Consider the various ways that a company names can be constructed.  The screen shot below how the Lavante Recovery™ solution has located potential duplicate vendors based on phone and fax numbers matching for variously-named suppliers.

From inconsistent naming conventions, to the same vendors located at different addresses, the potential for errors are vast and the impact of this bad data can be dramatic.

Based on a recent research report by Jason Busch and Thomas Kase of Spend Matters, here are the top seven areas to focus on to avoid the costly impact of bad supplier data:

1. Create an undisputed single point of reference – With processes to automate the supplier registration process, to collect supplier communications in a common repository and to assure data entry accuracy, organizations and dramatically eliminate costly errors.
2. Adhere to compliance requirements – Technology solutions can build in flexibility to support new compliance requirements by dynamically engaging with vendors around business changes, reducing compliance turnaround.
3. Assure security and privacy – In partnership with the Information Technology organization, Finance and A/P need to have strong adherence to security and privacy governance for data security, IP protection and information privacy.
4. Eliminate payment errors – A focus on processes to eliminate payment errors will reduce expenses around reissuing checks, late payment penalties and reduce over-payments and duplicate payments which can occur whenever a vendor is set up twice in the system.
5. Establish business continuity dependencies – Often owned by the Procurement team, business continuity impacts areas including material costs such as wrong parts, the cost of product or service disruption when stock runs out, operational overhead. It is also important to evaluate sales-side impact prior to making buys-side decisions, especially if a vendor is also a customer.
6. Minimize overhead for supplier management – By implementing supplier self-service maintenance functions, organizations can minimize internal staff resources for data maintenance activities
7. Automate using technology – Investments in technology will greatly improve your overall ROI as well as improve a company’s procurement professional utilization which can result in substantial savings.

The full white paper,  Developing and Maintaining Accurate Supplier Data – Overcoming Dirty Supplier Information in Finance and Procurement, includes much more about the importance of keeping vendor data files clean and up-to-date, along with a case study that details how one Fortune 500 Pharmaceutical company used Lavante Recovery to solve the problem and improve its recovery processes.  Click here to download the report.  Or, click here to read more about how Lavante Recovery helps cleanse vendor contact records.

Lennox selected Lavante, in part, because of our ability to deliver: comprehensive statement audit process;  patented, SaaS technology allowing seamless access to all results through a web-based portal;  speed and ease of deployment which delivers fast, continuous results, and; vendor file management and data cleansing as part of the recovery process.

Lavante’s patented SaaS technology continues to drive a differentiated offering for companies looking to maximize recovery dollars.  Because of our automated processes, Lavante Recovery is able to reach out across the breadth of a company’s supplier base vs. a small sampling which manual process-based services are limited to.  Our web-based portal also provides our users with seamless access to real-time reports and a view of every aspect of the recovery process.

The speed and ease of deployment are other important criteria to Lavante customers.  Our solution does not  require on-site personnel nor extensive, complex data collection procedures, making it fast and easy to deploy.   And in today’s business environment, where companies are forced to take on more and more task with fewer resources, our customers recognize that Lavante Recovery deployment has minimal impact on both AP and IT staff.

Another important feature noted in this announcement is the inclusion of vendor file management and data cleansing as part of the entire recovery process.  Our outreach to the majority of suppliers combined with over 2  million suppliers in the Lavante Supplier Network means that we update and cleanse your vendor contacts, which also helps to identify potential duplicate vendors.

We are excited to be working with Lennox Industries, a leading provider of customized home heating, cooling and indoor air quality products.   Click here to read more about this recent announcement.

His next post, Lavante Recovery – A Risk-Free Way to Segue Into SIM  expands the conversation to discuss Lavante’s Recovery Audit solution, which has built-in SIM-type capabilities.  And, the article continues to cover how Lavante works to “identify omissions, errors, and inconsistencies in your supplier data.”  What I saw as the vision of the two posts is the clear connection Michael makes between clean supplier data (and the ability to keep it updated on a continuous basis) and the ability to drive the maximum recovery effort.

“The benefits of good supplier data and multi-channel reach-out cannot be underestimated where recovery audits are concerned…. With respect to the former, cleaner supplier data makes for more complete transaction data, which not only increases the chance of finding a duplicate, incorrect, or fraudulent transaction — but improves your follow-on spend analysis efforts (and results). As a result of its supplier data cleansing effort, Lavante is typically able to process at least 95% of spend through its recovery audit solution, which maximizes the chances that it will find the majority of your recovery opportunities.”

