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Oct 12
PE Analytics

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

By Private Equity No Comments

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.  

 

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Oct 12
Private Equity

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

By Private Equity No Comments

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 Private Equity 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.  

 

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Oct 05

Contract Management Software Boosts Quick Wins for Procurement Teams

By Procurement No Comments

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 Procurement 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.

 

May 05
Ariba Snap procurement

Procurement Lessons in the Midst of a Pandemic

By Procurement No Comments

As the COVID-19 pandemic spread throughout the world, supply chains and procurement saw their traditional modeling around price negotiations, contract compliance, and cost control become overwhelmed with unprecedented challenges. Through this time, Premikati has learned that managing risk is paramount.

Suddenly, supply chains and procurement have been disrupted in ways we have not seen in our lifetimes. Many large and small entities had to immediately reconfigure their manufacturing, and procurement, to producing, distributing, and meeting the most essential healthcare supplies and foods to ensure populations are safe and healthy.

All of these actions required identifying new suppliers, vetting them, and ensuring enough liquidity to purchase necessary goods at scale. Further, unused inventory needed to be addressed as well.

Invariably, experts from every field prognosticate on how COVID-19 has changed our lives – and our economies – forever. The many blanket, and even extreme, disruptions to our work lives only serves to convey that we are still all playing a role in this huge experiment where technology has led the transition from traditional office environments to remote working and virtual happy hours. Is the future here, right now?

At Premikati, we don’t have any exact predictions around how this pandemic will impact procurement processes over the long term. What we do see is an opportunity to determine how digitization and new platforms can help companies gain a competitive edge once we reach the other side – and, we will.

Naturally, we all hope the pandemic will end soon and life will return to normal – as it has in previous disaster scenarios. Yet, it appears that many facets of our economy will never return to the pre-pandemic version of normal.

At this point, technology can help solve many of the issues which the pandemic has brought to the forefront. It’s time to change the mindset and work in a more collaborative and strategic way.

History in the making

For the first time in modern procurement, and supply chain history, a pandemic created a global impact on supply, demand, and the available workforce simultaneously. In order to revive the supply chain, and get things back to efficient processes, we view automation as a critical aspect.

In light of the global cracks in the supply chain, automation can help to increase productivity at home and with alternative suppliers who are located much closer to the communities they serve. In fact, with automation, many processes can be successfully executed domestically while creating new job opportunities for tech-savvy employees.

We also consider how important data will be not just now, but for the future of work. For procurement, greater connectivity demands an acceleration in digitization across the board and a utilization of collaboration tools, industrial IoT, and AI-driven insights to improve agility, capacity, predictability, and availability.

What does the future hold for procurement?

At Premikati, we truly believe that companies who invest in strategic technologies will come out of these perilous times with a competitive and profitable edge. Not to mention, your in-house team can ultimately become much more productive.

The COVID-19 pandemic has been a wake-up call for procurement in terms of addressing supply chain risk and business continuity. Perhaps it’s time for full-scale deployment of connected intelligence.

Yet, sourcing is just one side of the issue. Companies should also understand the supplier side. When you can comprehend the issues affecting your suppliers, then you can more efficiently ward off potential issues in the future. Some of the most critical components for the supplier side include:

  • Tier 1 supplier risk
  • Ensuring an alternative supply network
  • Efficient workforce planning
  • Bolstering the supply chain
  • Improved planning
  • Business continuity amidst plant closures
  • Production flexibility
  • Capacity security
  • Global planning

Think about your non-negotiables: Customers, employees, products, services, lines of business, and more. Which of these are the most critical for business preservation?

Without adequate plans in place, many businesses went towards overadjusting where they would increase inventory across the board – just as consumers were doing the same hoarding toilet tissue, masks, disinfectants, canned goods, soaps, and hand sanitizers. Nonetheless, overadjusting can come with consequences such as excessive inventory during a time when consumers have cut back on spending.

Disruptions have occurred upstream and downstream. The most successful companies will work on improving visibility, agility, and responsiveness using strategic analytics. As a result, you can determine how you can mitigate the risks and begin recovery quickly.

At Premikati, we realize that every company is at a different stage in terms of dealing with the impacts of the pandemic. Not to mention, problems can vary depending on region. We want to offer guidance on where to find opportunities in the midst of unprecedented challenges. Quick action is essential right now.

Premikati can help your organization control the narrative and the outcome, complete with a thriving environment. Working through this crisis, we are prepared with new business models created to define the future of work in procurement and for supply chains.

Final thought

The organizations with the highest likelihood of weathering this storm are those who have achieved the optimal balance between short-and-long-term strategies. During a crisis, the most common mindset is the short-term one. On the other hand, being forced to operate differently has helped many businesses see what they can do and also, what they need to do.

More than just adapting to the current environment, become a market shaper and take part in the reinvention.

Premikati hopes that by sharing what we’ve learned about this pandemic, that we can help strengthen your procurement processes. Our solutions are focused on accelerated efficiency, resiliency, mitigation, scalability, and flexibility. We are all facing this together, so let’s collaborate.

