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Jun 05

The Power of Automation: Unleashing Efficiency with SAP Ariba Commerce Automation

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Businesses today are realizing the urgent need for procurement and spend management innovation. Key decision-makers, particularly those in finance and procurement, seek solutions to streamline processes, boost efficiency, and improve organizational visibility. This is where SAP Ariba Commerce Automation enters the scene. 

 What is SAP Ariba Commerce Automation? 

SAP Ariba Commerce Automation is a solution designed to supercharge your procurement processes through powerful automation. Its primary goal is to enhance operational efficiency and ensure a steady supply chain by improving spend visibility and fostering efficient collaboration with suppliers. 

It’s a solution recognized for its innovation and effectiveness, with SAP being recognized as a leader in the 2022 Gartner Magic Quadrant for Procure-to-Pay (P2P) suites for the seventh consecutive time. 

Key Features: A Deep Dive 

SAP Ariba Commerce Automation comes with a suite of features designed to optimize procurement operations: 

  • Regulatory and Business Process Compliance: The solution ensures digital matching of invoices to POs and contracts, thus enabling compliance with regulatory requirements through e-invoicing. Transactions are validated based on configured business rules, reducing manual intervention and exceptions. 
  • Automated Procurement Workflows: The solution automates manual processes, freeing up workforce capacity, decreasing operating costs, and increasing productivity. It also enables digital delivery of POs to suppliers across a business network. 
  • Supplier Portal: The portal allows suppliers to flip a received PO on the network into an invoice, eliminating data entry and other errors. It also gives suppliers a view into invoice status updates, reducing inquiries. 
  • Invoice Status Portal and Transaction Visibility: This feature provides visibility into orders and invoices with a holistic view of spend. It allows suppliers to configure notifications to receive emails when their invoice status changes, promoting adoption for long-tail suppliers through self-service updates and invoice visibility. 

Impressive Benefits 

The benefits of SAP Ariba Commerce Automation are as significant as its features. These benefits include: 

  • Improved Procurement Compliance: The solution supports business process compliance with highly configurable business rules on the network. 
  • Automation of Spend Management Processes: The solution enhances productivity, lowers operating costs, and frees up people’s capacity by automating paper-based and manual processes. 
  • Increased Transparency of Business Spending: The solution provides a holistic view of organizational spending with greater visibility into orders and invoices in one platform. 

Recent Innovations and Future Outlook 

SAP is not resting on its laurels. Recent innovations and planned updates include: 

  1. Guided Buying: The next evolution in guided buying is here. The new capabilities improve the buying experience and leverage AI, intelligent recommendations, and machine learning. This creates a holistic view of what the buyer is purchasing and how it aligns with their organization’s environmental, social, and governance (ESG) goals. 
  1. SAP Central Procurement: The latest release of SAP Central Procurement addresses the challenges associated with centralizing procurement. It delivers the benefits of a uniform, centralized procurement system across all direct and indirect categories — without reworking individual solutions spread across the organization. 
  1. SAP Category Management: A new category management solution, SAP Category Management, is set to roll out this year. It will provide actionable market intelligence and category insights, empowering category managers and procurement professionals to make strategic category decisions. 

 

Statistics Highlighting the Importance of Procurement Optimization 

To underscore the significance of these advancements, let’s consider some compelling statistics: 

  1. Companies that excel at procurement have 20% lower costs, less supply chain disruption, and up to 55% fewer supplier defects (Source: The Hackett Group).
  2. High-performing procurement organizations operate at up to 21% lower labor costs (Source: The Hackett Group).
  3. According to Gartner, by 2023, organizations that have adopted AI in their supply chain management strategy will reduce errors by up to 50%. 

 

From the rollout of SAP Category Management to the enhanced supplier management and the integration of AI and machine learning, SAP is poised to redefine procurement and supply chain management. 

As procurement professionals, we must stay abreast of these developments, leverage these innovative solutions, and drive strategic value and business outcomes in our organizations. 

May 16

Unleashing the Power of AP Automation: A Strategic Move Towards Efficiency and Profitability

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In an era where digital transformation drives sustainable business growth, one area that remains ripe for disruption is Accounts Payable (AP). AP automation is no longer just an option – it’s a business necessity that yields considerable strategic advantages, particularly for mid-market companies. This post aims to provide an in-depth understanding of the myriad benefits of AP automation to executives committed to fostering operational excellence, reducing costs, and enhancing cash flow management.

 

The AP Challenge: A Time and Resource Intensive Process

AP processes often contain manual data entry, paper invoices, and lengthy approval cycles. These processes are time-consuming and prone to human error, resulting in late payments, missed discounts, and increased operational costs. The lack of real-time visibility into AP data often leads to suboptimal decision-making, hampering growth and profitability.

