Chief Marketing Officer
As pundits debate just how bad the global economy is and how much worse it may get, lawmakers around the world are taking unprecedented actions to stabilize the financial system, the likes of which have never before been seen. As governments work to ease economic pressure and restore public confidence, businesses too must act to ensure their financial health and ultimately, their survival. Faced with tightening finances, rising inflation, and increased supply chain risk, business leaders must quickly identify ways for their companies to control costs, reduce risk and improve performance in the face of a severely down economy.
Many leaders have found spend management – the discipline of controlling and optimizing the yield of every dollar you spend – as a vital stimulus package for their business. Leveraging technology-based solutions that enable them to holistically source, contract, procure, pay, manage, and analyze their spend and supplier relationships, companies of all sizes across industries are achieving complete control of their spend and driving continuous improvements in their financial and supply chain performance.
If you’re among these companies, you know that with the right combination of process automation (a.k.a., software), expertise and services, you can quickly and efficiently identify opportunities for savings and drive them to the bottom line. And few things are more important to the C-set in today’s economy. Yet, you may be wondering how you much more you can wring from your supply chain in such a volatile market.
And, if you haven’t yet embraced spend management, you probably want to know how you can get started driving savings this quarter. Consider the following tips:
1. Target New Spend Categories
With high volatility and inflation running rampant in core commodities, spend management leaders are turning their spend management sights on new categories – including many of the “sacred cows” – such as legal and advertising -- which were once outside the realm of standardized sourcing and compliance procedures.
2. Squelch the mavericks
Savvy leaders are using the current economic crisis to secure C-level support for policies and procedures to drive internal compliance with existing supply agreements. They are also using the opportunity to secure budget to invest in cost containment solutions, such as contract management software, to ensure that vendor agreements are negotiated and finalized according to company policy and then implemented and complied with quickly.
3. Manage your cash
As the saying goes, cash is king. And in today’s economy this is true both for you and your suppliers. If your cash strategy is to delay or extend payment cycles for suppliers, you’re putting your company at risk. Consider one telecommunications company who secured 60 day payment terms from customers but paid its suppliers net 75 days. When two suppliers went belly up because they didn’t have the cash to fund operations, the telecom company was sent scrambling to find alternative supply. One of the quickest ways to get cash under control is to automate the invoicing and payment process. This gives you clear visibility into your commitment and payment streams, ensures invoice and payment accuracy and increases rebate and discount capture. Most importantly, this new visibility allows you to make informed payment decisions based on cash needs, early-pay discounts and rebates, and overall supplier viability. Companies that have automated their invoicing and payment processes report that suppliers typically grant concessions of 0.5% up to 4% for faster payment.
4. Work with your suppliers
In a tumultuous economy, it is more important than ever for buyers and suppliers to work more closely together, share the economic burden of the times, and embrace innovative ways to ensure their mutual health. As the gap between low-quality and high-quality borrowers grows, more suppliers will experience cash flow problems. For forward-looking buyers willing to come to the rescue of their most important suppliers, third-party supply chain financing options exist today that enable buyers to hold onto their cash and suppliers to be paid early at far more competitive rates than traditional factoring or card providers allow. Buyers can use their good credit rating to help suppliers borrow at lower rates than they could achieve on their own. The result is a healthier and more productive relationship and supply chain.
5. Don’t be afraid to get help
Faced with pressures to deliver more savings faster than ever before, many companies are now looking outside for spend management process support, spend category expertise, or just additional arms and legs to help execute their savings plans. To meet budget constraints, many enterprises are revisiting variable or performance-based agreements that allow them to pay for all or a portion of these outside services based upon savings achieved.
Though the pundits will continue to try, it’s impossible to predict where the economy is headed. But by following these tips, companies can assert control over their physical and financial supply chains, minimizing the impact of the downturn on their business, and positioning themselves well for faster growth when the market finally rebounds.
Tim Minahan is Chief Marketing Office or Ariba, Inc., the leading spend management solutions provider.
Chief Marketing Officer
Tim Minahan is Chief Marketing Officer for Ariba, Inc. In this role, he is responsible for the design and execution of the company's global marketing programs including branding, corporate communications, marketing communications, product marketing, Web marketing, sales training & development, sales support, demand generation and analyst relations.
Mr. Minahan joined Ariba from Procuri, Inc., where he served as senior vice president of Marketing and worked closely with the executive leadership team in shaping the strategic direction of the company's growth. With a focus on supporting Sales, Mr. Minahan was responsible for raising the visibility of Procuri, assisting with product strategy, articulating the value proposition of the company and its solutions, and devising and executing new company initiatives.
Mr. Minahan is a widely recognized expert on supply chain management and technology issues. Prior to joining Procuri, Mr. Minahan served as chief services officer at AberdeenGroup, where he advised the world's largest supply chain and technology companies. During his tenure, he helped build Aberdeen's Supply Chain Research practice into one of the most influential of the top industry analyst firms. As Aberdeen's chief services officer, he defined the firm's research focus and methodologies, drove corporate branding initiatives, and reengineered the company's business model. Mr. Minahan began his career researching and writing on purchasing and technology issues, serving as senior editor of supply chain management for Purchasing magazine, and an editor for Electronics Purchasing, and a technology reporter for Government Computer News.
Mr. Minahan is a member of the International Association of Contract and Commercial Management's (IACCM) Thought Leadership Council. He has thrice been named one of Supply & Demand Chain Executive's Industry Pros to Know. He has also received Supply Chain Technology News' Top Industry Influencers Award.
Mr. Minahan holds a bachelor's degree from Boston College.