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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. 

Jun 01

Macro Finance and Procurement

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Macro Financial Concerns and Procurement in 2023: Are You Ready? 

The year 2023 has presented itself as a period of financial restraint, as the International Monetary Fund (IMF) echoed. Global growth is forecasted to fall from 3.4 percent in 2022 to 2.8 percent in 2023, and a more pronounced slowdown in advanced economies demonstrates a tightening macro-financial landscape.  

Furthermore, the financial sector is experiencing turmoil due to high inflation and ongoing geopolitical tensions, increasing market instability. Despite central banks raising interest rates, underlying price pressures are still proving stubborn, suggesting a prolonged period of financial strain.

 

The Impact on Procurement 

These macro-financial changes are placing a new level of pressure on procurement departments. In this context, procurement’s role has evolved significantly.  

The Chartered Institute of Procurement and Supply (CIPS) outlined key procurement trends for 2023, emphasizing the need for sustainability, timely payment to suppliers, investment in technology, and talent management. 

Sustainability has become a primary concern, as customers are increasingly sensitive to ‘greenwashing’ and demand more transparency about the environmental impact of their purchases. This trend pushes organizations to ensure sustainable practices in their supply chains and avoid falling foul of regulations. 

The challenging financial environment has led to 36% of businesses extending payment terms for suppliers in the last 12 months. This contributes to a vicious cycle that impacts cash flow and liquidity, emphasizing the need for improved supplier relationships and strategic payment practices. 

Investment in procurement technology solutions is also growing. Companies are seeking more consumer-like, intuitively designed, and agile solutions to improve efficiencies and work with leaner staff. 

Finally, with the predicted economic environment, there’s a new urgency to fostering a company culture and strategic problem-solving to attract and retain talent​3​ 

 

Navigating Economic Uncertainty with SAP Ariba 

As predicted by the IMF, the global economic outlook for 2023 presents a complex landscape characterized by financial sector turmoil, high inflation, geopolitical uncertainties, and the lingering effects of the COVID-19 pandemic. In such an environment, businesses need robust, flexible, and intelligent tools to navigate the choppy waters of global commerce. 

With its comprehensive suite of solutions, SAP Ariba is perfectly positioned to help businesses adapt and thrive in these uncertain times. Its intelligent sourcing tool, for instance, allows companies to identify savings opportunities and assess market dynamics, giving them a competitive edge even in challenging conditions.  

As inflation remains high, the ability to efficiently source and manage direct and indirect goods or services within a single platform becomes a crucial advantage, allowing businesses to reduce their time, effort, and risk associated with sourcing events. 

 

Aligning with Sustainability Trends 

Sustainability is no longer a niche concern; it’s a core business priority. Businesses are increasingly under pressure to demonstrate that their operations and supply chains are sustainable to meet regulatory requirements and appeal to increasingly eco-conscious consumers. 

SAP Ariba’s Supplier Management tool can be a crucial asset. It provides comprehensive tools to help buyers onboard, qualify, segment, and manage supplier performance according to parameters that matter to them. This means businesses can drive spending towards preferred, sustainable suppliers, reduce overall risk, and ensure compliance across their entire supply base. In doing so, companies can turn sustainability from a challenge into an opportunity, bolstering their reputation and gaining a competitive advantage. 

 

Embracing Technology for Greater Efficiency 

SAP Ariba is at the forefront of the trend toward increased investment in procurement technology. Its suite of solutions embodies a consumer-like, intuitively designed, and agile approach that can significantly improve business efficiencies. For example, the SAP Ariba Supply Chain Collaboration tool automates the direct procurement lifecycle, reducing reliance on emails and spreadsheets, shortening cycle times, and increasing productivity. 

SAP Ariba Buying and Invoicing further streamlines the indirect goods and services procurement process. Automating and regulating the management of the entire procurement process helps business leaders eliminate errors and exceptions, manage more spending with less effort, maximize savings and profit margins, and respond flexibly and swiftly to changing demands. 

 

Winning the Talent War 

In the predicted economic environment, fostering a strong company culture and attracting the right talent will become even more essential. SAP Ariba’s user-friendly, intuitive design is crucial in this regard. It makes procurement tasks more engaging and less cumbersome, improving employee satisfaction and retention. 