The AP Automation Advantage: Transforming the AP Landscape

AP automation technology disrupts this status quo, offering a more innovative, efficient, and cost-effective way to manage AP processes.

Let’s delve into the specific benefits:

  • Time Savings: AP automation drastically reduces the time to process an invoice, leading to faster approvals and payments. This increased efficiency frees up valuable staff time that can be better utilized for strategic tasks, such as analyzing spending data or improving supplier relationships.
  • Reduced Operational Costs: Automating AP processes reduces the need for manual intervention, thereby minimizing the scope for human errors and the costs associated with rectifying them. Moreover, it can also decrease storage and postage costs associated with paper invoices. Calculate your potential savings here using SAP’s Buying and Invoicing Value Calculator.
  • Enhanced Cash Flow Management: With real-time visibility into outstanding invoices and payment dates, AP automation allows companies to optimize their cash flow. Companies can take advantage of early payment discounts and avoid late payment penalties, thereby improving their bottom line.
  • Decreased Rogue Spend: AP automation controls maverick spending by enforcing corporate policies and approval workflows. It also improves spend visibility, enabling companies to identify and mitigate rogue expenditures more effectively.
  • Improved Supplier Relationships: Timely payments and transparent communication foster healthier supplier relationships. This enhances supply chain efficiency and opens up opportunities for negotiation and collaboration.

The Powerhouse Duo: SAP Ariba Buying and Invoicing and Premikati

While the benefits of AP automation are clear, the choice of software and its implementation process is crucial.

SAP Ariba Buying and Invoicing is a robust solution offering comprehensive AP automation capabilities. It streamlines end-to-end procure-to-pay processes, enhances visibility into company-wide spending, and drives compliance and control across the invoice management process.

Yet, the success of any AP automation initiative is about more than just the software. It’s about how effectively the software is implemented and integrated with your existing systems and processes. This is where Premikati offers rapid implementation and deployment services that ensure a smooth and efficient transition to automated AP processes.

Premikati’s expertise in SAP Ariba implementation reduces the time-to-value, allowing companies to experience the benefits of AP automation sooner rather than later. Their robust training and support ensure that your team is equipped to leverage the software’s full potential.

AP automation is a transformative strategy that can significantly improve your business’s operational efficiency, financial health, and competitive edge. With SAP Ariba Buying and Invoicing and Premikati’s deployment services, your business is well-positioned to navigate the AP automation journey successfully.

Connect with us today to talk to our team.

Dec 22

3 Business Resolutions You Can Actually Keep In 2021

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The New Year of 2021 is right around the corner, and many are breathing a sigh of relief that 2020 is finally coming to a close. After a daunting, strenuous, and uncertain year for nearly everyone on the globe, the tradition of setting New Year’s resolutions can be a welcome change of pace that requires focus on the positive and a future that holds brighter possibilities that are, at least somewhat, within our control.

But if you’re like many people, your business resolutions may suffer from an eyes-bigger-than-your mouth scenario. Despite a color-coded bullet journal, habit tracker, ergonomic chair, and the best of intentions, businesses usually run out of steam within the first few weeks. And this year, there’s all the stipulations and precautions to navigate in the midst of a pandemic to also consider—things like attend 10x business networking events, etc.

We’ve put together a list of three, Covid-friendly New Year’s resolutions for business that you can actually keep amid the chaos.

Prioritize worker health and safety above anything else

Now more than ever, it’s important to make sure your employees are taken care of. Follow all recommendations such as safe social distancing, proper mask usage that is enforced, and regular hand washing.

Additionally, you can set aside time for employees to simply chat on a call wih their coworkers. For many adults, the people we work with are our main source of non-family socialization with people in our age group. If working from home is starting to make employees feel isolated and irritable, schedule time on the clock for workers to regain some camaraderie.

This is a good tactic for reputation management as well. Businesses who chose money over worker safety in early 2020 have received a lot of backlash for their actions. Many people have begun to actively refuse to purchase from brands that don’t respect their workers.

Clean up your remote work processes

If you just started with online work because of the pandemic, then you’ve likely gone through some growing pains this year. In 2021, vow to clean up your remote work processes by:

  • Managing tool subscriptions. Delete unneeded accounts to save immediate cash.
  • Creating standard operating procedures for common tasks such as blog posts
  • Choosing a unified system for all employees such as Google Drive or Slack and then communicating

Learn how to set effective KPIs

Just like personal goals, many businesses struggle with KPIs. They sound great on paper, but don’t perform their intended function in an overarching sense.