Apr 21
Virtual workforce

How To Thrive While Transitioning To A Virtual Workforce

By Procurement No Comments

How To Thrive While Transitioning To A Virtual Workforce

Summary: Many people are working from home during the coronavirus pandemic. New remote workers and businesses can help foster success by generating routine, utilizing calendar sharing, having video meetings, setting clear expectations, developing time management skills, and continuing to learn. 

 

As of 2017, 43% of employees worked remotely with some frequency. In 2020, with the COVID-19 pandemic shuttering many brick-and-mortar office places, agile companies are quickly pivoting employees to remote work. Telecommuting is a great benefit in the age of social distances, but it comes with its own challenges. Especially companies and their employees who are new to telework will likely experience growing pains, but there are steps you can take to ease the transition and ensure your virtual workforce is able to thrive. 

New Normal, New Habits 

Working from home is a major transition for employees who have spent their entire working lives in an office space. While offices offer a sort of comforting familiarity, a steady set of expectations, and a familiar environment while home may be full of energetic children, stir-crazy pets, and plenty of chores and hobbies alike to do. 

The best thing for companies who are new to this form of work is to understand that is a transition and that it can take an adjustment period for workers to find their focus, their flow, and their new normal. During this period, be lenient, expect some technical complications, and have patience while new systems for collaborating and working are developed and tested among workers who are unfamiliar. 

You can ease the transition by creating a form of routine, just as employees had at the office. This could be a recurring meeting, a consistent sign-on, sign-off, or lunch time, or anything else that offers stability in this time of stark change. 

Similarly, equip teams with a calendar sharing application such as Google Calendar. When teams can collaborate and understand where time is used and how their efforts fit into a bigger picture that they all are working toward, the stress and isolation of working from home can transform into great freedom for productivity and collaboration. 

Set Expectations

When life is in a deep state of flux, employees can feel overwhelmed with a bombardment of decisions and uncertainty. Guide employees through work changes by offering clear expectations. This may mean specific output quotas, work hours, required meetings, or anything else that is a high priority for your business. 

Don’t set expectations too high or add requirements for their own sake. While structure is important, offering employees some freedom to feel into their new roles and schedules can help ease stress too, boost loyalty, and benefit your company’s culture on a broader scale. 

Communicate Differently

When workers can’t meet face to face, utilize technology to boost presence, connection, and accountability. Instant messenger and chat applications, such as Slack, help employees have real time conversations throughout the day. You can even set up a “watercooler” chat segment where employees can talk about anything to keep connection and camaraderie high. 

For meetings, use a video software such as Zoom in order to help replicate the rapport that comes with in-office meetings. Even a once-a-month meeting on a video can go a long way for morale and accountability. 

It’s important to find new, effective methods of communication with clients and buyers as well. For example, we at Premikati use remote demos to help engage potential clients. Because we are doing this from afar, we pay special attention to asking meaningful questions and really engage with our clients on a deeper level. 

Use Your Time Wisely 

Many new remote works feel like they simultaneously have more and less time than they once did. There’s no more commute time, tedious morning primping, prepping meals ahead, or other tasks that come with office work, but they may feel like work starts expanding into their personal life or struggle with focus during the day due to distractions. 

Time management is a make-or-break factor for virtual workforces. Set expectations surrounding schedules to help prevent worker burnout and the “always-on” mentality. Have focus sprints. Have patience with coworkers who may not always be available. 

Similarly, many job functions can’t be fully performed from home. If you or any of your employees are “benched” during the pandemic, look for other ways to contribute. Could they update documentation? Spend time brainstorming resolutions to industry problems? Furthermore, could they continue their education in order to make deeper contributions after the crisis? Do what you can do, and encourage your employees to do the same, but be mindful as well to not get caught up in busywork. 

Never Stop Learning

Continued education is always important to pursue, but now is a prime opportunity for many employees to pursue an expansion of their skills. Many courses are free during the coronavirus crisis, so time availability, a desire to learn, and an idea about what’s important to know are all you need to bolster yourself and your employees for the future. 

As the new normal for work continues to  change, keep learning what systems work for you and your employees, and don’t be afraid to try new things to make life, and work, a little bit easier and more connective. 

What has your business done to adjust and thrive during the transition to virtual work?  Reach out to us and let us know!

 

Apr 13
Streamline procurement

How to Streamline your Procurement Processes During a Pandemic

By Procurement No Comments

Procurement Processes and a Pandemic

 

Within our modern era of globalization, and inter-woven supply chains, the coronavirus pandemic is presenting an unforeseen set of challenges to address. The state of multi-factory and multi-country manufacturing is now teetering on shaky ground. If COVID-19, and the economic downturn, isn’t effectively mitigated soon, the supply of various items from cars to clothing to electronics and even oranges will falter.

With the breaking down of the global supply chains, many are calling for returning critical production of medical and tech supplies to the United States. Perhaps, another option is to increase the redundancy of supply chains by further diversifying suppliers and inventory moving forward. As a result, any future obstacles can be more easily managed.

