Winning the Competitive Battle by Looking Inward

 

The battle in which competing enterprises are continuously engaged requires them to look both outward, at such things as revenue growth, new revenue generation, increased market share or new market gains, and inward at cost-reduction and greater efficiencies.

An organization that embraces a long-term approach to maintaining a competitive advantage must acknowledge that it does not always have control over, or knowledge of the external factors that it could be impacted by, yet it can certainly attain control over what happens with its own systems, functions, and processes.   

One area over which an enterprise has control involves the set of interactions with its suppliers from sourcing through payment for goods and services – an area that's often characterized as being slow, labor-intensive, and prone to errors and fraud, which could have significant impact on overall cost, supply chain efficiency and ultimately - competitiveness. 

Achieving greater efficiencies and cost-reduction in this space is clearly a competitive necessity, but the adoption of discrete solutions that lack end-to-end visibility and control at best fall short of achieving the sought-after savings and at worst create additional headaches or even greater cost.

To achieve long-term transformational benefit and operational advantages an enterprise must adopt a holist approach in the Source-to-Pay arena and implement invoice automation, accounts payable automation, vendor management and dispute resolution and other such capabilities as part of an overall system that enables complete, end-to-end visibility and control. 

Achieving error and fraud elimination, greater supplier relations, and improved supply chain and logistics does not necessarily have to involve a significant, one-time undertaking, rather it can be incremental, and built on investments already made in various discrete solutions.

Such systems use advanced machine learning and artificial intelligence technologies as well as Robotic Process Automation (RPA) to intelligently automate and streamline the exchange of purchase orders, invoices, shipping notifications, payment notifications and the like between buyers and suppliers, while performing two, three and four-way matching, interactive guidance, compliance assurance and dispute resolution. 

The combined set of activities, orchestrated by one system that can interact with other procurement applications, can enable an enterprise to gain a competitive advantage and to attain greater margins, freeing up resources to be invested elsewhere.

 

Ilan Friedman

The effective way to address complexity in procurement

 

Procurement is an integral part of any organization, whether it is for products and services that keep the lights on, or for those that serve as input in the production of a product.  When processes are standard and repetitive and the supplier base consistent and stable, many procure-to-pay solutions and automation platforms can serve to reduce cost and increase efficiencies in the organization.

 

The challenge becomes greater as complexity increases.  An increasing number and variety of suppliers, an evolving diversity of requisition types, and a set of other factors could complicate the interaction between the buying enterprise and its vendors and require a greater level of flexibility and human intervention to ensure data accuracy, timely and accurate delivery and on-time payment.

 

Any large enterprise can face complex procurement, yet it is more characteristic of those which are capital intensive, and which have a complex supply chain.  The complexity stems from the presence of processes that are based on agreements and blanket orders with inherent ordering rules and conditions around pricing, shipping, and deliveries, as well as those with mandated supply chain rules, special delivery scheduling and conditions.  It also stems from the presence of orders with hundreds of line items, partial shipments per line and multiple receiving and invoices per line, processes that include intermediate warehouses and/or 3PL, QA, MRB, 4WM and returns, import via sea or air freight, and more.

 

In such environments, enterprises invest a significant amount of time and effort ensuring that suppliers comply with their business rules and policies, following up on order fulfillment, supply chain execution and on-time delivery, validating invoices, handling invoice reconciliation processes, validating payments, handling a significant number of errors and discrepancies, and preventing fraud.  Additionally, complex environments often involve multiple geographies and the associated differing rules, regulations, and cultures, as well as the presence of multiple applications and ERP systems.

 

Complex Industries

There are multiple industries that deal with complex procurements every day.  Some examples include Oil and Gas, Project-based Manufacturing, Life Sciences, and Consumer Goods.

 

Oil and gas companies, which need custom-designed infrastructure that can change based on sea depth, land topography, or the depth of the ores are just two examples of this type of company.

 

Project-based manufacturers, such as construction companies, power plant builders, commercial HVAC companies, industrial cranes, and specialty automobile manufacturers all have complex procurement needs to ensure that their projects are built to spec.

 

Life science companies, which operate laboratories and are involved in biology, physiology, botany, and other related sciences require parts that meet exacting specifications.

 

Consumer goods also have exact specifications for some of their parts.

