Recession to Recovery
Digital Transformation Stories from Zycus’ Pandemic Archives
Story #1 – A Leading US-based Insurance Provider
Amidst the pandemic-driven recession, a leading insurance provider based in the US was working towards the objectives of –
- Reducing their process & cycle times
- Improving the transparency in their purchasing process
- Measuring the productivity of the procurement dept. with relevant KPIs (key performance indicators)
The insurance provider wanted to make the most of a crisis, and decided to undertake a digital transformation effort by implementing Zycus’ complete suite of P2P solutions.
- Trimmed the cycle time for catalog orders & invoice approvals from a full business week, down to ~15 hours
- Enjoyed increased discounts by leveraging favorable terms for quick payments
- Boosted their savings by ~$100k, by eliminating duplicate & over-payments
- Reduced their vendor management FTEs by 87%
- Increased the stakeholder satisfaction Net Promoter Score (NPS) from neutral to +10
Story #2 – A Multinational Electronics & Electrical Equipment Company
A multinational electronics and electrical equipment company transformed its P2P process with AI-based technology. A quick glance at its AP improvements during the pandemic:
- Paper invoices
- Nearly 100% manual
- Highly inefficient processes
Feb 2020: Go-Live with AP Automation
March 2020: Work From Home
September 2020: 100% digitalized AP
Key Highlights from results achieved through Zycus’ AI-based AP Invoice Automation:
- Enforcement of ‘No-PO-No Invoice’ reduced retrospective POs (Purchase Order)by 50%
- ~1/4 invoices via portal; 3/4 via AI
- 75% POs are issued prior to invoice
- PO cycle time reduced by 75%
- 676 suppliers on-boarded
- Availing the early pay discounts for 1sttime
- Exceeded year 1 ROI (Return on Investment)targets
- 10X more requestors
- Suppliers paid on-time
“iAnalyze was the big driver for our cost savings, where we were able to set an idea of what our total spend was by operating group and across the globe.” – Carlson
“The product that we use from Zycus was a game changer allowing our users within 10-15 minutes to get the scope of spend that they need. Providing that extra service we didn’t feel we’d always get from other competitors.” – Cargill
“Zycus was the ﬁrst step towards standardization of procurement processes across divisions. Providing visibility into Spend and identifying savings opportunities is something Zycus has helped us with. Their approach toward customer service is top-notch.” – Global Beverage Giant
Additional Opportunities in Adversity
While procurement and finance may not independently hold the pen on some of the following countermeasures, with the ever-increasing importance of the role of the CPO (Chief Procurement Officer), they should be able to influence and support these additional strategies –
Cash is King:
In case of bad debts / Accounts Receivables (ARs), deploy aggressive ‘factoring’ strategies. ‘Dollar today’ (in cash) is always greater than a ‘dollar tomorrow’ (in whatever form). For a haircut of ~10%, you can turn your ARs liquid with many highly reputable factoring service providers.
If you’re able to act on ARs before the vast majority pick up on & acknowledge the recession, accelerate efforts to realize as much cash as possible before we hit the trough.
In a similar vein, it would be beneficial to shore up working capital by borrowing relatively heavily, before the debt market dries up. Preserve cash/money to operate.
Recession offers, to those that need it, a do-over – to address past strategic mistakes and misfires such as product portfolio optimization, unrelated & unsuccessful diversification, or unsuccessful geographic expansions. As we head into Quarter 4, pull the plug on projects that are value destroyers – redeploy assigned resources for other core projects.
Recession also offers great buyout opportunities, including fundamentally strong businesses, sometimes available at deep discounts. However attractive it may seem, instead of buying ‘white elephant’ companies, focus on buying single-product companies. Such companies are often leaner, the value is preserved in the product IP (Intellectual Property) & brand, and don’t have the overheads of larger companies.
Acquiring companies in this phase offers various synergies:
- A larger vendor/supplier base
– Rationalizing the supplier bases of both/all organizations gives your company access to a more refined pool of trusted, competent suppliers
– Overheads get shared and help you to optimally utilize your operational capacity
Additionally, undertake CLM (Contract Lifecycle Management) & due diligence processes to understand the risks, and harmonize them to your organization’s guidelines.
Recessions can create vast and long-standing performance gaps between companies. Digital technology can either help you close the gap, or it can widen the chasm. Come the next recession, companies that neglect digital transformations may find themselves staring down the abyss.
How Long Do Recessions Last? When Are They Over? (forbes.com)
How to Survive a Recession and Thrive Afterward (hbr.org)