As manufacturing CFOs (chief financial officers) and CPOs (chief procurement officers) are tasked with greater responsibility, there are four major industry themes that are top-of-mind for them. Although cost reductions, increases in efficiency, and visibility into valuable data are still important, there are other strategic challenges that need to be addressed.
Relationships between buyers and suppliers can make or break a business, so buyers can no longer look at solutions through a narrow lens. They need to consider how supply chain and payables solutions will impact their suppliers and how that will, in turn, impact their own business. Here are four key ways to address this situation:
- Increased Collaboration: Collaboration has always been important, though not always easy to accomplish. When transactions are made through paper-based and manual processes, an inordinate amount of time may be spent on the phone or via e-mails checking on discrepancies, exceptions, and payment timing. Today, buyers and suppliers, with platforms provided by third-party solutions, collaborate primarily through digitalization. This allows both parties to instantaneously organize and access account information. The total cost of the buyer/supplier relationship is no longer only about the pricing of goods and services. It’s also about the pricing and processing of the very act of the transaction as well.
- Building Digital Supply Networks: Even though digitizing processes has the power to transform the buyer/supplier relationship, that will only be successful if both parties work together to apply what they learn from the data. A digital supply network accumulates data on crucial elements of the procure-to-pay cycle, like the status of invoices and supplier payments, procurement pricing, payment terms, and discounts. Reams of supporting data and documents validate the transactions, reinforcing the most important value of the buyer/supplier relationship: trust!
In addition, this digitized network provides connectivity between buyers and suppliers, making it easier to streamline how buyers and suppliers “talk” to one another.
- Diversifying Software Solutions: It may seem overwhelming when a CFO or other financial professional searches for a payment option that will digitize business-to-business (B2B) payments. There are many options as financial services companies try to outdo one another in promises to streamline processes for less cost and greater efficiency and accuracy.
But one size will not fit all when it comes to electronic payments. In addition to expecting the trifecta of efficiency, cost reduction, and accuracy, buyers should also look for a solution that provides flexibility in the transaction process—one that will address a full range of needs and challenges that both suppliers and buyers face. Some suppliers may put up barriers to avoid accepting digital payments, but financial services companies and corporate buyers can help avoid that problem by making it as easy as possible for vendors to accept an electronic payment. It may be necessary to create added incentives for suppliers to make that change.
- Right Workforce for the Right Time: With full employment, attracting qualified employees can be difficult for small and medium-sized businesses. Instead of looking outside, companies should boost the skills of their current workforce through automation. Due to a strong economy, companies required added cash reserves in 2018, forcing many to stay on the sidelines with automating procurement and payment solutions. For companies that have already automated their indirect spend solutions, their finance and procurement teams now play a more strategic role in their company’s revenue efforts.
Editor’s note: Corcentric supports companies across procurement and finance transformation.