April 2020

COVID-19. You cannot escape this word anywhere you look in todays society. Companies are in a difficult spot to balance both employee health/safety and keeping the business afloat from a financial perspective. In these times a company’s HR department becomes a key advocate for employees and can be a place for employees to turn to with various questions on ever evolving company practices and policies. An engaged and proactive HR department can be the difference between happy employees or ones that are utterly confused and frustrated.

When we think of HR we tend to always think about employee relations and the department you go to with questions about your paycheck or benefits. While those are definitely components to the HR organization there is so much more that does not meet the eye. From a procurement lens there is a lot that touches the HR department in terms of cost. A few that quickly come to mind are payroll administration, benefits and retirement plan administration. In an era of companies trying to cut costs to stay in business or avoid headcount reductions it is important to think about the other levers available when trying to reduce costs. Many organizations are opting to slash the employer match for 401k plans or reducing employee pay by 10-20%. Before taking these drastic employee morale draining measures, companies should look at the costs that they are paying for these services. There is always an administration cost to have a payroll vendor or retirement plan vendor but many companies are not keenly aware of what these costs actually are. These costs can sometimes range between 1-5% of the total payroll or 401k program meaning more cost for the organization. Negotiating these costs and partnering with a strategic supplier in this area may enable companies to not have to take such drastic measures in these times. Saving 1% on retirement plan administration could mean a company is able to keep the employee match but potentially reduce it slightly versus slashing it altogether. Reducing a payroll vendor fees or certain services that are not deemed essential could enable up to a 5% reduction helping to potentially offset employee salary cuts.

The point in all of this is to think creatively about cost reductions and how you can leverage the suppliers you have in the marketplace to collaborate and work with you in these difficult times. The goal is not to just merely ask for a reduction but to have a productive conversation about the challenges your organization is facing and how they as a supplier can help you keep your employees on payroll and minimize any reduction in benefits. Employee morale is key in these times when everyone is experiencing some form of difficulty and change to their normal. Keeping employees engaged, happy and informed are all key ways for long term employee retention. When the dust settles and we start to get back to a new normal do you want to be remembered as the organization that cut benefits and payroll in a time where they are needed the most or one that thought creatively as to how to leverage other pieces of the cost equation to keep core obligations consistent? Employees will surely remember this time and start to think about their workplaces in a new light based on the decisions that are made.   

The current state of the global economy has caused a very large amount of companies around the world to either change how they operate or perhaps even stop operations all together. The
consequences of doing so are very significant and while companies try and figure out ways to keep their head above water, some might look at this time as a way to dive into some projects that have always been on the back-burner and could help your organization come out of the global pandemic quicker than others.

Identifying opportunities within a supply chain to reduce your overall spend as a company is a critical area of focus. Some opportunities are easier than others. Some require a lot of internal effort in order to gather the required data and perform the necessary analytics to make educated decisions. During the COVID-19 pandemic, this could be a great time to utilize the time available to collect that data and do those analyses.

One area where a company can look to reduce their overall spend is with Inbound Freight. Specifically, freight where the cost is currently built into an invoice with a supplier. An invoice might have a fixed fee for the product coming in, perhaps they charge a percent of the invoice for freight, or maybe they have their own preferred carrier network and just select the carrier they like the most. Are any of those methods the best option for you? Understanding how you are charged for inbound freight can be a huge opportunity for improvement. By taking control of the spend, you can start to find ways to improve on the cost to ship those goods. It might take a little more manual effort from your logistics team but in the end, the ability to control all of the cost levers and flexibility to change as needed, can be a great opportunity for savings.

There are a couple of things to consider when determining what the best option is for inbound freight with your suppliers.

Flat Fee: Ask your supplier for details on the shipment. As for dimensions, weight, shipping method, class, etc. Reach out to one of your carriers (parcel, LTL, FTL, etc) and ask them to price out a shipment with those specifications. Try and determine if that shipment is one of the more common shipments. Do you receive that shipment 80% of the time? When you get pricing back from your carrier, see if it is above or below your flat fee to determine if there is an opportunity to take that cost in house and use your own carrier network.

Percent of Invoice: The type of commodity is important here. If you are receiving very expensive items but a carrier values those items as ideal freight to carry (well boxed, palletized, dense, etc), then you might want to have your carrier move that freight instead of take the hit on the invoice.