 

All these types of companies are faced with difficult procurement issues, and unfortunately, most existing software fails to address their complex spends.

 

Procurement’s Challenges in Complex Environments

The chief procurement officer (CPO) needs a system that can handle varied types of interactions with suppliers. Using non-traditional vendors to source custom parts may involve processes that are outside standard business practices.

 

For example, the exchange of information around inventory, scheduling, planning, quality, technical specifications, and engineering concerns may require going beyond a standard sourcing RFP or issuing a purchase order.

 

These types of procurements require a significant investment of time and effort, to ensure that the supplier complies with the business' rules and policies. As many of these suppliers tend to be smaller operations, they lack the expensive computer systems and B2B integrations that make procurement paperwork flow smoothly between the company and its supplier.

 

Because these engagements take place outside typical operations, it opens the door to quality issues such as errors in the final product and discrepancies between the volume that was ordered and the number of goods delivered. There is also the real possibility of fraud, kickbacks, and other illegal activities.

 

These challenges are further complicated due to the lack of communication channels between the suppliers and company, as well as differences in geography, culture, multiple ERP systems, different measurement and electrical systems, and different regulations applying to different locations.

Capabilities that Enable Complex Procurements

Based on our experience working with complex procurements, we’ve found that there are essentially six different capabilities that smooth out the process and enable businesses to successfully collaborate with multiple vendors for complex procurements.

 

System Coverage

Procurement departments require a system that provides them with the ability to quickly implement and automate complex business processes. For example, they need forecasting tools that can anticipate their needs ahead of time, giving procurement enough time to source a supplier and place their order.

 

VMI capabilities provide suppliers with a clearer view of what’s needed, while vendor consignment processes enable parts to be delivered to the purchaser’s premises but remain on the books of the supplier until the vendor uses them.

 

Advanced shipment notice (ASN) and delivery scheduling capabilities also ensure that these goods can be delivered and provide visibility to the company about supplies they need. Other tools like S/N, import, 3PL, JIT, task management, and Q&A all work together to provide the company with the system coverage they need to manage their complex procurements.

 

Procurement systems with built-in processes and templates simplify the steps buyers need to take when placing orders. Additionally, process governance and compliance features allow for automated follow-ups and document reconciliations.  

 

Process Governance

Businesses must have automated tools to govern their procure-to-pay processes, as well as have the ability to verify that both the supplier and the company are performing their required tasks while adhering to corporate policy.

 

Through effective governance, companies can manage and control supplier response, and ensure that both parties have shared the information required to successfully acquire the product. This includes specs, delivery times, and other details in the purchase, as well as step-by-step guidance to suppliers, walking them through every response type.

 

Any notifications, alerts, and escalation processes are part of governance. They need to be aligned with the buyer's business rules and policies but customized to the specific role of the recipient, while automatically following up on open issues within the governed process.

 

Automation tools are required to involve the highest number of suppliers. This includes rapid supplier onboarding using automated, dynamic guidance based on specific process logic, required activities for each process, and step-by-step requirements that are aligned with the specific procure-to-pay process.

 

Process Compliance

Procurement teams need a system to verify that the supplier is adhering to the company’s business policies and requirements. Additionally, the system needs to ensure that the information shared between the company and the supplier is consistent across all documentation and that the information the company receives from the supplier is accurate.

 

This includes having the capability of automatically reconciling e-invoices, and validating transactions and documents such as PO confirmations, attachments, and shipping notifications, even when some of the data is missing or doesn’t entirely match data in previous documents.

 

 

Discrepancy Management

Discrepancy management is an important tool for procurement teams. It marks the ability to identify, in real-time, errors, discrepancies, missing data, documents, certifications, or other required paperwork to guide the supplier through correction procedures.

 

Automation tools embedded in this process should be able to identify and correct errors as well, based on predefined business rules and policies.

 

Finally, complex procurement tools must have the ability to automatically resolve discrepancies using machine-learning technology that can learn user behavior.

 

Supplier Relationship Management

Providing a supplier relationship management environment helps facilitate communication between the company and its suppliers, as well as provides accessible storage capabilities for supplier data, documents, and certifications.

 

This environment enables businesses to easily interact with their customers, sharing documents that need to be completed and tracking document expiration dates.