Our company’s founders, Joe Flynn and Tom Flynn, saw the connections between clean supplier data and maximum recoveries when they built out Lavante’s solution set.  Our SaaS-based solution set starts with an automated outreach to the breadth of our client’s suppliers, and then continues to update records through our supplier network database, now with over 2.3 million suppliers.  The continuous communication with suppliers results in very high compliance, which keeps our client’s vendor records current, driving the maximum amount of credits possible.

Michael is very astute in his observations and analysis.  I have been in supplier management business for 25+ years and very few are able to connect the dots between Supplier Audit Recovery and Spend Analysis.  In a future post I will dig further into Doctor’s comments on how Recovery leads to cleaner supplier data resulting in improved spend analysis, which in turn provides better sourcing and more effective supplier management.

If you are interested in this connection of vendor file management and data cleansing processes, as well as statement audit please visit our website.  And, click here to read more about Michael Lameraux and his Sourcig Innovation.  The two blog postings referenced here can be found at: Recovery Audits – Are they Worth It, Lavante Recovery – A Risk-Free Way to Segue Into SIM .

Statement Audits: There was considerable interest in the presentation by one panelist who presented how automating the statement audit process using Lavante Recovery has delivered a steady stream of credit recoveries, beyond what was anticipated – in the first year over 1% of auditable spend was recovered. He covered how his company had moved from an inherited manual/paper based system to Lavante’s automated, web-based solution, which has provided seamless access to results through the online web portal. Lavante’s ability to automatically connect to and audit the breadth of suppliers vs. a smaller subset that a traditional recovery process would target, had an added benefit of improving communications and the overall relationship with vendors.

This focus on the importance of supplier relationships spilled over into the next hot topic the panel uncovered:

Supplier Management Portal: The need for an easy, transparent way to connect with suppliers and improve the supplier service function was another hot discussion topic. There were several presentations focused on this topic. One presenter focused on the process now underway to implement a vendor portal to the organization, leading with the findings that internal development of a supplier management portal would be cost prohibitive. Important issues in selecting a vendor were identified as: data integrity, eliminating duplicate vendors, and maintaining an accurate active vendor file. Ease of use, workflow approvals, and an increased turn-around time for approvals were also important elements cited. Questions about what incentives would drive vendors to join the network centered on the benefits vendors would enjoy and the possibilities of customizing the approaches for different types of providers.

I applaud the conference organizers (this was the first IFO conference in Toronto) in including this along with many other technology-oriented sessions at the event. Thank you to all of the panelists and audience members for a thought-provoking session. And, please check our website for more information about Lavante Recovery.

With this in mind it is a worthwhile to consider the details of the entire cross-functional process.  At the front end, one will encounter any number of sourcing and procurement activities where highly trained professionals are chartered to identify the best possible suppliers to buy the best possible products or services at the best possible cost of ownership.  At the far end of the P2P lifecycle, one will encounter Accounts Payable (AP) department whose goal, as told to me by one industry expert, is very simple, “To pay the right entity, the right amount, at the right time.”  This is a simplification of course, but generally, all professionals in the space are pursuing some combination of these stated objectives.

Typically these departments are measured, evaluated and guided through an exhaustive suite of metrics.  A number of sophisticated software applications and service providers stand ready to review, in fine detail, how efficiently resources are being spent across commodities, geographies, business units and supplier types.

Having been a practitioner in this space, I can tell you that even though the concept is simple, AP departments face a number of external factors that constantly challenge their ability to achieve transactional perfection.  As a result, the last decade has seen the emergence of “supplier statement audit” which routinely reviews the transactional (read: payment) history of the enterprise to determine the efficiency of the supplier payment processes.  For too long such supplier statement recovery auditing has been confined to the AP suite as a tool for improving the efficiency of Accounts Payable.  With increased focus on the broader P2P process, supplier statement recovery audit results should be more frequently evaluated by the procurement professionals in the context of the larger supplier management process.

There are many benefits to combining supplier statement audit results into the associated procurement metrics, such as supplier scorecards or spend analytics.  Procurement departments have as much or more to gain by evaluating the results of the recovery effort as do AP departments.  Here are just a few ways procurement can gain from incorporating a review of statement audit results:

• Statement audits can reveal profit leakage, which procurement needs to understand in order to assess larger budgeting or savings opportunities that may exist. 

• Analysis of recovery claims can reveal valuable  insights that will better inform future procurement activities, such as  overlooking the related nature of separate suppliers and missing out on pricing  discounts. 

• Procurement can identify suppliers that routinely  commit transactional errors and incorporate those suppliers’ lack of accuracy in  the supplier scorecard for a more holistic supplier evaluation. 

