Anyone who has taken a look into the world of procurement metrics recently has seen the same thing year after year. Seemingly unaffected by financial woes, the number one metric that is used to measure procurement has stayed the same: spend under management. Although I understand why it is important, the fuzziness of spend under management actually makes the metric stumble on its own merit. This is because while spend may be crystal clear and easily …
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Procurement Transformation Blog | Capgemini
Reverse Factoring – Innovative Financing to Strengthen Supplier Relations
The cooperation between procurement and finance can go beyond joint initiatives within the organization. In today’s network, economy parties must see beyond the borders of their own organization to discover opportunities to increase their competitive edge. Reverse factoring (RF) offers new possibilities for this. This fits into a broader trend of competition, shifting from individual organizations to chains of organizations. Smart competition in the supply chain will become a necessity to survive in the …
Are you in control of volatile commodity price fluctuations?
The recent global financial crisis displayed it once again: markets are becoming more and more turbulent and volatile. Commodity prices show more erratic behavior and are being driven to extremes on a regular basis. This wild price volatility is caused by: Scarcity of natural resources – e.g. rapidly changing prices for energy, food, copper and several other raw materials Shorter product life cycles – e.g. phones, laptops Uncertain global economic climate – e.g. current developments …
The “Seven Strategies for Future Procurement”
As we plan for 2012, we take time to look back upon the achievements of procurement organizations in 2011. Again, as in previous years, the Capgemini CPO survey reveals that procurement organizations have fallen short of achieving many of their development goals. Due to the challenging economic conditions of 2011, many CPO’s have reverted to the “old school of procurement”: savings through squeezing suppliers, contract renegotiations, “until death do us part”. We feel this trend …
Unlocking Value By Obtaining Insight In Spend
The Procurement and Finance & Control disciplines are highly interwoven. For instance both disciplines get their management information from the same source: invoice lines and financial obligations. However, the drivers for using this source differ. To prevent both disciplines from ‘poisoning the well’ it is important to speak the same language and understand each other’s motives. The following article discusses how to overcome the challenges within spend data management and realize sustainable savings, a common …
The Next 5 In Procurement
Each year IBM presents its “Next 5 in 5”, a list of innovations with the potential to change the way people work, live and play over the next five years. Traditionally the turn of the year is a period of “lists”, a retrospective of the developments of the last year or trends for the year ahead. Let me have a shot at it too: The Next 5 in Procurement. Supply Chain Risk Management The most …
Supplier InfoNet Takes Supply Chain Risk Management To The Next Level
Despite the focus on innovation, true ground breaking innovations are rare. With Supplier InfoNet, SAP seems poised to shake supply chain management to its foundation. I recently had the opportunity to see a demo of Supplier InfoNet and speak to Vineet Seth, Vice President Product Management & Marketing at Global Business Incubator in Palo Alto, California. In 2008 SAP set up a new organization to better capitalize on new market opportunities and decisively respond to competitive …
Cost of Capital as Leverage for Effective Supplier Payment Terms
An effective payment terms strategy can yield positive cash flow besides streamlining the compliance process for payments. Payment terms reflect an agreement between a buyer and a seller specifying the timing and expectations regarding financial settlement. For example, “2% 10 Net 30” is payment of the face value of the invoice payable by day 30 or a 2% discount from the face value and paid within 10 days. The primary focus for most companies relies …
Calculating The Payment Term Benefit From The Cost Of Capital
While negotiating product X supplier A offered net 75 payment terms, supplier B offered net 60, and supplier C offered 2% 30 net 60. It is clear that net 75 is preferred over net 60, but is 2% 30 better than net 75? Why are extended payment terms preferred over standard payment terms and how to account for these differences when evaluating suppliers will be reviewed and shared in this entry. To be able to …
Mergers & Acquisitions – Procurement-Related Opportunities Shouldn’t be Underestimated
It seems that almost every time I turn my head lately or read the latest business news on my smart phone, there is a story relating to a merger or acquisition. This year has been packed with M&A activity, and there doesn’t appear to be any signs of it slowing down in the near future. Oftentimes, the article is announcing a new mega-acquisition or provides an update on a pending merger awaiting antitrust approval. One …