Take some time out in 2021 in order to reclaim time for years to come by doing a deep dive into goal planning and key performance indicators. Explore how to set realistic goals and KPIs that will actually gauge your success at meeting them.

Learning to set effective KPIs now can save you years of tried and failed attempts, wasted money, and trial-and-error loops that make only tiny incremental progress. Choosing the right ones and working toward them with consistency can be a gamechanger in your business if you’re used to doing everything by feeling, instinct, and happenstance. Having some measurable stats can also boost your team’s morale and keep them on track with insight into how what they do fits into the big picture of what’s most important to your company.

What are your New Year’s resolutions? At Premikati, we’re working harder than ever to make sure our clients have a wide range of features, a supplier list not to be reckoned with, and a simple interface for all of their purchasing needs. We also offer business process outsourcing in order to optimize the use of your time so you can use your time to its fullest.

Dec 22

What 2021 Has In Store For Supply Chain And Procurement

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As December 31, 2020 fast approaches, it’s becoming increasingly apparent that we might as well start calling the “new normal” plain-old no-modifier “normal,” because what we used to call normal is over. While that reality sets in, we turn towards 2021 with hope of redemption, some way to calm the effects of the first year of this decade. 

We’ve seen a record-breaking number of named storms this season at a whopping 30, six of which were major hurricanes. We’ve seen the rise of the coronavirus pandemic, the overburdened hospitals and overtaxed supply chains which led to no respirators and no toilet paper and a lot of desperate people. We’ve seen riots abound. And politics? Let’s not even start down that path. 

But we’ve also seen the advent of not one, but multiple vaccinations show results in fighting Covid-19, the product of researchers around the globe sharing for the greater good. We’ve seen suppliers and manufacturers rise to the occasion to protect humanity at its most vulnerable. More than any other year in recent decades, we’ve seen the innovation and sheer force of will that keep people going, growing, changing, and making progress no matter the obstacles in the way. You can see it with online schooling, work from home, distilleries turned sanitizer manufacturers, and widespread curbside pickup. As easy as it is to lose track of, as a species, we are teaming up to fight the pandemic and to support one another, as best we can from a safe social distance (six feet apart, we’re told.) 

So what do all these changes mean for supply chain and manufacturing? This segment of the economy has not escaped unscathed, and 2021 is likely to bring even more profound changes as complex ideas come to fruition in the face of a chaotic world. Here’s what you can expect: 

All eyes on supply chain, our unsuspecting heroes

Supply chain professionals tend to fly under the radar, invisibly managing the gears that keep humanity buzzing along. But when people can’t get the equipment they need to survive or maintain their basic quality of life (things like toilet paper, Lysol, hand soap, N-95 masks, and respirators, to name a few) then those who have never given a second thought to where and from whom all these sorts of items come, they start to scrutinize the why’s. 

During Covid, this has meant monitoring suppliers for ethical dilemmas such as price gouging or dangerous working conditions. Throughout 2021, expect consumers and businesses alike to offer deep scrutiny to supply chain practices as old world ways break down entirely in our now-digital economy (with our overburdened postal service.)  

Suppliers who come up with innovative solutions and respect the health of their employees will see increased loyalty and applause while people are paying more attention than ever. As is natural, bad apples will float to the top—perhaps only faster now in the mid-pandemic world. 

Expect more recognition, too, as consumers begin to see and value the role of various players in their supply chains.

A much colder supply chain

As vaccines are introduced to patients around the globe, somebody has to transport these ultra-sensitive products. Current Covid vaccines require a maintained temperature of  -70 degrees Celsius ©, or -94 Fahrenheit. With so many people at risk, and each patient requiring two doses for the vaccine to be effective, we can expect a rise in focus on transportation refrigeration technology that can sustain such low temperatures. In the same vein, a need for transparency and verifiable track records that show chain of custody, temperature consistency, etc. (probably via some IoT device paired with blockchain tech) will drive innovations among supply chain startups.

Susan Beardslee, Freight Transportation, and Logistics Principal Analyst at ABI Research has described the efforts needed to effectively supply the Covid-19 vaccines as “Herculean” and requiring “efforts beyond the actual vaccine development and approval.”

Continued volatility and increased automation

No one in supply chain, logistics, or manufacturing has been spared of the uncertainty and volatility caused by the coronavirus. Driver shortages and overburdened warehouses paired with a teetering economy make for delicate and unprecedented balance to be struck in order to stay afloat and stay relevant. Many in the supply chain realm are turning to machine learning in order to help predict what might come next and how to proceed. Some manufacturers consider lights-out factories that are fully automated—essentially, someone pops in to turn the lights out, and the robots handle the rest. 

Businesses will need to remain flexible in order to adapt to what 2021 has to offer without breaking under the weight of the chaos. 

