In his latest contribution to Entrepreneur, Bill Hobbs connected with SourceDay CEO Tom Kieley to discuss how procure-to-pay solutions are critical to mending broken supply chains.
“Most SMEs today either use a hodge-podge of small-business tools to manage the flow of goods and materials from procurement to delivery and payment, or they outsource the management of their supply chains to third parties, which comes with its own set of limitations,” Hobbs said in the article. To solve this problem, Hobbs points to a procure-to-pay approach to supply chain management that integrates procurement with accounts payable, helping SMEs reap the benefits of visibility, business connectivity, enhanced demand planning, and revenue forecasting. Furthermore, Hobbs emphasized how companies can avoid the all-too-common mistakes of overbuying and overpaying when they switch to procure to pay.
We caught up with Kieley to expand on Hobbs’s article given his experience leading SourceDay to process more than $93 billion in direct materials spend since 2015.
When it comes to overbuying, Kieley said he believes one misstep in the first mile can mean the difference between shipping a customer’s order on time or holding onto it for weeks on end. This concern can compel businesses to fall into the trap of overbuying to compensate.
Stop chasing purchase order updates from vendors and suppliers
“For many SMEs, the threat of failing to meet peak demand often means they purchase more parts or components than they actually need to assemble, package, or ship a product. It is a surface-level fix to a deeper problem—it’s like walking a tightrope across a river. There are only so many times you can do it before you fall and decide you need to build a real bridge,” Kieley said.
Overpaying suppliers is another supply chain woe that can hurt your business. Thus, finance teams need to have the same level of intel as procurement teams when potential changes or problems arise.
“In the legacy supply chain model, procurement, receiving, and finance teams are so disconnected that it’s nearly impossible to maintain real-time visibility and adapt to changes in orders or timelines to meet customer commitments,” Kieley said. “Half of all purchase orders in a given supply chain change, so the number of parts ordered doesn’t match the number of parts received, and then the invoice matches neither. It’s a nightmare scenario for finance teams, which is why integrating accounts payable into the procurement process is a critical step for SMEs to grow.”
For your business to scale, great supply chain performance is crucial. To maximize supply chain efficiency, every segment of a business—from procurement at the front end to finance at the back end—should be seamlessly connected. SourceDay’s suite of supply chain solutions offers a technology-driven platform that can easily integrate into your existing ERP system, ensuring your entire organization has accurate, real-time data about supplier pricing, quantity, lead times, and delivery dates. To see for yourself how your business can use procure-to-pay solutions to stop overbuying and overpaying, schedule a demo today.
Expert Panel: Supply Chain Performance in 2021
Tune in to this on-demand webinar to hear from a panel of our experts as they discuss what our customers are struggling with this year, and how to grapple with the fallout from COVID-19 on the Supply Chain.