurement can always be a source of strength for your organization, not a burden.

To learn more about how Premikati can lift your procurement capabilities through BPO, please get in touch with our team.

spend sieves

Eliminate Spend Sieves

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Eliminate Spend Sieves with a Three-Way Match

 

Your business is dynamic and fast paced, and you want to be on the move, getting the real work done. In this type of environment it is easy to think you can manage your organization’s purchasing decisions on the fly. After all, you know your business and your suppliers; transacting with them doesn’t have to be a big deal, right?

Well, maybe. As your business grows and adapts to an ever-changing marketplace your purchases of goods and services are changing too. They are becoming more complex, or higher in volume; maybe you need to expand your supply sources to keep up with customer demands. This is when you benefit from having a consistent, optimized purchasing process.

Costly mistakes can happen, and even seemingly small financial variances can leak through holes in weak process adding up to big bucks over time. How can you prevent wasted funds and risky deals? Document your purchases, for goods and services. Use a detailed purchase order (PO), perform a receipt, and ensure the supplier invoice matches the goods/services ordered and received before issuing payment. This process is called a three-way match, and it ensures you get exactly what you want from your suppliers at the price you agreed upon. Here’s how to implement this in practice.

Write a Detailed PO

For Goods:

Even if you know exactly which items will make up your total purchase, avoid entering one grand total on your PO. Create lines for each item. Include the quantity and purchase price per unit. Don’t forget to enter a line item for negotiated shipping or delivery costs.

For Services:

Just say “no” to one-line, lump sum service purchase orders. It may seem like the quickest way to get things moving, but if a deadline or deliverable is missed or delayed you won’t have an easy way to hold your supplier accountable.

Instead try breaking the service into milestones, for example: Kick-off, Release 1, Release 2, and Go-live. Include a deliverable date and milestone payment value for each. If your service is not project based, you can capture an hourly rate and a set number of hours allocated to the work each week or month. Even if you have a recurring monthly fee for a year of service, break that out into 12 line items so your supplier can invoice against each easily. This will avoid confusion on invoice reconciliation especially at month or year end. Don’t forget to include a line item for T&E if any work will be performed off-site or remotely.

Lastly, ensure expenses are approved at the appropriate authority in your organization before the PO is issued. If these costs need to be allocated to a specific cost center identify and record that detail now. Getting this approval up front helps projects run smoothly, ensures budgets stay on track, and saves time and confusion at the end of the project when the supplier is waiting for money for services rendered.

Confirm Receipt

Ideally the same individual who is ordering and approving payment for goods should complete this important second step. This is especially relevant for orders with long lead times or those delivered in multiple shipments.  The receiving process is your chance to call out any discrepancies before the invoice comes in making it much easier to adjust and avoid overpayment.

If you’ve built a milestone-based purchase order you can use this opportunity to check in and ensure the project is progressing as intended before issuing a payment.

Reconcile the Invoice and Approve for Payment

Ensure the supplier is invoicing for the same amount of money as indicated on the purchase order and as the goods/services received by you. If the expenditure is approved up front in the purchase order process and all relevant parties have confirmed the quality of the goods/services through the receipt, this should flow seamlessly and quickly allowing you and your supplier to get back to doing what you do best supporting and growing your business.

Executing a proper three-way match will ensure your strong relationships with your suppliers stay that way. You have more valuable work to perform than haggling over a missed deadline or chasing down details to approve an outdated invoice. You can consistently follow this simple process that will not only help you prevent lost dollars but will give you confidence that your operations are running smoothly, and save time spent on purchasing activities.

To make a three-way match flow even more seamlessly contact Premikati to learn more about how you can simplify your procurement processes.

 

 

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