The disappearance of smaller companies

Of course, not everyone will succeed, even if they stay flexible and do everything “right.” Covid-19 has already brought businesses to their knees across a wide range of industries. An unfortunate truth is that smaller companies often can’t face the pressure or constantly changing variables that come with a crisis-minded market.

At least in the US, government funding for small business can sometimes be finicky to navigate, and there’s no guarantee of continued support for small businesses. 

Nearshoring and Regionalization

Expect supply chain companies to look to nearshoring and regionalization to help manage logistics and cost. Companies will more frequently turn to neighboring countries for products that may have once been bought overseas. This allows for redundancy, cost savings, and strengthening and revitalization of local economies for an easier recovery from 2020’s effects. 

Some aspects of 2021 are just going to be a matter of wait and see, especially as rapidly as the world is changing in response to the pandemic. No matter the specs you need from a supplier, 

Premikati Marketplace has you covered. If you’re looking for professional services to help give you a competitive edge in today’s strange market, Premikati can help by managing your business processes using our team of experts. Reach out to us today to see how we can help your business flourish in 2021. 

Dec 18

B2B Holiday Gift Giving For Grateful Procurement Pros: Covid-19 Edition

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When the snow starts falling and the Walmart speakers start fa-la-la-la-la-ing (okay, that was back before Halloween, but still), then you know it’s time to start thinking about how to show your appreciation for your suppliers and employees with a few well-thought-out gifts. After all, showing gratitude is among the number one ways to foster better relationships with suppliers and employees alike, and gifts are a common way to share the sentiment. 

But gift giving in business is a careful dance. You want to do something personal, but not too personal. You want to give something merry or even traditional but not exclusionary or politically incorrect—the Jewish vegan rep for your supplier that’s helped you no less than 50 times this year may be a little off-put by your summer sausage and smoked cheddar gift basket with its big “Merry Christmas!” adornment, even if she knows you mean well.

Then, there’s the dreaded taxes. Keep your gift-giving in check so as to not incur any unexpected visits from the IRS from anyone involved. And if you’re giving to individuals with the hopes of writing the gifts off as deductions, then you have a $25 maximum to think about. And the de minimis fringe benefits rule, especially if you’re giving small branded items. 

If that wasn’t enough to make you rethink your gifting strategy, this year you have something extra special to contend with—Covid-19. The coronavirus pandemic has shaken the business world to its core as millions around the globe are infected and holiday gatherings are already a source of concern as infection rates spike in response to Thanksgiving events. In the midst of a global pandemic, easy fall-backs like gift cards to favorite shopping centers or restaurants can come across as foolish, callous, or even offensive to recipients who are trying to responsibly social distance this holiday season.

So, what’s left? Here are some ideas for last minute corporate gifts that are Covid friendly, inasmuch as is possible. 

The Classic Company-Branded Gift Gone Viral: Custom Hand Sanitizer

If there’s one thing everyone can use right now, it’s sanitizer. Now that the shelves are not so bare and manufacturers have bolstered their reserves for a study influx of orders, hand sanitizer is a pandemic essential that is reasonably easy to come by, relatively inexpensive, and says, “Hey, we care about your health and safety. We hope our company helps you get through another day of this craziness unscathed.” 

Just like the pens, magnets, and water bottles with company logos that we all know and love, there are a ton of different options for company-branded sanitizers—from spray pens to squeeze gel to credit-card shaped designs, wipes, and keychains. You can get 500 bottles of custom-branded sanitizer for less than $400, so it’s pretty affordable too, which is great considering many business budgets are looking a little frail with such huge hits to the economy and global uncertainty. 

Running low on time? Get unbranded! Any brand! Right now, I don’t think anyone’s going to toss your sanitizer gift aside because it didn’t (or did) have a logo. This stuff is important right now, and you can’t go wrong with it. 

Work From Home Accessories

With so many businesses switching to full remote work, employees are making major adjustments to their home environments (especially since coffee shops are not so much an option right now.) Anything that boosts focus, ergonomics, or efficiency is a great way to show your appreciation. 

Everything from ergonomic cushions and monitor risers to more expensive gifts like ergonomic chairs and standing desks can help your recipients feel a little more cheerful throughout the day. Things that make the “new normal” easier to cope with are a positive in our book. 

Gift Cards That Encourage Staying Home

Gift cards are still a viable option! Replace the buffet cards and mall certificates with e-gift cards that both encourage recipients to stay home and also don’t require physical transmission. You can send a digital gift card from Amazon to anyone’s email. Instacart also just launched their gift card options, and who couldn’t use groceries? Last I checked, we all eat. 