Furthermore, the Guided Buying feature of SAP Ariba makes the procurement process more intuitive and compliant, making it easier for employees to adhere to procurement policies and procedures. This enhances the effectiveness of procurement teams, freeing them to focus on strategic problem-solving and relationship management, which are crucial skills in the modern, complex business environment. 

In conclusion, SAP Ariba is a powerful tool that can help businesses navigate the challenging economic conditions predicted for 2023, align their operations with key procurement trends, and drive significant efficiency and cost savings. By leveraging its comprehensive suite of solutions, businesses can position themselves to survive and thrive in the uncertain times ahead. 

 

In a time of financial restraint and uncertainty, organizations must leverage tools and strategies to help them navigate these challenges. Armed with solutions like SAP Ariba, procurement departments can play a pivotal role in driving cost savings and efficiencies. The time for organizations to act is now – to survive in the current financial climate and thrive in the years to come. 

 

May 25

Navigating the Supplier Landscape

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Unleashing the Power of SAP Ariba Solutions for Optimized Procurement and Risk Management

 

Supplier management has become a critical aspect of business operations for procurement and supply chain executives in interdependent businesses and complex supply chains.

In fact, according to a report by Ponemon Institute, 53% of organizations have experienced at least one data breach caused by a third party in the past two years. This statistic alone underscores the urgent need for robust supplier lifecycle and risk management.

Fortunately, innovative solutions are available to help professionals navigate this challenging landscape. For instance, SAP Ariba’s Supplier Lifecycle and Performance solution offers various benefits that help streamline supplier management and optimize procurement processes.

Enhancing Supplier Relationships

A strategic procurement process starts with strong supplier relationships. SAP Ariba solutions provide a unified and comprehensive view of supplier information, which helps businesses work effectively with suppliers and withstand disruptions. This increased visibility can drive spend to preferred suppliers, allowing businesses to manage suppliers based on specific parameters and integrate this information with other SAP Ariba solutions.

Maximizing Savings

SAP Ariba’s solutions can also help eliminate savings leakage. With enhanced visibility and control, businesses can ensure employees buy the right products at the right price, allowing negotiated savings to reach the bottom line.

Simplifying Risk Management

Understanding supplier risk is essential in today’s complex business landscape. 2021 data breaches increased by 17% from the previous year, and it’s predicted that supply chain attacks would quadruple in 2021 over the number of 2020 attacks. SAP Ariba’s Supplier Risk solution simplifies supplier risk management by providing actionable insight into high-risk suppliers and focused risk alerts.

Gaining Deeper Insight

With SAP Ariba Supplier Risk, businesses can act fast with insight into the location of at-risk suppliers, the problems they may face, and the orders and shipments impacted by risk. This solution also allows for intelligent control assessments based on suppliers’ inherent risk, enabling businesses to identify suppliers of greatest concern.

Driving Compliance with Embedded Risk Management

Embedding risk management in the procurement process can significantly improve compliance. SAP Ariba Supplier Risk helps reduce the assessment cycle time from months to weeks, improving compliance through third-party risk assessments for each supplier engagement.

Delivering Business, Environmental, and Social Impact

Businesses today are increasingly held accountable for their operations’ social and environmental impact. With SAP Ariba Supplier Risk, companies can find the causes of risk to enable compliance controls that make a difference and provide responsible plans for supplier selection, onboarding, and contracting.

Proactively Mitigating Risks

SAP Ariba Supplier Risk enables businesses to generate and execute issue management and action plans to mitigate risks proactively. This solution also connects to the source-to-pay process to improve compliance.

Receiving Personalized Risk Alerts

The SAP Ariba Supplier Risk solution automatically tracks more than 200 risk incidents, helping businesses proactively monitor financial, operational, environmental, social, regulatory, and legal risks.

In an era where 65% of businesses find it hard to manage cybersecurity risks associated with third parties and 74% believe that third-party vendor selection overlooks potential key risks, SAP Ariba Supplier Risk removes the challenge from supplier risk management. It empowers businesses to work with suppliers that can keep business moving with less risk, monitoring aspects of supplier lifecycle management that may not have been considered before.

The Future of Supplier Management

As businesses continue to evolve, so does the complexity of their supplier networks. An estimated 60% of organizations work with over 1,000 third parties, which is growing as business systems become more complex. Additionally, 71% of businesses expect to become more reliant on third parties in the next two years.

