Ivalua: Procurement strategies for post-Covid-19 recovery
Research conducted by Forrester Consulting and commissioned by shows how disruption caused by the global pandemic has changed procurement and supply chain strategies around the globe. Not surprisingly, the worldwide study found that procurement’s role has grown in importance, with 85% of respondents indicating that executive leadership recognises procurement’s role in revenue and margin growth.
Due to Covid-19, 50% of organisations are increasing investment while 23% reported to be decreasing investment.
Procurement has also become more strategic, focusing on supply chain resilience and fueling growth. For 65% of organisations, Covid-19 increased the priority of ensuring supply chain agility and continuity (65%), identifying new revenue opportunities (64%), and improving decision making (64%).
Outdated technology, however, continues to be a stumbling block, hindering procurement strategies and limiting overall value and top-line growth. Laid to blame are:
- overly dispersed data (72%)
- unactionable data (70%)
- a lack of embedded best practices (70%)
- rigid systems that don’t support new ideas (75%)
- processes and systems that don’t enable effective, scalable supplier collaboration (71%)
- a lack of integration among source-to-pay systems (71%)
“For many organisations, procurement was crucial to keeping supplies flowing during the pandemic and minimising the impact on profitability. But at many, COVID-19 exposed weaknesses in outdated procurement processes, tools, and data that limited agility and impacted decision-making,” comments David Khuat-Duy, Corporate CEO at Ivalua. “Now is the time to digitalise procurement and use it as a growth driver. This means using data to find new revenue streams and unlock supplier-led innovation. If procurement leaders don’t overcome technology challenges now, they risk missing growth opportunities and ensuring resilience for the future.”
The high costs of dirty data
Proper inventory management is a key factor to mitigating the risks that lay within your supply chain. Poor quality and inaccurate inventory data can lead to disruptions to production, impede your ability to service your customers and impact your profit margins. According to the study, because of inflexible procurement tools and poor data quality:
- 47% of organisations experience cancelled or lost orders
- 45% of companies saw revenue loss
- 44% faced reduced profit margins
- 49% of organisations said they were penalised by a third-party marketplace for missing Service Level Agreements (SLAs)
Poor inventory management also has high impacts on cash flow. At least once a month 47% of organisations surveyed experienced overstock at a particular location, accumulating storage fees and incurring additional costs.
Procurement strategies for restoring growth
To restore revenue growth, 45% of organisations are aiming to improve supply chain responsiveness and reliability, 42% are looking to reduce product costs, and 40% want to improve time to market.
To improve supplier-led innovation, the top strategies followed by procurement organisations include leveraging technology to improve information sharing and communication (49%), increase visibility into the timeliness of payments (48%), and to provide structured framework or processes around supplier led innovation (47%).
“As organisations transform procurement strategies to focus on growth, they must take a more holistic approach. This means engaging all stakeholders from the offset, collaborating to identify new revenue opportunities, and choosing the right technology to support strategic objectives,” concludes David Khuat-Duy, Corporate CEO at Ivalua. “Smart procurement technology helps free capacity, improves quality of and access to insights, and enables scalable supplier collaboration. This gives organisations the control and visibility they need to help them on the road to recovery.”
Coupa Launches US$50 Million Ventures Fund
Operational resilience and agility. Following the events of the last twelve months, companies have focused on these strategic areas like never before. Some, as we’ve noted, have started to wonder whether this trend will continue post-pandemic—or will we go back to the same old supply chain? Not if Coupa Software has its way.
Last week, the company launched Coupa Ventures, a global fund that will invest US$50mn in early- and growth-stage companies that target business spend inefficiencies. “Coupa Ventures enables us to invest in a future where businesses and their suppliers can harness the power of their spend to constantly adapt, transform, and innovate”, said Rob Bernshteyn, Coupa’s Chairman and CEO.
What’s Business Spend Management (BSM)?
Let’s be honest, it doesn’t sound particularly sexy—it sounds like a subsection of the finance department. But business spend management, together with ERP (enterprise resource planning), CRM (customer relationship management) and HCM (human capital management) make up the core operating process of any company out there. When companies spend money, sign contracts, analyse supplier costs, take inventory or budget for the future, that’s BSM. Overall, business spend management is made up of three main areas: procuring materials, managing invoice, and handling expenses. Essentially, it’s the engine of the entire operation.
Why Change It Up?
According to Coupa, the next wave of BSM is now. It wasn’t always this way: in March of 2016, advisory giant Gartner claimed that BSM was dead. At that time, the firm was partly right. Companies couldn’t handle trillions of bits of data by themselves—and they were sinking as the waves of big data swept over their heads.
But recent developments have meant that BSM isn’t fated to die just yet. “The key to optimisation is data—and not just any data”, Coupa stated. The company has supported community intelligence, in which machine learning uses anonymised data from hundreds or thousands of client companies to suggest better spend tactics. This way, companies can get better insight into their suppliers, track supply chain disruptions, and investigate procurement alternatives.
This network effect is part of what makes Coupa Ventures so exciting. Said Eric Christopher, co-founder and CEO of Zylo, “We’re excited to join an expansive ecosystem of customers, suppliers, and partners”.
First Companies in the Ventures Portfolio
- Zylo, a leading SaaS management platform that helps companies manage cloud-based applications, offers visibility into what software is being used, how much is present, and how a company can optimise its software investments.
- SourceDay, a leading supply chain performance solution, bridges the gap between a company’s enterprise resource planning (ERP) and its supply chain network.
At SourceDay, Coupa’s investment is heralded as a chance for the company to really take off. “The investment from Coupa Ventures will...enable our joint customers to save money and leverage supplier performance as a competitive edge”, said Tom Kieley, SourceDay CEO. “We’re honoured to expand our relationship with the Coupa ecosystem”.
Looking ahead, Coupa will capitalise on community intelligence to help its partners make smarter spending decisions. “[Organisations will] place bets on which investments will quickly pay off to accelerate their growth and resilience in the post-pandemic economy”, said J.J. Freitag, senior vice president of Corporate Development at Coupa. “[And] we’re looking to back the best ideas across Europe and beyond to help businesses build back even stronger”.