Keep these people who work hard to make your business thrive out of the aisles for a day so they can get their snack on while they binge-watch Netflix without having to worry about the treacherous trek out into public. Bonus: When you give Instacart, DoorDash, and similar gift cards, you help bolster your local economy and keep more people out of the stores, helping to flatten the curve in your area. Another option is to give gift cards to restaurants that are available locally that offer contactless delivery. 

Whatever you choose to give your employees and suppliers this holiday season, we wish for you and yours to stay safe and stay healthy. We look forward to you joining us in the new year. 

 

Oct 12
PE Analytics

Spend Analytics At The Private Equity Level Are Critical To Future Success

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Keeping spend analysis at the portfolio company level results in data silos, missed savings opportunities, decreased negotiating power, increased compliance risks, and a negatively impacted valuation and EBITDA figures at the private equity level. Choosing a PE-level marketplace can eliminate these issues as well as provide long-term strategic perks that come with intelligent spend. 

Spend analytics at the private equity level are critical to continued success. Running a business without data is a real shot in the dark—financial data being among the riskiest options to neglect. Data collection and analysis continue to reign supreme as a major business initiative in nearly all industries and sectors across the globe. Data silos are being eroded. Data is not only being shared between departments, but between brands, sometimes as a primary form of partnership. Continuing with business in the ‘20s without a comprehensive data analysis strategy nearly guarantees that your companies will soon be out of the game, replaced by spry, agile companies who blend numbers and instinct into something that grows like wildfire. 

Choosing the strategy that best suits your business structure is an important step toward spend visibility. In this article, we will discuss spend analysis at the private equity and portfolio company levels. 

Current State of Spend Analytics Across Portcos

Current processes for spend analysis across portcos today are likely to look like this: 

Right, nothing. There’s no process. Portco spend analysis is usually siloed within the portfolio companies themselves, with no analysis of note at the private equity level. If anything exists at all, it’s probably being done manually via XLS—a wildly inefficient method with poor results compared to its alternatives. To swing the other direction, there may be no spend analysis going on whatsoever at either the portco or PE level, a high risk in 2020. 

Problems With Keeping Spend Analysis at the Portfolio Company Level

If spend analysis is only happening at the portco level, then, by nature, there is no PE-wide spend visibility that reaches across portcos. As with siloed approaches in other operational aspects of business, there are costs that come with that level of “convenience.”

Without PE-wide spend visibility, there is also a loss of leverage—leverage which turns immediately into savings—during negotiations and multiple vendor communications. 

This results in a loss of 3-5% of spend analyzed. 

Benefits Of Analyzing Spend at The Private Equity Level

At its foundation, analyzing spend at the PE level offers a clearer picture into what is being purchased and from whom. With this information opens the opportunity to rationalize vendors and standardize, identify savings potential, and spot new sourcing opportunities. 

At a deeper level, developing a spend analysis strategy that looks at all portcos can have a notable benefit on valuation and EBITDA figures, even within months of implementation. Having real-time spend analysis also offers clear visibility into rogue spend so that compliance issues can be tamped out swiftly before major damage is incurred. PE-level spend analysis also lays a solid framework for category management initiatives which are increasing in importance in the PE environment. Spend analysis underpins successful, optimized procurement strategies of all varieties. 

How The Private Marketplace Model Enhances PE-Level Spend Analysis

Rather than organizations adopting purchasing software one at a time in a siloed manner that negates savings opportunities, a private marketplace can improve PE spend analysis opportunities. A PE Owned Marketplace, underpinned by SAP Ariba, is a solution that allows for centralized control with portco-level authority, simple methods to turn on/off portcos as they are acquired or sold, and PE-level-led purchasing that allows for maximization of savings. With immediate spend visibility and  additional savings opportunities, businesses can expect to achieve rapid savings for near-instantaneous ROI plus long-term strategic perks.  

 

Learn More:

Oct 12
Private Equity

Capture And Enforce Savings With A Central Private Equity Level Procurement Marketplace

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A private equity level procurement marketplace such as Premikati’s PE Marketplace allows firms to maximize on savings utilizing group purchasing power and then enforce those negotiated rates to ensure savings are captured. Opportunities for purchasing autonomy remain at the portco level while spend analysis and sourcing events can be managed centrally at the PE level. PE firms are also able to add or remove portcos at will as they are being sold and acquired—removal occurs within minutes when needed. PE-level purchasing also assists in reducing rogue spend. 

Current State of Procurement Purchasing Across Portcos

The use of siloed procurement technology such as SAP Ariba Snap is common among many portfolio companies. Expense reports are also the norm. Cost optimization processes remain at the individual portco level leading to missed opportunities, compliance issues, and a significant reduction in savings for PE firms as a whole. PE firms may feel overwhelmed by the complexities of cross-portfolio sourcing and may face resistance to a centralized  approach by portco-level executives. 