Given these trends, it’s clear that effective supplier lifecycle and risk management are more critical than ever. Advanced solutions like SAP Ariba’s Supplier Lifecycle and Performance and Supplier Risk solutions can help businesses navigate this increasingly complex landscape, enabling them to make better buying decisions, maximize savings, scale compliance, simplify risk management, and more.

With robust supplier management solutions, businesses can turn procurement and supplier management from a challenging task into a strategic advantage. By harnessing the power of SAP Ariba solutions, businesses can mitigate risks and unlock opportunities for growth and innovation. It’s time to reshape the procurement landscape and transform how we manage supplier relationships.

 

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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.

Apr 03

Contract Trends in 2023

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Contract management is a critical aspect of any organization’s operations, and it’s especially important for executives who are responsible for managing the financial health of their organizations. Effective contract management can help you mitigate risk, increase revenue, and reduce costs, but it can also be a complex and time-consuming process. In this post, we’ll explore the top five pain points that businesses like yours face with regard to contract management, and we’ll provide some best-in-class solutions to help address these challenges. 

 

Lack of visibility into contract terms and obligations 

 

One of the biggest challenges with regard to contract management is the lack of visibility into contract terms and obligations. This can result in missed opportunities to save money, increase revenue, or mitigate risk.

Best-in-class solutions for this challenge include contract lifecycle management (CLM) software that centralizes all contracts in a single repository and provides advanced search and reporting capabilities. With CLM software, you and your team can easily access all contract data, including key terms, obligations, and milestones, and they can quickly generate reports to help them make informed decisions. 

According to a report by the International Association for Contract and Commercial Management (IACCM), companies implementing CLM software can reduce contract cycle times by 50% and increase compliance by 80%. 

 

Inefficient contract creation and negotiation processes 

 

Creating and negotiating contracts can be a time-consuming and inefficient process, especially when done manually.

Best-in-class solutions for this challenge include contract authoring software that streamlines the contract creation process and automates workflows – which can easily help you create contracts using pre-approved templates and standardized language, and automate workflows to ensure that contracts are reviewed and approved in a timely manner. 

 A study by Aberdeen Group found that companies that use contract authoring software can reduce contract cycle times by 50% and increase contract accuracy by 90%. 

 

Poor contract management workflow and process 

 

Inefficient workflows and processes for managing contracts can lead to delays, missed deadlines, and increased risk. CLM software can easily manage contract workflows and approvals, as well as receive automated alerts for key contract milestones and renewal dates. 

According to a report by the IACCM, companies that implement CLM software can reduce cycle times by up to 50%, increase compliance by up to 80%, and reduce legal costs by up to 30%. 

 

Poor contract compliance and governance

 

According to a study by Forrester, companies that use CLM software can reduce legal costs by up to 30% and increase compliance by up to 70%. 

While contract compliance and governance can be a complex and time-consuming process. Best-in-class solutions for this challenge include CLM software that provides automated compliance and governance workflows, as well as real-time alerts for non-compliant activities. 

 

Limited scalability and flexibility 

 

Scalability is a concern for any growing business.  Solutions like SAP Ariba CLM or ICertis CLM software provide scalability and flexibility, as well as customizable workflows and integrations with other business systems. These will ensure your contract management processes can adapt to changing needs, reducing risk and increasing efficiency. 

 

To learn more about:

Contract management and its impact on procurement click here. 

Complex contract management solutions click here.

 

Mar 27

Best Practices to Master Buying and Invoicing

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CFOs and CPOs face numerous challenges when managing to buy and invoicing processes within their organizations. Efficient financial management is crucial to maintain a healthy cash flow, reducing risk, and making data-driven decisions. In this blog post, we’ll explore the top ten pain points related to buying and invoicing from a financial perspective, along with best-in-class solutions and supporting statistics.

 

Manual Invoice Processing

One of the most time-consuming and error-prone aspects of financial management is manual invoice processing. Automating this process with AI-based tools can significantly reduce the time spent on processing invoices and improve accuracy. According to the Institute of Finance and Management (IOFM), organizations that have automated invoice processing report a 60-80% reduction in invoice processing time.

 

Inaccurate Financial Data and Reporting

Access to accurate, real-time financial data is essential for making informed decisions. Implementing real-time data analytics and reporting tools can help CFOs and CPOs to achieve greater insights and improve decision-making. Companies that use real-time analytics experience a 54% improvement in decision-making speed, according to the Aberdeen Group.