 

It also facilitates direct, free-text conversation between companies and their suppliers, with built-in corporate supplier hierarchies and categories, as well as automated responses and searchable FAQs.

 

Businesses can also use machine learning automation, with continuous improvement processes that can learn user behavior and receive feedback.

 

Integration with Multiple ERP Systems

For businesses working with multiple vendors, it’s important that their system integrates with the myriad of ERP systems that their customers are using. This enables suppliers to maintain their existing work environment and procure-to-pay processes, as well as turn manual activities into automated processes that eliminate errors and resolve disputes autonomously.

Finding the Right Tool for Complex Procurements

Most procurement tools fail when working with complex environments because they require suppliers to adapt to their customer's systems. While this might seem ideal to the customer, suppliers work with hundreds of customers, and creating B2B integrations to make them compatible with every system is unrealistic.

 

Rather, businesses facing these challenges should look for a procurement solution that functions as an interface that connects disparate ERP systems. These solutions don’t place any demands on the suppliers and allow them to easily interact with their customer’s purchasing department.

 

This connectivity facilitates communication, introduces automation, and checks for errors in documentation that can delay processing and payment until its resolved.

 

Complex procurements are, by their very nature, complex. They push procurement teams outside their standard supply chain to source materials and parts that would otherwise be impossible to get. Simplifying the connection between vendors and suppliers goes a long way toward facilitating smooth processes once the suppliers are identified.

 

Ilan Friedman

Director of International Growth Strategy and Engagement

Nipendo

info@nipendo.com

 

 

Nipendo's P2P automation platform complements existing ERP systems and procurement applications

 

 

Achieving Competitive Impact in the Procure-to-Pay Arena

The continuous effort by organizations to create or maintain a competitive advantage touches on a variety of business activities and looks at both cost and revenue.  The prevailing trend of Digital Transformation, seen as a way by which to convert manual or otherwise inefficient processes into advanced digital processes that remove cost and improve efficiencies, also includes procure-to-pay (P2P) interactions between organizations and their suppliers.

The challenge in selecting appropriate solutions to fulfil the need for Digital Transformation in the P2P arena, is, as always, to determine which of the myriad of solutions is best suited in terms of immediate and long-term cost, ease of implementation, continuous maintenance and support, and of course – value proposition.

The complex set of challenges and available solutions, coupled with organizational constraints, such as the availability of time and money and the presence of organizational politics and other such influential factors, cause organizations to make tactical decisions rather than strategic ones and to focus on discrete solutions instead of looking at improving overall business outcomes.

For example, implementing robotic process automation (RPA) technologies in an effort to automate repetitive manual processes and make better use of personnel, could reduce associated long-term costs and remove errors, but would more often than not cause a significant short-term disruption to the business and ultimately operate on a limited scale. 

P2P is far more than just a set of highly structured, highly repetitive throughput of digitized data that can be easily automated – it is far more dynamic and complex, requiring a greater level of intelligence and varied decision-making capabilities. 

To digitally transform P2P in a way that allows the organization to extract optimal business value, it would need to adopt a strategic view that accounts for both near and long-term, minimal business disruption and an attractive margin of financial benefit (low cost of implementation, long-term cost reduction, increased productivity, removal of errors and fraud, etc.).  An ideal solution would be simple to integrate, allow the organization to maintain existing resources and minimize organizational change, yet offer cross-functional and multi-parameter value through process automation that is intelligent enough to replace human thought.

Such a solution would make better use of personnel by allowing it to focus on the exception that arise when interacting with suppliers, which brings us to the final piece of the puzzle: any P2P process automation solution, exceptional as it may be, will be useless if suppliers do not use it to the tune of a spectacular adoption rate.  For that to happen, they too must gain practical value from it – minimal barriers to implement, access to new business opportunities, better working capital management, improved payment processes and more.

 

Ilan Friedman

Nipendo explores new business opportunities in the United Arab Emirates

 

Nipendo Explores Business Activities in UAE

The co-Founder and CEO of Nipendo, Eyal Rosenberg, and I just returned from a week-long visit to Dubai, UAE.  The short visit, which is part of the company's New Market Exploration strategy, followed several weeks of research and networking and included both business meetings and tourist activities, through which we were able to absorb the local culture and atmosphere and to develop some important insights.