Problems With Procurement Purchasing at the Portfolio Company Level

Purchasing at the portfolio company level wastes time and resources across the board. If purchasing is happening at this level, it is likely that deals have also been negotiated piecemeal, missing the opportunity to leverage group buying power as well as consuming employee hours across each individual organization for a process that only needed to occur once.   

Data is siloed between portcos and, because of this, there is a major lack of spend visibility which also results in its own savings reductions. Compliance issues such as rogue purchases can quickly arise when purchasing occurs at the portco level instead of in a controlled, centralized, PE environment with full cross-portfolio spend visibility. 

Purchasing at the portco level results in:

  • Lack of controls
  • Inability to enforce negotiated rates / prices
  • Rogue purchases

Savings lost due to purchasing at the portco level equates to 2-4% of spend. 

Benefits Of Purchasing at The Private Equity Level

The most obvious benefit of purchasing at the private equity level is savings. Purchasing at the PE level allows for strategic choices that result in obtaining the lowest possible price. These prices are only available due to PE-level spend analysis which allows for the identification of spending patterns that could lead to potential deals. This leads to the PE firm’s ability to effectively source and leverage group buying power to purchase at the best rates and prices. 

By completing the entire procurement journey at the PE level utilizing a private marketplace, PE firms can achieve an expected >%4 spend savings achieved across portcos. This is a quick and sizable win for PE firms struggling to meet requests for procurement savings—a notable, even trendy area of critique among PE firms in recent years.

Additionally, rogue spend becomes more apparent in this model and quick action can be taken. 

How The Private Marketplace Model Enhances PE-Level Purchasing

Using a central, PE-level procurement marketplace, PE firms are able to ensure that items and services are being obtained at the lowest prices possible resulting in enforceable savings. Because portcos retain some procurement autonomy with full approval controls at the portco level, the switch to a PE-led procurement model becomes smoother. Premikati also offers change management solutions to guide each portco’s adoption. Because PE Marketplace sits alongside other technologies—it is a non-integrated solution—portcos can continue to use additional technologies as they see fit.

On the PE side of the equation, PE Marketplace offers the ability to easily remove portfolio companies from the system within minutes if divested. The addition of new portcos takes only a few short days and is based around the company’s current eprocurement solutions.

 

Learn More:

Oct 12
Private Equity

Private Equity Firms Gain Quick Wins With Optimized Sourcing

By Blog No Comments

Sourcing at the private equity level offers maximized savings via leveraged buying power, the ability to standardize processes and best practices, increase spend visibility and analysis capacities, and improve valuation and EBITDA figures. 

Why source everything separately across each individual portfolio company when private equity-level sourcing can increase rate of return, maximize savings, efficientize SOPs, and lead to insightful spend analysis across all organizations? Prior procurement platforms kept power at the portco level, but PE firms have a notable leg up in their sourcing efforts when they can utilize their full, leveraged buying power, resulting in quick, sizable savings. 

Current State of Sourcing Across Portcos

In many PE scenarios, all sourcing is executed at the portfolio company level—there is no PE-level control whatsoever. This caution-to-the-wind approach results in a lot of lost savings and opportunities. Of these PE-firms that do not utilize a more inclusive strategy, there is often mounting pressure to generate good returns, and procurement can be seen as a quick win for savings with sizable long-term potential as well. While some portcos may seek to retain autonomy in procurement, insightful spend analysis figures and a well-planned roadmap can often combine to make a compelling argument for PE-led sourcing. 

Problems With Keeping Sourcing at the Portfolio Company Level

When sourcing is only happening at the portfolio company level, there is a tremendous hit to savings potential as well as a higher likelihood of siloed data practices which open the company to a wide range of risks and other detriments. When portcos retain full autonomy in sourcing, this usually results in:

  • Lack of aggregated spend across portcos
  • Lack of standardization of sourcing processes and best practices
  • Overpayment due to minimized savings and potential discounts. 

In terms of savings lost, this can equate to 9-16% per event. This lack of visibility and reduction in savings is often enough for many PE firms to consider moving sourcing to the PE level, because it can result in fast and impactful ROI. 

Benefits Of Sourcing at The Private Equity Level

How do things change when sourcing moves from the portco level to the private equity level? The magic word of the day is “leveraged buying power.” Sourcing at the PE level offers a major boost attaining the best possible prices from vendors. Partner-led execution of sourcing events ensure maximized savings that hinge upon best practices. 

Through the combination of spend analysis and sourcing at the PE level, private equity firms can immediately increase visibility, reduce compliance risks, boost leveraged buying power to negotiate the best deals, and standardize sourcing processes across the board—all of which add up to notable savings. 