 

Fraud and Compliance Risks

Fraud and compliance risks can have severe financial and reputational consequences for organizations. Enhancing internal controls with fraud detection and compliance management systems can help mitigate these risks. The Association of Certified Fraud Examiners (ACFE) reports that companies with strong anti-fraud controls can reduce fraud losses by up to 50%.

 

Decentralized Procurement and Purchasing Processes

A decentralized procurement process can lead to inefficiencies, lack of visibility, and increased costs. Centralizing procurement with a comprehensive, cloud-based procurement platform can streamline operations and reduce expenses. The Hackett Group found that centralized procurement can reduce procurement costs by up to 20%.

 

Inefficient Vendor Management

Managing vendors effectively is crucial for maintaining strong relationships and ensuring optimal performance. Implementing a vendor management system with automated vendor onboarding and performance tracking can improve the efficiency of this process. Deloitte reports that companies with efficient vendor management experience 26% faster vendor onboarding times.

 

Lack of Spend Visibility

Gaining granular, real-time insights into spending is essential for cost control and strategic decision-making. Utilizing spend analytics tools can provide CFOs and CPOs with the visibility they need to make informed decisions. Gartner states that organizations that leverage spending analytics can achieve up to 15% cost savings.

 

High Invoice Error Rates

Invoice errors can lead to payment delays, strained relationships with suppliers, and increased costs. Adopting a smart invoicing system with built-in error detection and prevention can reduce invoice error rates significantly. Ardent Partners found that companies using smart invoicing systems can reduce invoice error rates by up to 37%.

 

Slow Approval Workflows

Lengthy approval workflows can delay payments and hinder cash flow management. Streamlining approval workflows with automated routing and escalation features can expedite the process. PayStream Advisors report that organizations that automate their approval workflows experience a 45% reduction in approval cycle times.

 

Difficulty Managing Cash Flow and Working Capital

Effective cash flow management and forecasting are vital for maintaining financial stability. Implementing cash flow management and forecasting tools with real-time visibility can improve accuracy and decision-making. PwC found that companies that use cash flow management tools can improve cash flow forecasting accuracy by up to 36%.

 

Ineffective Budgeting and Cost Control

Budgeting and cost control are integral to financial success. Adopting an integrated budget management system with real-time tracking and reporting can streamline these processes and provide better insights. The Financial Executives Research Foundation (FERF) reports that organizations that implement integrated budget management systems experience a 33% reduction in budgeting cycle times.

 

By addressing these pain points with best-in-class solutions, CFOs and CPOs can significantly improve their organizations’ financial performance, reduce risk, and enhance decision-making capabilities. These improvements will ultimately lead to a more efficient and effective buying and invoicing process, allowing organizations to thrive in a competitive business environment.

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Feb 16

Five Ways to Ensure your Sourcing Strategy Never Disrupts the Supply Chain

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Because sourcing is at the heart of any procurement strategy, it is critical to the success of your supply chain.

Poor sourcing strategies have a negative impact on the supply chain such as  downtime, low inventory, and a lack of supply chain transparency.

Here are five things you can do to protect your supply chain from disruptions:

1. Assemble the Right Team

It goes without saying that your supply chain requires people to function. More importantly, it requires the right people.

Consider the following when assembling your sourcing team; such as the ability to quickly learn, analyze large amounts of data, build long-term relationships, communicate, and negotiate.

2. Provide the Right Tools

In today’s supply chain climate, your productivity depends on the tools you make available to your team and the tools and solutions they have at hand can make all the difference.

With emerging technologies across the globe, the supply chain has never had the potential to be more efficient. 

A great example of a sourcing solution is SAP Ariba’s Sourcing tool.

3. Have a Solid Sourcing Strategy

Your sourcing strategy is used to find the most effective, efficient, and reasonably priced solution to your supply chain needs.

So, how do you identify the right product or supplier?

Here are some tips:

  • Understand the market trends. 
  • Always pick quality and time over price. 
  • Build relationships with several vendors in the market. 
  • Have clear expectations or targets. 

4. Have Multiple Vendors for Each Product Supplied

Building long-term relationships with your vendors or suppliers is extremely beneficial to the supply chain. However, if the pandemic taught us anything, it’s the importance of having backup plans.

Supply chains are more flexible, visible, and resilient than ever before. Despite this, there is still an element of uncertainty surrounding supply chains.

To be better protected, it is critical to work with more than one supplier. A great place to start is the Ariba network where over you can connect with over 40 million suppliers and growing!