Nipendo's technology addresses the complexities and cost associated with supplier interactions around procure-to-pay activities, significantly simplifying them through intelligent automation and bringing about major cost-savings and improved efficiencies.  UAE is home to an abondance of companies that could benefit from Nipendo's platform, but our assumption was that establishing a fruitful connection with them would require having some form of local presence.

 

 During our visit we met with several businesspeople – both Emirati and expats – who acknowledged our strategy and offered different models for cooperation.  They were open and direct, welcoming and warm and were more than happy to have second and third meetings with us, some of which in less formal settings.  Through them we learned that having a local presence is critical and having the right connections could be the difference between success and failure in this market.  We also learned that most of those who operate in the UAE see it as a steppingstone to other parts of the Middle East and Africa and a central point of operation to these regions.

Dubai is a beautiful city where the architecture of each building is more staggering than the other, and where each car is more luxurious than the one it just passed.  The cleanliness and order are notable, as are the kindness and openness of people.  One can enjoy a stroll through the Old City and markets (Souks), visit landmarks like Burj Kalifa, Dubai Mall or Dubai Frame, or choose from multiple cuisines at the beautiful restaurants in Palm Jumeirah (or pretty much anywhere else in town).  There are also a variety of activities in the adjacent desert – jeep rides that include dinner and local entertainment, skydiving, camel riding, hot air balloons and much more.

 

 

Ilan Friedman

 

Accounts Payable (AP) Automation – The End Game?

 Organizations continuously seek ways to improve efficiencies and reduce cost – particularly during challenging times.  In line with the era of Digital Transformation, they primarily seek ways to automate processes and to gain greater insight into processes. 

Procurement and Accounts Payable (AP) are areas that potentially involve many inefficiencies, particularly as they relate to each other.  If the two are not perfectly aligned, the organization not only experiences waste - it also misses out on opportunities.

An effective AP Automation strategy should align with an overall strategy around Procure-to-Pay (P2P) process automation.  By doing so, accurate and real-time information could contribute to the timely and accurate supply of goods and payment to suppliers (which, in turn, could impact production processes and income) as well as to more efficient procurement spend, but also encourage savings through the ability to receive early payment discounts, and by avoiding unforeseen penalties.

Nipendo's end-to-end, cloud-based platform for the intelligent automation of P2P processes provides AP Automation.  But it doesn't stop there.  The platform automates every interaction between suppliers and buyers from RFP through payment, providing process governance that aligns with the buyer's business policies, as well as data validations, error-capture, discrepancy resolution and much more.  It is the link between procurement and AP, providing real-time transparency and error-free data processing. 

 

The Organizational Impact of Supplier Relations

The higher up you are in an organization, the more likely you are to be exposed to, and to care about how individual segments of the organization impact its overall performance. 

Take supply chain, for example, and the understanding that accurate and on-time delivery of supplies impacts your company's own production and/or distribution processes, revenue stream and customer satisfaction.   

An important aspect of supply chain optimization is supplier relations, and the goal should be to build strong, and positive relationships that improve business outcomes for all parties.

Viewing supplier interactions as a set of tasks that need to be addressed individually, for example through the use of a supplier portal for the delivery of invoices, falls short and does not align with a holistic view that touches on all points of impact on the organization.

The optimal approach to enabling efficient supplier relations, which, in turn, will have a positive impact on the buying organization, should consider the business culture of each of the suppliers, their individual modes of operation, and their existing information systems.  Using technologies, solutions and methodologies that require minimal change on the part of your suppliers at minimal cost, will be more likely to gain their buy-in.

Such solutions should enable suppliers to maintain their preferred methods of communications and existing accounting systems, guide them through the appropriate procurement and supply chain processes in line with your business policies, and ultimately ensure efficient supply of their goods and services and subsequent on-time payment.

Global tier 1 enterprises like Intel, HP, KLA Tencor, teva Pharmaceuticals, Elbit Systems, and Check Point have chosen nipendo's P2P automation platform, as it offers these features and many others.

Ilan Friedman

 

 

 

Adopting a Holistic View in Procurement

It's common practice for organizations to try and patch up challenge points or to implement partial solutions, whether it is due to cost and implementation speed considerations, bureaucratic or legal factors, or the avoidance of making risky decisions – either way, neither approach is optimal.