As a best practice, build in a process to review supplier statement audit results before your next supplier strategy review.  It will provide important insights for managing suppliers.

I would welcome your thoughts on this topic.

In this post, I’d like to present the final two changes we see coming to AP, that will drive efficiencies and increase the value that AP brings to an organization.  In two previous posts, we covered the first three changes:

1.  More Importance Will be Given to the Quality of Supplier Information
2.  Supplier Networks Become a Reality
3.  Technology Provides New Ways to Automate AP Systems & Processes

Here, I present some ideas related to the final two changes:

4. Buyers & Suppliers Collaborate
5. More Cooperation between Finance & Procurement

All of these changes are discussed in a recent webinar I co-presented with Bob Cohen, VP Marketing at Basware, which can be viewed by clicking here.  And, here is a quick overview of the final 2 changes.

4.   Buyers & Suppliers Collaborate

The desire to bring buyers and suppliers closer to together is not a new concept, but it is one that is gaining more attention and momentum.  The potential benefits — from reducing transactional and administrative costs, to streamlining business processes — are just too great to ignore or put off for some unknown future date.  But, there are challenges that must be overcome, as each department has its unique set of requirements.  These can be overcome by focusing on better connections between buyers and suppliers, which then helps drive more timely access to better data.

The first step in the process is to improve the electronic connections between suppliers and buyers.  Moving away from paper-based, manual processes to electronic, automated processes serves to dramatically speed transaction times while reducing errors It also provides the opportunity to proactively use current data to drive better deals for your company.  Timely access to current data will help in setting better terms, more advantageous payment schedules, the ability to leverage product delivery issues (i.e. shipment is delayed, so payment should also be delayed), or to best determine payment timing strategies.  This all will help improve cash flow and streamline business processes for added cost savings.

5.   More Cooperation between Finance & Procurement

Improving the working relationships between finance and procurement is another area of potential organizational benefits, and one we predict is already in play.  Considering the different perspectives and roles that Procurement, AP, Finance, and Suppliers play within the P2P cycle, the potential for departmental disconnects are great, making the benefits to gain in harmonizing the connections equally as significant.  Accounts Payable is in a unique position to be the key convergence point for Procurement, Finance and Suppliers.  Placed at the center of these three entities, AP has the opportunity to add great value to the overall organization.  For example, where procurement is focused on what is spent, AP has the data to know what is spent, and when it is delivered.  With AP at the center of these three entities, they are in a position to deliver critical, timely data to procurement enabling them to negotiate better terms, improve deliver and receipt of goods, etc.  In this scenario, AP takes on a much more strategic and indispensable role in achieving organizational goals.

This has been a very quick overview of what we see as critical changes coming to the AP environment. For a more in-depth discussion around these points, please download the webinar by clicking here.

We will be posting additional material on these topics over the next few months.  We welcome your thoughts about changes you see which will impact AP and Procurement.

This week’s webinar The Dirty Little Secrets of Dirty Data jointly presented on Tuesday the 28th by Jason Busch of Spend Matters and Lavante aims to unveil the many different ways that dirty and omitted data in your supplier population can cost you significant dollars. Jason, Senior Editor of Spend Matters, will discuss from a high level how purchasing and payment challenges bubble up as data decays overtime. Lavante will follow by looking at, in very practical terms, how supplier recoveries are linked almost entirely to the presence of bad data in the supplier population.

By viewing the webinar you will understand a little more about the risk your company faces as well as learn ways in which you can combat that risk and prevent profit leakage.

Join us at the webinar, or check back to see the recorded on-demand presentation.

This presentation was the distillation of literally hundreds of conversations with finance and technology professionals over the past two years about what AP professionals and the AP market have identified as the key to becoming increasingly efficient, productive, and more relevant in today’s business environment.

The list that follows outlines what we see as the top five changes coming to AP:

1. More Importance Will be Given to the Quality of Supplier Information
2. Supplier Networks Become a Reality
3. Technology Provides New Ways to Automate AP Systems & Processes
4. Buyers & Suppliers Collaborate
5. More Cooperation between Finance & Procurement

In this post, I’ll add my thoughts about about the first two points; the remaining items will be handled over the next two weeks.

1. More Importance Given to the Quality of Supplier Information

Improving supplier information is an elusive but increasingly seen as a critical goal in AP departments. Lavante benchmarking data indicates that every year over half of any company’s suppliers will change some significant contact attribute in their AR department. These changes – ranging from the primary contact, physical address, or email – can dramatically affect an organization’s ability to interact with that supplier and maintain transactional excellence.

