Procure IQ

I’ve told you many times that spreadsheets, the cockroaches of the workplace, can cost you billions, but I’m not sure that you’ve been listening. So I’m going to remind you of two situations where poor spreadsheets literally cost a company billions. As per this classic article in CIO on eight of the worst spreadsheet blunders ever: Fidelity Loses $2.6 Billion In January 1995, an accountant omitted the minus sign on a net capital loss of $1.3 Billion when transcribing the net realized gain from the funds financial records from one spreadsheet to another. As a …

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Today’s guest post is from Sudy Bharadwaj, ex-analyst extraordinaire of the Aberdeen Group, former VP of MindFlow, former CMO of Informance, and, most recently, a star at Inovis. There has been considerable emphasis in improving working capital among large and small enterprises alike. While the reasons may seem obvious, to state a core objective: unleashing working capital provides more cash for other areas in the business and reduces dependency on credit. According to a recent benchmark by CFO Magazine(c) the working capital metric, DWC – Days Working Capital, of the top-1000 US-based public companies (excluding financial service …

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Ever since the recession hit full swing, it’s been working capital this and working capital that. And I’m getting tired of it. And it’s not because I don’t like working capital management. In theory, when it’s done right, working capital management is worth its weight in gold. The problem is, at most companies, it’s still done very, very wrong, and ends up being the lead weight that drags the company down until it drowns. Here’s what usually happens. The company starts by: Paying some invoices early …

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Mostly Harmless, Part XXII Previous Post There are three major procurement models. While they all require the same basic e-Procurement functionality, each model dictates its own e-Procurement requirements and emphasizes certain features and functions above others. This post will address the different models and which features and functions are emphasized by the models. The first major model is the classic model of decentralized procurement where each business, functional, or geographic unit is responsible for its own purchases. Individual business units are empowered with autonomy and control over their process and design decisions. It allows for …

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The key to a rising CPO’s success is the often the ability to talk shop with the CFO and explain the advantages of supply chain management in terms that the CFO can understand. It’s often the quickest way to a seat at the boardroom table. Traditionally, this has come down to the ability to provide the CFO with the ROI (Return on Investment), the ROIC (Return on Invested Capital), and the ROE (Return on Equity) of every investment. This is because ROI measures the efficiency of investment, the ROIC measures the company’s efficiency at allocating the capital …

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Mostly Harmless, Part XXI Previous Post Every solution costs more than the sticker price. But how much more? In this post, we’ll outline how to cost the various solutions as well as a methodology for calculating the expected value. First of all there’s the cost of the license, which can be significant. If the system is enterprise, and especially if it’s an installed solution, this can be a very significant up-front cost in the six figure range. Then there’s the maintenance, which is required for support and mandatory for some solutions, and built into …

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Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.) In our last post we discussed the undervaluation of the yuan, introduced the Purchasing Power Parity (PPP) rate as a measure of the relative valuation of a currency, and reviewed the background behind the PPP rate. In this post, we’ll cover the determination of PPP rates, the calculations necessary to determine value against the US dollar, and list some countries with large differences between the PPP rate and the actual rate. …

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Editor’s Note: Today’s post is from Dick Locke, Sourcing Innovation’s resident expert on International Sourcing and Procurement. (His previous guest posts are still archived.) The value of the Chinese currency, the renminbi is getting a lot of attention. The renminbi is commonly called the yuan, and I’ll use that term here. Economists, lobbyists, legislators and others are all saying the yuan is undervalued. I agree with them. But undervalued compared to what? Often the answer is “compared to what it should be”. That’s really vague and circular. There is one common point of comparison, though. …

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Mostly Harmless, Part XVI Previous Post In the last post, the process of tax reclamation was defined and some of the complexity around tax reclamation was discussed. This post will address some of the challenges associated with tax reclamation, some best practices, and the benefits that could be expected from an appropriate e-Procurement solution with good tax reclamation support. Common Challenges Tax Rate Verification Is the rate being charged by the supplier the right one? This is tricker than it seems. …

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Mostly Harmless, Part XV Previous Post Tax reclamation is the process of applying for and securing tax refunds and rebates due to the organization. In many circumstances, a buying organization may be eligible to reclaim some or all of the taxes that it pays to a supplier. For example, in the US a buying organization can often reclaim out-of-state sales taxes (if the organization has no presence in that state), in Canada an organization can reclaim GST (Goods and Services Tax) paid, and in the UK, sometimes an organization can reclaim VAT (Value-Added Tax). In addition, …

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