Financial Supply Chain Management

We’ve always seen the banks as being the facilitators of commerce. Depending on your point of view, they’re an invaluable support to business or a necessary evil. Without a properly regulated banking industry, business in the modern world couldn’t function. Or could it? There are changes happening that could make us question what role the banks play and in some industries and supply chains, there could be a better way.

In a comment on an earlier article about the cost of DPO, Richard Fitzwilliam commented: “DPO is a key indicator of a company’s health and is one of the levers which drives a company’s share price and therefore its valuation. Discounting does reduce DPO and therefore has a negative impact on share price.” I would not normally respond to a comment if I disagree with it but Richard's point is  an interesting one and it goes to illustrate very well how DPO, discounting and supply chain finance can be seen in entirely different ways depending on the lens you view them through.

So you think DPO is important? Well it is of course but manging it effectively comes at a price and it may be higher than you think. DPO (days payables outstanding) is an imoportant KPI for AP people but in many cases there is a hidden cost in keeping DPO figures high. It's the often significant opportunity cost of not taking discounts.

The more I look at the proposed acquisition of Ariba by SAP, the less sense it makes. SAP didn't need the functionality. They didn't need the brand. The Ariba shareholders will clearly be pleased to see this deal go through but what, I wonder, would an SAP sales guy be thinking and what would Ariba's competitors be making of it all?

There has been some criticism of OB10's user interface and so their users are likely to be pleased at the announcement today of a new version of their portal which, according to the press release, will "enhance the user experience, bring further efficiencies and transparency to the purchase-to-pay process, and deliver ground-breaking new services."