5. Constantly Review Suppliers

A supplier review provides insight into the supplier’s performance.

Constantly reviewing a supplier ensures that potential disruptors are identified as soon as possible; giving you the opportunity to prevent them from causing harm to the supply chain.

To get the most out of your supplier’s performance, make a list of performance indicators. Quality, service, delivery rate, damages, compliance, innovative ideas, and cost are some examples.

Summary

Disruptions in the supply chain are undesirable. It’s not just that they cost the company time and resources, though those are significant. The unfavorability stems from the impact on the company’s customers.

What are some common disruptions in your supply chain?

One of your primary responsibilities as a supply chain or sourcing manager is to prevent disruptions. Particularly artificial disruptions. One of the most effective approaches is to develop an effective sourcing strategy.

For your procurement solutions and services, click here at www.premikati.com

Jul 12

Contract Cubes for Private Equity

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Contract Cubes For Private Equity Firms

 

Contract Cubes Offer Powerful Advantages For Private Equity Firms

Successful private equity firms know that time is something you want to have on your side. When you’re looking at supplier contracts across multiple portfolio companies, then all of your procurement and contract management habits—whether time efficient or not—become greatly magnified.

PE firms that are able to compound on good contract management skills (and good software) have a massive competitive advantage over private equity firms that are still stuck in data siloes, spreadsheets, or, worse, completely analog procurement records.
SAP’s “contract cubes” are a game changer for data-centric PE firms because of their straightforward approach to accessing contract data near-instantaneously. Here are just a few of the powerful features of contract cubes that PEs can harness to supercharge the combined power of procurement across all of their portfolio companies: 

Use Keywords To Make Better Choices Spanning Your Entire Portfolio

Even disparate portfolio companies often have areas in which they can join forces to negotiate better deals with suppliers or, in some ideal scenarios, offer sourcing amongst themselves. It becomes exponentially easier to get discounts for quantity by combining orders or to find hidden gems amongst suppliers if your database of contracts is centralized and readily searchable. Find the things portcos are buying separately through a simple search and then turn that data into cost savings or even revenue generation while other firms are still flipping through file cabinets. 

Get All of The Numbers On The Table

Data transparency and visibility go a long way toward making better choices in both the short and long term. It’s impossible to capitalize on things that you don’t know are happening. With contract cube functions, you can get all of the numbers you need via simple commands. That can include time left until contract renewals, numbers of orders, financial ratios and other history and stats which can be transformed into even greater savings, revenue gen, and better supplier relationships.

The ability to know who your best-value suppliers are is priceless. Contract cubes can help you determine this based on your own metrics of value (and across a variety of metrics). Prioritize these suppliers during contract renewals, bring them additional business, set up data sharing, and make generally better choices that are data-led. 

Additionally, use data easily pulled via contract cubes to gain insight into long-term financial trends, even as portcos come and go, so you have a big-picture view that can lead big vision (and big money) moves while competitors are still taking a myopic and segregated approach to procurement, leaving you with a clear advantage. 

Handling procurement for a private equity firm is among the most difficult scenarios for even the most seasoned procurement expert who has been working with individual companies. That’s why we at Premikati offer BPO with managed services in procurement catering expressly to private equity firms. We understand how to navigate the complexities of cross-portfolio sourcing and we have the tools and expertise to fully manage this process to the great advantage of the firms who choose to outsource to us. Our specialized knowledge and toolsets bring value to the table that would go entirely unrealized by teams with less pointed expertise.

Reach out to us today to see how we can help you advance your procurement strategy.

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Jun 13

Managed Services for Private Equity

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Sourcing Via Managed Services In Procurement Is A Game Changer For Private Equity Firms

Managed services providers (MSPs) bring with them a suite of finely-tuned skillsets, knowledge, and tools to the companies they serve. In an arena such as procurement, this can mean massive savings and opportunities to scale that are not readily realized using non-specialist teams and archaic, clumsy processes that allow for valuable data to slip through the cracks.

Many PE firms are now taking a closer look at existing supply contracts—on valuation, it is clear the direct link that exists between exceptional procurement capabilities and competitive advantage. 

Aided by seasoned experts, the procurement process in private equity firms can move away from limiting goals like capturing low-hanging opportunities in favor of more strategic and impactful approaches to value creation so that rapid sizing and added risk mitigation and transparency, the impacts of which will clearly converge on the bottom line.