With increased demand for specific items such as soap, hand sanitizer, face masks, ventilators, cleaning products, and more – retailers have done their best to serve their communities while drastically transforming how they run their stores and protect the health of their employees and customers alike. In many communities, the pandemic has already negatively impacted the economy and sources of income.

In these times, businesses are going above and beyond to manage their supply chains effectively and ensuring consumers have access to the goods they need. Yet, we have all seen the deluge of images conveying barren store shelves and out-of-stock items. Right now, it’s time to address the short-term fallout from the current health crisis. In this article, we will focus on steps you can take towards minimizing the challenges associated with COVID-19.

How COVID-19 May Affect your Supply Chain

Since this is a novel pandemic, there isn’t an exact method for determining how the coronavirus may impact supply chains but you could experience instances of the following?

  • Materials: Shortages of supplies or materials from deeply-impacted locations.
  • Workforce may face fluctuations due to illness, fear and/or quarantine.
  • Travel, and shipping, may be limited due to newly-placed restrictions and decrease in demand for flights.
  • Established logistics, and networks, may be upended due to capacity shortages and even labor shortages.
  • Consumers are transitioning to online shopping en masse, for a larger percentage of their purchases, and this may be the existing reality moving into the future.

Now is the Time to Secure Demand

As network-wide stockouts increase for certain types of non discretionary goods, it’s critical to strengthen your relationships with co-manufacturers, consumer-packaged-goods (CPG) makers, and distributors. For the most in-demand products, you should hold daily conferences with suppliers to ensure comprehensive supply.

One way you can secure your supply is by limiting variety, for now, then increasing the quantities. In addition, it can help to be more flexible with your delivery windows and even your payment terms. Then redirect your employees and capital to the essential categories during this pandemic. Right now, it is very important to foster an environment of open communication with your partners.

If you are dealing with decreased demand and excess inventory of non discretionary goods, then perhaps you can sell to your distribution partners and also start working with suppliers who have adequate cash reserves.

Living in an unprecedented scenario requires long-term planning, as well. If you supply non discretionary goods then perhaps it might be time to shift focus and resources to 2021. Review your buys for next year, and revise the variety based on expectations of demand even after the pandemic is mitigated. Many of the changes the world has recently made will be long lasting.

Plan Quickly

Now that we are going through this crisis, it’s important to focus on how you can improve your supply chain to become more agile and responsive in the next crisis. Conduct a simulation test and develop a strategic response with action plans. There is no time like the present to create a network of alternative sources.

Being better prepared than the competition might even open new opportunities when the next disruption comes around. When the next disruption arrives, you want to be better prepared than your competitors. Figure out how to diversify concentrated supply chains with high value, and find alternate routes and sources.

Prioritize Flexibility

If you want to limit any future disruptions, then your procurement processes must be more agile than ever. Surges in demand are cobbling excess capacity of specific non discretionary product demands. In fact, freight costs and trucking demand have skyrocketed. Not to mention, shipping rates have gone up. Now that you have experience with this level of disruption, what can you learn from it and how would you prefer to handle a similar disruption in the future?

It will take creativity to ensure you have the capacity to consistently stock your store shelves with the essentials. And, it will take a larger portion of your financial resources. One way to limit expenditures is by having suppliers ship directly to stores, as opposed to distribution centers. Next, you could decrease packaging and assortment complexity so that suppliers send same-SKU shipments to dedicated hub stores.

Product variety is less of a concern, consumers just want to ensure they have supplies of important products. So then, packaging and assortment simplification can help to improve shipping speeds.

Fix the Gaps

When extraordinary measures are needed, then more resources are concentrated on expediting shipments. But, if your company is prepared for a major disruption, will you have to pay premiums to secure adequate supplies or raw materials?

From a future-proofing perspective, what gaps are slowing you down and how can you fix them with the right people, processes, tools, and data? How can you align your procurement and business objectives to protect your organization from crisis events in the future? Think of how customer spending, and demand, will be affected in various crisis scenarios. Make time to prioritize research to get a comprehensive picture.

What are the Financial Implications?

You want to ensure your inventory is located logistically, strategically, and within easy reach. Moreover, it should not be located in areas that are heavily impacted. Then, work with your HR and legal team to determine any financial impacts for not providing reliable supplies to customers and how to guide your team members correctly.

In Conclusion

Once we get to the other side of the COVID-19 pandemic, businesses will quickly fall into two categories: Those who have learned from the crisis and used those lessons to improve their procurement processes and those who like to gamble with their survival by not doing anything and hoping something like this will never come around again. Reviewing your supply networks, and making the right investments now, can ensure you don’t have to feel blindsided by the next crisis.

 

 

Mar 10
BPO for SMB

Procurement Managed Services for SMBs

By Procurement No Comments

SMBs Can Leverage Managed Services 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 Managed Services 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 Managed Service 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 Manage Service 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 Manage Services, companies that outsource procurement can often gain competitive advantages by leveraging the expertise of their Manage Services 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 Manage Services, 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 Manage Services 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®Manage Services 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 Manage Services, please get in touch with our team.

Mar 03
spend sieves

Eliminate Spend Sieves

By Procurement No Comments

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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