Working Capital Insights from the SAP Ariba Benchmark Program

Transcription

1 Working Capital Insights from the SAP Ariba Benchmark Program November 2017

2 Working Capital Insights from the SAP Ariba Benchmark Program 2 /10

3 Background and Key Definitions The information outlined below will help you understand the objective, scope, and contents of this paper. Objective This paper summarizes observations made by the SAP Ariba analytics team about the benchmarking survey and provides our recommendations for improvement on key performance indicators (KPIs). Scope of This Paper Highlight trends and best practices Compare benchmarks of top performers with average performers Compare benchmarks of select metrics with the previous year Provide recommendations to improve benchmark scores Background of the SAP Ariba Benchmark Program Launched in 2002 for Ariba customers Today includes 200+ SAP Ariba customers across 24 SAP industry groups Based on benchmarking survey covering strategic sourcing, operational procurement, and treasury and accounts payable processes SAP Ariba solutions covered are SAP Ariba Spend Analysis, SAP Ariba Sourcing, SAP Ariba Contracts, SAP Ariba Buying, and SAP Ariba Buying and Invoicing Close to 3,500 UNSPSC categories (classes) analyzed Over US$400B in spend analyzed (~$80B in SAP Ariba Sourcing spend, ~$60B in SAP Ariba Contracts, ~$160B in SAP Ariba Buying plus SAP Ariba Buying and Invoicing, and ~$100B in SAP Ariba Spend Analysis) Research Definitions Quartiles are defined by equally dividing the data points for each given metric into four groups Report includes the following benchmarks for each metric: Top quartile: 25% of companies with the highest values; minimum value of top quartile is considered as the benchmark value Average: Arithmetic average of all data points for the metric The paper evaluates: 1. Top quartile performance compared to average performers 2. Top quartile performance in compared to top quartile performance in Time Period of the SAP Ariba Benchmark Program September 2015 to August 2016 Participate in the benchmarking survey at SAP Value Lifecycle Manager Address your queries to Working Capital Insights from the SAP Ariba Benchmark Program 3 /10

4 2015 SAP SE or an SAP affiliate company. All rights reserved.

5 Table of Contents Overview 6 Key Highlights 7 Strategic Measures to Improve Performance 9 Working Capital Insights from the SAP Ariba Benchmark Program 5 /10

6 Overview Improving Working Capital to Benefit Your Financial Supply Chain The ability to align invoice status visibility, working capital management, and payments can dramatically impact your organization s bottom line. And in today s digital economy, you can use automated solutions to better connect and collaborate with global suppliers, realize new opportunities to manage cash and working capital, and simplify the B2B payment process unlocking significant value from payables as a result. Best Practices to Optimize Working Capital Management Connect and collaborate on a global scale with Ariba Network Take advantage of discount opportunities on electronic invoices as well as invoices processed manually Maintain or extend days payable outstanding (DPO) by managing payment terms Use supply chain financing to support increased DPO Use simple and secure payments to remove complexity and reduce costs Working Capital Insights from the SAP Ariba Benchmark Program 6 /10

7 Key Highlights Trends 01 Days payable outstanding (DPO) has increased from the previous year; top performers have significantly higher DPO compared to average performers 02 Organizations have higher spend under discount compared to the previous year 03 Top performers have better prenegotiated discount terms with their suppliers Working Capital Insights from the SAP Ariba Benchmark Program 7 /10

8 Key Highlights Trends Days Payable Outstanding ( ) Days Payable Outstanding ( ) DPO has increased by 2% from the previous year Top performers have 25% higher DPO than average performers 7% 10% Percentage of Spend under Discount ( ) 6% 7% Percentage of Spend under Discount ( ) Percentage of spend under discount has increased by 43% from the previous year Spend under discount for top performers is 52% higher than for average performers 87% 30% Supplier Discounts Captured Supplier discounts captured by top performers are 2.8 times higher than average performers Average Top Quartile Working Capital Insights from the SAP Ariba Benchmark Program 8 /10

9 Strategic Measures to Improve Performance Automating Invoice Processing Digitize invoices to accelerate invoice approvals, improve compliance, reduce exceptions, and increase processing efficiency which in turn leads to lower invoice-processing costs and improves accounts payable (AP) full-time equivalent (FTE) productivity Use smart invoicing and automated workflows to expedite invoice approval and lay the foundation for working capital opportunities such as dynamic discounting, optimizing DPO, and unlocking more strategic value Managing Payment Terms Review opportunities to extend DPO with as many suppliers as possible, and offer early-payment discounts for others that prefer to get paid sooner Enable more suppliers over Ariba Network to connect with multiple trading partners and receive competitive payment terms Limit variances in payment terms to improve DPO performance Invoicing DPO Discounts Payments Capturing Discounts Review opportunities to take advantage of more supplier payment discounts Enable more suppliers over Ariba Network to obtain the most competitive discounts Consider enabling the discounting capability in SAP Ariba solutions to increase supplier participation and take advantage of dynamic early-payment discount programs, maximize discount savings, and earn impressive returns on cash deployed Optimizing Payment Establish a simple and secure payment method to remove complexity and reduce costs Consider enabling the payment capability in SAP Ariba solutions to drive faster, more secure payments that include greater payment detail than other e-settlement methods Working Capital Insights from the SAP Ariba Benchmark Program 9 /10

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