These are some of the major benefits to managed services in procurement for private equity firms:

Sophisticated Procurement Functions Provide An Edge Over Clunky, Outdated Approaches

Procurement has matured from cost-reduction into value creation.

Procurement has been on oft-overlooked space that’s brimming with value potential. In order to get ahead, companies must leave behind old ideas about ruthlessly slashing costs and simple cost-saving actions like asking suppliers for deals. Rather, today’s procurement—when handled well, ideally via experts from an MSP—is more transformative and comprehensive.

Procurement today involves advanced spend analytics, process automations, predictive technology such as machine learning for demand planning, and a host of other intensive processes that were once reserved for Fortune 500 companies. Now, PE firms can use advanced technology and expertise to look beyond easy wins into all categories of spend to extract value that is far and beyond what could otherwise be achieved. 

Sustainable, Scalable Approach

Utilizing more sophisticated procurement strategies results in a more sustainable, scalable approach. With supply shortages hitting many industries, sustainability is a concern for all companies both in terms of classic factors like environmental sustainability, but also sustainability among suppliers. Will companies be able to get the goods they need when they need them? Is there too much reliance on one or two suppliers? 

Similarly, if a company achieves unprecedented growth, will current suppliers be able to scale accordingly or will they prove to be a bottleneck? 

Managed procurement services help PE firms navigate these types of questions—plus, they are able to see portfolios as a whole unit to achieve even deeper (and verifiable) scalability and sustainability than looking at each portfolio company’s supply strategy from within a vacuum. 

Risk Mitigation

To step back a moment to the question of whether or not a company relies too much on a small pool of suppliers for some critical product, it’s much easier to spot these sorts of risks while doing the deeper work provided by MSPs in procurement than it would be using a more scattered approach which can leave considerable risks entirely unknown.

Private equity firms are latching on to the value that mitigating supply risks provides over simply cutting costs. MSPs are also more likely to see ways to mitigate risk from amongst portfolio companies before having to turn externally.

Digitization, Transparency, and Value Optimization

Digitization is a major driver in the managed procurement renaissance. Technologies once reserved for only topmost companies are now readily available at SMB sizes. Digital systems that are nimble, agile, and simple to implement while retaining robust, enterprise-grade features—systems that come par for the course with a good MSP in procurement—are a staple of effective procurement strategies within private equity firms.

Using digital tools, managed services providers are able to aggregate data from all sources both within individual portfolio companies and across the entire portfolio and then clean and categorize this data to create a single source of truth that is free from the confines of data silos.

Then, using advanced spend analytics, machine learning, demand planning, and similar techniques, MSPs can quickly capture value for private equity firms. Electronic sourcing in particular is one arena of procurement that offers considerable benefits in terms of saving time and money.

Having the combination of transparent data and digital tools leads to value optimization that goes far deeper than what procurement pros could have expected to achieve in times past. 

Cross-Portfolio Collaboration

All of the benefits listed above become magnified multi-fold when considered from a cross-portfolio collaboration perspective. MSPs in procurement are more readily able to take on the task of cross-portfolio procurement strategies which can be among the most complex sourcing work a firm ever encounters.

MSPs can consolidate spend, look for strategic cross-portfolio opportunities to either supply each other or collaborate on sourcing and achieve economies of scale which can be achieved only through transparent data and accurate spend analytics. This collaborative approach offers unique challenges but can work to mitigate risk as well as spur exponential growth among symbiotic portfolio companies. 

Long-Game View

Rather than get bogged down in the details of any one new portfolio company, MSPs in procurement are able to help capture value in the long game by surfacing longer-term overall spend trends and executing long-term procurement strategies that can span multiple years and multiple portfolio companies. 

Managed services in procurement today is much more than outsourcing. It isn’t a replacement so much as an expansion of your team, working closely alongside the firm to understand, prioritize, and execute the most suitable strategies capture value, capture opportunity, and support rapid sizing with reduced risks, increased transparency, and far, far fewer headaches. 

See what Premikati’s managed services in procurement can do for your private equity firm. We will help you quickly see ROI through our white-glove expert team of procurement pros, advanced and agile toolsets, as well as a state-of-the-art (but simple to use!) procure-to-pay marketplace with bespoke options to onboard current favorite suppliers that are already adding value to your portfolio.

Reach out to us today to see how we can help you advance your procurement strategy.

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