SIM Made Simple is the resource area for best practices in supplier information management (SIM)– derived from our experience in managing SIM for over 1 million suppliers for some of the world's largest companies.
April 14, 2010
Notes from the Front Line and Some Bragging
I regularly cull through the success criteria we develop for new clients. We use these to help clients gauge ROI on Aravo and ensure that we continue focusing on critical business issues. Developing measurable success criteria starts with gaining agreement on the problem areas accurate supplier information management can help solve.
From the procurement leaders we work with, chief business issues from the last 6 months include:
- High off-contract spend: Looks like on average our clients tell us that maverick spend accounts for ~20% of overall spend. On average it looks like clients are wasting 10% in unrealized savings.
- Poor spend visibility: Over 60% of companies report that less than 20% of their overall spend goes through their eProcurement system; and
- High cost of supporting multiple ERP/procurement /AP systems: Most of our client base is Fortune 1000 companies who have done a lot of M&A activity over course of last several years so still supporting multiple systems across different businesses...
One example, a Procurement Executive estimated that her company was spending at least $10M more per year by paying off-contract terms to her suppliers. She also estimated that her company was wasting at least 3 FTEs/year in analyzing and fixing supplier payment errors.
After working with Aravo, she was able to:
- Realize an additional $4M in savings in contracted discounts
- Move $400MM in new ePayables to electronic processing in under three months
- EFT enable an additional 30% of her suppliers in less than 8 weeks.
- Centralize supplier management so that information is synchronized and continually updated between ERP, Procurement and AP systems.
So when you read about our new functionality in each month's release -- like accurate data gathering to better support error-free supplier payments, business relationship mapping to manage unique profiles for each contracted relationship between a buying organization and an individual supplier, or even VAT number validation support – keep in mind ultimately what you're trying to achieve within your company.