How The Private Marketplace Model Enhances PE-Level Sourcing

To nix the siloed approach to procurement across portcos, PE firms can adopt a private marketplace model as part of a greater e-procurement strategy. With Premikati Marketplace, PEs can take advantage of PE-negotiated contracts and catalogs while utilizing the Private Equity Marketplace underpinned by SAP Ariba. No matter the current state of e-procurement technology within organizations at the start, Premikati Marketplace is a quick-to-deploy, lightweight solution with lighting-fast time to ROI. Plus, it can easily integrate into pre-existing procurement processes for fast adoption—with change management services provided to each portco to ease the transformation. 

This PE-level option offers the ability to quickly turn on or off portcos as they are acquired or sold, retain centralized control with  portco-level authority, and numerous ways to maximize savings across all participating organizations. Using this sourcing approach comes with the additional benefit of deep spend analysis at the PE-level which has been known to boost valuation and EBITDA figures even after only a short duration of use.  

 

Learn More:

Oct 05

Contract Management Software Boosts Quick Wins for Procurement Teams

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Contracts are the heart and soul of procurement operations. Even a few outdated processes can slow down your team and impact supplier relationships. A modern contract management system, however, can eliminate many long-standing painpoints, save time, and even enhance communications with suppliers in ways that may lead to greater trust and better deals. The following are just a few reasons that robust contract management is a big win for your procurement team:

Easily Search Using Keywords

Do you know where all your contracts are? Do you know which suppliers provide which items without having to go on a wild goose chase? A good contract management system helps centralize your contracts in an indexed database so you can easily search for whatever contract information you need, even on the go.

Blaze Through Contract Processes With Templates

Most procurement teams send a lot of very similar contracts that go on to follow very similar processes. Instead of starting over from scratch every time or using makeshift methods (like the “find” function) can result in errors. Contract management based on SAP Ariba enables the use of templates to manage contract cycles that behave alike. By using templates, your team can ensure that all changes relevant to the supplier at hand have been made accurately and consistently across the board, more effectively and efficiently than other, outdated methods. Even if entire contract templates don’t sound suited to your business, SAP Ariba can handle a full clause library so your team can pick and choose as needed.

Templates help ensure agreement terms are in line with your company’s legal advice from the start, speeding up contract creation and completion to unprecedented speeds. This doesn’t mean you’re locked in, though. SAP Ariba-based contract management also allows for non-standard agreements which require closer review. 

Information Dashboards and Notifications

When one of these nonstandard agreements comes through, all relevant parties can receive a notification to review the requested changes. This helps eliminate minor changes that can turn into big risks that might otherwise go unnoticed without a templated system. This helps ensure a healthy start for buyer and supplier alike. 

Other information dashboards can present important info in a quick, digestible, easy-to-under format. Find data on all of your contracts like contract duration, bids, and upcoming important dates.

Alerts for impending contract renewal dates can offer teams enough time to re-evaluate each supplier and research alternatives before the renewal date instead of being blindsided when the renewal date has come and passed. This way, your team can enter negotiations well prepared as well as save everyone time in the process. 

Manage Compliance And Performance

Including managing compliance for nonstandard contracts and mitigating many of the associated risks, a good contract management system can manage both internal and external compliance concerns. Whether compliance from a regulatory body or an internal expectation of performance and quality, SAP Ariba can ensure that the entire procurement process is visible and everyone involved is compliant to all relevant standards so any issues can be dealt with early, not once they’ve already caused a problem.

Esignatures For Better Speed and Accuracy

Pens are a thing of the past for procurement contracts. Esignatures bring a lot of benefits to the table for procurement teams. Not only is it much, much faster for everyone to sign online than to fax or snail-mail back and forth, it’s also safer (in Covid-19 terms and compliance terms!). Esignature software like DocuSign which is the platform of choice for SAP Ariba users walk suppliers through every box that requires a signature or initial to ensure that nothing is missed in the signing process. Esigning software can also send automated reminders to clients to ask them to please sign the contract, saving your procurement team a lot of time, leg-work, and chasing. 

Nurture Supplier Relationships

All of the things combined help you nurture relationships with your clients. Your team will have more time and more energy to truly engage with suppliers to establish trust and rapport—two qualities of a great buyer-supplier relationship that can easily net your team better deals and priority communications. 

See Your Best-Value Suppliers At A Glance 

A proper contract management system is also able to pull all of the above together to show you which of your suppliers are the best value based on the data you have provided. Based on data, good procurement software can let you know which suppliers to focus on in order to make the greatest impact. That may mean deepening partnership opportunities with some suppliers but it may also call attention to low performers so changes can be made as soon as possible. 