The situation is no different when looking at cost and efficiency factors associated with procurement processes and supplier management.  Companies often deploy exorbitantly expensive and slow-to-implement solutions as a form of "follow the crowd" mentality or acquire apps that do not really work together and therefore only minimally optimize processes.

What typically works best, in just about every sphere, is adopting a holistic approach – looking at all impacting factors together to reach an optimal solution. 

If you maintain significant staff to oversee, confirm the accuracy of, and process procurement interactions with suppliers – you're likely faced with a slower-than-desired supply chain that's rich with processing errors and inaccuracies. 

A holistic view of the problem would address such factors as cost and speed of implementation, end-to-end resolution of the associated challenges, limited modification of existing systems and workflows, and the like.

Nipendo's end-to-end intelligent automation platform was designed for rapid and cost-effective implementation above existing ERP systems and procure-to-pay processes – of both buyers and suppliers.  Its automation capabilities not only cover the back-and-forth transmission of documents but also provide process governance that matches existing business policies as well as the flexibility to absorb changes in both systems and processes. 

The end result of implementing nipendo's holistic platform is the entry of accurate data into ERP systems and the efficient supply of goods and services. 

 

 Ilan Friedman

Where Should I Establish my US Office? 

I recently read an article where an Israeli VC partner was quoted saying they invest in Israeli companies, some of which may have established their US offices in NY or in CA.

Not that it's necessarily wrong for an Israeli startup to establish its US office in either CA or NY, but the automatic reference to these states tells me that the decision-making process around the US office location may not have evolved much over the past two decades.

Most Israeli technology startups strive to grow into the US market and are correct in doing so. But there are many ways by which to enter a new market – all of which should be reviewed as part of each company's go-to-market strategy.

Assuming that opening a local office is the chosen path, the decision on where to locate it should account for several factors, such as:

• Where are most, or the most important customers of mine based? Same for partners and for competitors?
• Where would I find the most talented (and relevant) workforce to recruit? On that note, to which location would it be easiest to relocate employees? 
• If there are multiple choices to consider, how do they compare in terms of cost-of-living and cost-of-doing-business? 
• If I plan on hiring a mobile sales force, is there a major airport in the vicinity? Will weather cause major flight delays? 
• Is time-zone a consideration, particularly if frequent interactions with the Israeli office are planned? 
• Are there any relevant financial incentives to consider? 
• What, if any, impact does the global coronavirus pandemic have on my decision? 

I could name a few more issues that should be looked at, but you get the point – a decision about where to locate a local office in a foreign market should be part of an overall go-to-market strategy accompanied by research and should not be guided by a "follow the herd" mentality.



Ilan Friedman, IDFglobalbiz@gmail.com

 Global Business Expansion - The Right Approach

Admittedly, when I started working with nipendo, over a year ago, I didn't really have a good understanding of the industry in which it plays – procure-to-pay. 

If you too are unfamiliar – it is the process an organization goes through to acquire goods and services from its suppliers, from the point of order through payment.  Turns out, this process causes companies a lot of headache!

If you're going to order goods from one supplier - no big deal.  But once you start working with hundreds or thousands or even tens of thousands of suppliers, each delivering a different set of products or services – it starts becoming quite complex.  Add to that the fact that each supplier is different in terms of size, resources, methods of work, IT systems, etc.

Nipendo addresses this complexity and the exorbitant costs that it creates, through intelligent automation – ultimately achieving a far more efficient supply chain.

My fascination with the industry and the technology grew over time, as it became clear how important this really is and how nipendo impacts the bottom line of its customers. 

But putting technology aside, it is also an excellent example of what a company should do when expanding into new markets – namely the US.

Nipendo leadership adopted the first rule of global market expansion – create a strategy and assign appropriate resources to its implementation.  In nipendo's case, the strategy was much like its technology – holistic by nature.  In other words – the company embarked on a combination of direct and indirect sales, backed by razor-sharp efforts to create awareness through relevant online venues.  They've even gone farther by establishing a US office, where the CEO spends half of his time, and have recruited personnel to provide 24/7 global support in multiple languages.

Nipendo has been hugely successful in the Israeli market, selling to major global players like Intel, HP, Unilever, teva Pharmaceuticals and many others.  Its success thus far and its current global growth efforts should serve as a model for other companies that are in a similar situation.    

Ilan Friedman

IDFglobalbiz@gmail.com