Critical components in your supply chain are at risk – and you may not even know it. There are numerous points of failure in today’s complex supply chains and because of the difficulty that upstream suppliers have funding their business from day to day, the risk of a damaging and expensive failure is increasing. And it gets worse. Efforts to cut costs have resulted in leaner, riskier supply chains held together by a network small suppliers. If the risk of financial failure isn’t mitigated it could have disastrous consequences – which is why businesses – especially in Europe – should begin to take supply chain finance more seriously. continue reading…

The problem with public sector finance is they have it too easy. The challenges that face businesses in the real world don’t affect public sector. Apart from the annual scramble to spend money in order to secure next years budget, issues like cash flow management just don’t exist in the same sense that it exists in the private sector. And this is why it is so disappointing to see government bodies playing the late payment game.

Why do they pay late? They don’t have a good reason to. continue reading…

Karl Meinke, professor at the Royal Institute of Technology in Stockholm once said – “Computers allow us to shrink the world. Before we know it, we’ll all be living in matchboxes”. I paraphrase slightly. He won’t remember that he said it.  It was it circa 1975 when he was 13. I remember it was very funny at the time but remarkably, there’s a ring of reality in what he said.

The world we occupy today is unthinkably different to the world that existed then and while we don’t live in matchboxes in a literal sense, who would have thought that the shops we used to frequent would have shrunk to the size of a letter box?

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Happy New Year and welcome to Q1. Time to undo all the good work you did last quarter – and a little bit more. Let’s hope the shareholders aren’t paying attention. continue reading…

This week we’re delighted to welcome John Mardle as a guest writer. John delivers CashPerform’s working capital optimisation programme and brings a new perspective to the supply chain finance discussion.

The level of trade finance required today globally outstrips what can be achieved even by syndications that pull together all the banks. The pool is just not big enough in terms of the figures needed to support global trade. Could pension funds plug the gap? continue reading…

A high profile public procurement exercises in the UK has become a very public embarrassment for the British government as the award of the franchise for one of the country’s busiest rail lines has been withdrawn following complaints from one of the unsuccessful bidders. This is going to lead to calls for public procurement processes to be examined and it will do nothing for the reputation of procurement professionals in the public sector who regularly come under fire from a press who will seek to conclude that the public procurement process needs to be overhauled.

But that’s exactly the wrong conclusion to draw. Indeed, I think that the whole debacle shows the strength of the procurement process – not its weakness. continue reading…

Most procurement people would describe their role in terms of getting the best prices, managing supplier risk ensuring certainty of supply. But it’s more than this. If you can get the best price but the logistics costs are extortionate then it’s not the best cost of supply. And if the process of purchasing or the payment terms are unusually complex or cumbersome, then it may be the wrong choice of supplier. Of course some of these purchase-to-pay costs are managed within finance but procurement need to take a holistic view and consider the total cost of ownership – the cost of acquisition, management of assets and ultimately disposal or contract exit.

There’s a succinct, albeit somewhat simplistic definition of procurement. It’s all about managing the cost of doing business with your supply chain. It’s not just the cost of supplies. It’s all costs – and they are numerous. The cost of goods and services themselves, logistics costs, warehousing and supply chain management costs. There’s the cost of the purchase-to-pay processes, maintenance and support of purchasing systems and associated finance modules and accounts payable. But there’s a cost that most purchasing people overlook – the cost of working capital.

Overlooking the ways in which procurement can impact the cost of working capital allows significant costs to leak from the supply chain – a leakage, that if identified and stemmed, can have a major financial impact on both sides of the buyer/supplier divide.

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