A rapidly-decaying vendor database has real hard costs associated with it. Consider the potential loss of missed discounts, unanswered phone calls, or miss-directed checks as just a few possible outcomes of incorrect contact data. There is an enormous financial upside to improving and maintaining the highest quality of supplier data. This issue gains increased relevance as industry analysts are focusing attention on this new vendor data management market* and technology providers, such as Jigsaw and Lavante, deliver solutions to help companies effectively automate this process.

Improving supplier data offers a great benefit across the larger procure-to-pay life cycle by providing both procurement and finance with one uniform, single source of truth that will drive improved procurement activities as well as payment processes.

2. Supplier Networks Become a Reality

Simply put, a supplier network is inevitable. Numerous software providers are emerging and gaining momentum as network providers, although a clear market leader is yet to rise to the top. It is obvious that AP professionals are increasingly interested and excited to leverage the benefits and functionality that a comprehensive supplier network can offer.

We see the emergence of a supplier network is a natural for two major reasons.

• A network most closely resembles what is fast becoming the favored means of communication amongst large, disperse groups – social media. Consider when you buy products on Amazon and the instant access you have to what others think about the seller and the product. Think also about how quickly you can use Facebook to inform your entire family that you are safe after a natural disaster has struck your geographical region. Or, the use of Linked-in to seamlessly communicate well-beyond your personal network to professionals in your field. AP departments (and all business for that matter) have much to gain from adopting this same level of immediacy and efficiency!

• A supplier network should deliver equal benefits to both supplier and customer. Ultimately the winning technology will deliver the greatest benefits across both populations in order to drive adoption.

Click here for part 2: Technology Provides New Ways to Automate AP Systems & Processes. The final installment will come shortly with: Buyers & Suppliers Collaborate and More Cooperation between Finance & Procurement. Please add other ideas about what you think is coming in the AP industry.

Lavante & Basware will present a webinar on July 13 at 11am PDT on this topic, covering these top five changes. Click here to find out more and register.

* See Jason Busch’s Spend Matters blogs for more discussion around vendor data management, supplier networks, and other P2P issues.

- Suppliers
- Supplier Contractual terms
- Purchasing volume with those suppliers under control of agreed upon terms

In pursuit of maximizing/managing spend, many procurement professionals have devised numerous intelligent methodologies for selecting the correct suppliers and for negotiating the best possible terms. Unfortunately a lot of the work done on these matters exists as a point in time. For example, selecting a supplier at a single point in time and you set contractual terms at a point in time to last for a period of multiple years. What is not accounted for is that as soon as you lock in a contract with a supplier much of the details regarding the supplier will begin to change almost immediately.

Just like precision machinery, supplier information degrades over time if not maintained properly. For example, Lavante often finds that a customer’s supplier file includes nearly ten percent overlap in the supplier population. That is to say one in ten suppliers are related to some other supplier in the population – but that connection is not visible to the customer. This unseen linkage between suppliers can lead to significant profit loss in the form of missed price breaks, volume discounts, and rebates.

True spend management requires the best of breed technology and processes to select suppliers and negotiate terms. In addition, due to the constantly changing landscape, it is important to manage and refresh the supplier information in real time so that enterprises have ongoing visibility into the constantly evolving relationships within the supplier population.

Precision machinery requires lubrication, sharpening and maintenance at continuous, frequent intervals. Similarly, accurate and well maintained supplier information can reduce unnecessary errors which will help you avoid over-payment all while improving organizational efficiencies and providing your company a competitive advantage in strategic relationships.

To find out more about Lavante’s solutions to help maintain supplier information please click here.

The central focus was on how to continue moving beyond the last two years of recession and how to better prepare for future economic upheavals. Several marquee session titles included: “Challenging Times Pose Unique Opportunities for Shared Services” and “Fresh Eyes for 2011: Realigning Competitive Strategy Post Recession.” Other sessions looked at using metrics to constantly gauge the health and efficiency of a company’s financial operations.

Another theme looked at the health of a company’s supplier data. Directors of shared services can typically view the entire P to P process, and it has become increasing clear that corrupt or inaccurate supplier data can create errors in the payment process that drive up transactions costs. Top of mind were solutions that ensure quality supplier data. Companies actively discussed the growing adoption of e-payable solutions along with other automation solutions and the importance of accurate supplier data as part of corporate initiatives to ensure smooth deployments and upgrades. On the floor, Lavante saw considerable interest in our supplier information management solution, as well as overall growth in awareness of the critical importance of a supplier management strategy and solutions.

We welcome your feedback about the conference as well as your thoughts about the themes presented here.