Solving the (Other) Last Mile Problem
By David Hope-Ross on Jan 30, 2012
Perfecting delivery of goods or services along the ‘last mile’ to a final destination is a complex challenge that receives wide attention from supply chain professionals. The term ‘last mile’ even has its own Wikipedia entry and will return about 15 million results from a Google search. But in the case of things we buy from suppliers, delivery isn’t the end point at all. It isn’t even close. Instead we should think about delivery as only an interim step in a much broader set of processes that begin with strategic sourcing, supplier management, contract management, and, ultimately end with payment to suppliers.
So where is the real last mile? Well it begins with a delivery- the delivery of an invoice. And it ends with successful payment to suppliers.
Given the attention focused on the movement of materials, we should expect organizations to devote considerable resources to the movement information and money along the other last mile of the financial value chain. But instead, invoicing receives surprisingly little attention. Indeed, most organizations still rely heavily on paper invoices. And these paper invoices are notorious because they introduce errors, fraud, overpayments, and inefficiencies that prevent finance officers from optimizing early payment discount and interest benefits. The expense and working capital costs of inefficient invoicing are significant. Organizations that have moved to electronic invoicing and accounts payable (A/P) have seen improvements in working capital and margin that surpass supply chain reengineering efforts focused on the physical movement of goods. For example, an Oracle customer in high-tech added $1M to thier balance sheet with every additional day of DPO (Days Payable Outstanding).
To address the challenges presented by paper invoices, Oracle has developed an array of portal and network solutions. And we’ve also been busy working on a partnership with a company called Transcepta. We are excited about Transcepta because it addresses the two fundamental challenges of e-invoicing. First, Transcepta addresses the inability of organizations to devote headcount to recruiting and on boarding suppliers by providing expert service teams. And second Transcepta eliminates the need for suppliers to make any changes to their invoice formats through a portfolio of supplier connection technologies.
Transcepta’s approach is a powerful one-two punch that is finding success. To learn more about how it works, you should listen to Shan Haq, Vice President Global Marketing & Sales on this podcast. Your CFO will thank you.