If you want to see what we can do for you with our SAP Ariba-backed contract management system, reach out to us today. 

About Premikati

Premikati is a woman-owned business of procurement experts providing best-in-class software to maximize your company’s ROI.  

Our award-winning team has a 100% success rate implementing on-time and on-budget, due to our agility, leanness, operational experience, and the ability to tailor the transformation process from C-level to end user. (For more information, visit www.premikati.com)

Jun 18
outsourcing

All You Need to Know About Impact Sourcing

By Blog No Comments

There isn’t any question that inclusive corporate practices and business shared values have been highlighted in recent years as customers increase their search for companies who induce rich social impact throughout their supply chain and workflows. In fact, contemporary organizations risk falling behind the curve if they don’t adopt impact sourcing in their processes.

For several years, companies looked at deploying “social good” policies as a type of afterthought or even icing on the cake. The main focus was profit. Now, things are changing. Many millennials, and gen Z’ers, actively search for businesses who have long-term strategies around social impact.

Today, embracing and embedding social impact into business processes is no longer an option – it is mandatory. Even prospective employees only want to work for companies that have infused social good practices into their overarching policies.

Not to mention, in an increasingly competitive marketplace, consumers have countless options right at their fingertips. In the end, they will choose to patronize a business with values that align with theirs. Now, let’s talk a bit more about impact sourcing.

What is impact sourcing?

Many industries are in the position to improve their business practices. Impact sourcing simply means employing individuals who come from a disadvantaged background, and providing them with opportunities they might not have otherwise received. 

There are billions of people who just can’t access professional business opportunities because they also don’t have access to higher education. For instance, Africa may have the largest workforce on this planet, but they certainly don’t have enough jobs for their populations. Impact sourcing offers employment to people who live in locations with persistently high rates of unemployment. 

Further, these are people who may live in rural areas, or even slums, and don’t have access to secondary education. So then, as these types of people receive better career opportunities – and higher wages – they can actually go to college and be better able to help their family members who are in need.

Impact sourcing is gaining traction

Led by organizations such as the Rockefeller Foundation and Business for Social Responsibility (BSR), impact sourcing is also proving advantageous for companies who adopt this particular business practice. According to BSR, “Impact sourcing is not philanthropy; it is a business practice that seeks to maximize societal and business outcomes.” There are also some practical applications you can implement within your company. 

  • Focus on the people 

A successful impact sourcing program should not be about the numbers, or even the algorithm, it should be about the people. These are not automated robots, but every employee has unique gifts and talents they can bring to your organization. And, through their tenure with your business, they can spread the benefits throughout their communities. Not to mention, you are accessing a talent pool inundated with motivated individuals. Moreover, you don’t have to change your organization’s values simply because you are hiring in another country or working with a supplier in a disadvantaged area.

  • Business improves through long-term relationships

It always helps to remember that, when it comes to business, the bottom line is still critical. You certainly want to be known as a company who prioritizes social impact. Yet, that shouldn’t be the end all and be all. Your business should still ensure your customers get the quality they’re accustomed to along with the right price and the right customer experience.

Invariably, happy employees are much more productive and they are much more loyal to a company. As a result, they have the potential to become more skilled at their roles which leads to getting a larger amount of work done in less time. The best way to improve happiness and motivation is to offer an opportunity to someone who – under normal circumstances – would not have received such an offer.

Turn your company into a force for good

There is still limited understanding about the various populations – throughout the world – who need more help. In this regard, it takes time and research to determine where your impact sourcing program can make the most impact.

Participate in conversations with people from disadvantaged communities to gain a better understanding of their experiences and challenges. Partner with organizations such as the Global Impact Sourcing Coalition (GISC). Currently, the GISC is challenging its member companies to start hiring at least 100,000 workers before the end of 2020. The GISC also offers toolkits for download which include case studies and best practices. Now, you can design your impact sourcing strategy. 

Next, host job fairs in disadvantaged areas. If your company can’t be there physically, then partner with local organizations. Other ways to help include offering guest lectures, online training, and mentorships. Change people’s lives with training and education.

Remember that disadvantaged communities aren’t only found in developing countries. There are disadvantaged individuals in developed countries, as well. 

Final thought

There is no greater feeling than knowing your company can help disadvantaged individuals out of poverty all around the globe. Impact sourcing can provide some stability in war-torn regions when opportunities for career, education, and training increase. When a person feels secure, they also gain a feeling of peace. Just take a look at the change in formerly war-torn regions of southeastern Europe where many citizens now work remotely for companies all over the world. As the global skills gap continues to grow, it’s time to consider the talent outside of the traditional pools.

 

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