Supplier’s Carrier: It easy to assume a supplier will always use the best carrier for you. That does not have to be the case. They are most likely using a top carrier in their network, not the one with the lowest cost, or best transit time or most reliable delivery. Determine which of these factors matter the most to you and either ask the supplier to select carriers bases on your requirements, or use the same method as Flat Fee and ask for a variety of shipment specs, and ask your carriers to price accordingly.

3PL: One other option could be with a 3PL or the Spot Market. If you do not want to use contracted pricing for receiving a shipment, maybe the market is in a downturn for trucking, use a 3PL or hit the spot market. Using these options when the time is right can help save a lot of money throughout the year.

Taking on an initiative like this will require a lot of time and effort. Multiple departments throughout your organization will have to get involved. The cost function of the invoice changes if freight is removed. It’s no longer baked into the cost of the goods. This could change how you price your products or services for your customers down the road. Making sure the proper internal stakeholders are involved will be critical for not only the success of the project, but making sure your company will be able to take advantage of all the operational and cost improvements made as a result of taking control of your inbound freight.

What are some other downtime projects where Corcentric can help? Please visit our website and fill out our online form here.

Studies show that 1 in 5 adults report mental health issues. Although this may seem like it is just a personal matter, it actually affects companies. To start, many citizens with mental health conditions also have serious physical health conditions. This combination of issues raises the treatment rates by about 300%. As a result, companies will have to provide sufficient insurance and time off for their employees to tend to these concerns.

To minimize these hardships, companies can actually assist with the mental healing of their employees. For one, they can spread awareness about the importance of monitoring your mental health and stress management. Promoting workplace health is often successful and even more when paired with intervention opportunities. Centers for Disease Control and Prevention provide a lot of insight on how companies can take action. One is to foster a safe environment. Safe can mean that employees have access to dedicated quiet spaces to perform relaxing activities throughout the week. Another option is to provide employees free counseling services in support of their mental well being. Some additional ideas to promote wellness include stress management workshops, mental health PTO, training for leadership to spot those distressed and providing information brochures throughout the company.

Now, more than ever, mental health support is needed. As a result of our current pandemic, many are experiencing high level of anxiety and stress. If companies show their support and understanding during this difficult time, employees are likely to become appreciative of and even prioritize their job when everything is over.

The World Health Organization has taken a step further as to create a Global Plan of Action. It started in 2013 with a full implementation and impact goal of 2030. It 'outlines relevant principles, objectives and implementation strategies to promote good mental health in the workplace.' Check it out here to learn how you can start promoting mental health today!

With the onset of COVID-19 many companies are encouraging their employees to work from home. Although, some may be more experienced than others in working from home this is definitely an adjustment for all. Forbes has provided some best practices for working from home.

One of their first steps to success is to create a work-conducive environment. It is recommended that your home work-space mimics that of your office space. This means to have a chair and desk setup versus a couch, bed or other relaxation furniture. For me personally, this has proven true. I am a much more efficient worker when at a desk in the den of my home verses my bedroom. Additionally, this area should be void of distractions such as family and entertainment devices (TVs, gaming systems etc).

Next, comes the more mental aspects. This includes having set office hours, taking breaks, eating healthy and exercising. Being at home there is a little more freedom with your work schedule. Though, this flexibility should not be taken advantage of. It is good to still create a schedule. This will help keep your productivity on-track. Next, it is important to take those lunch and coffee breaks. Allowing your mind a chance to rest and your body a chance to recharge will help increase your endurance and often make the day go by faster.

Lastly Forbes provides some advice on the business side. Computer skills are in high demand in most jobs today. Now that you may have to set up your own devices and technical equipment as well as participate in various virtual meetings, it is best that you watch some online tutorials or even enroll in a few free online courses. It is important to stay connected with your work team through various form of communication such as instant messaging and video calls. In my experience, having a network helps you feel supported and confident.

Have you been implementing any of these best practice at home already? Did you learn anything new today? Is there any tip that you can add? Let us know in the comments below!
Supply chain key to recovering after coronavirus slowdown

These are strange times indeed, and while you're likely hearing a lot of references to "the new normal," you also need to keep in mind that within several months, many parts of life will likely be back to "the old normal" again. That certainly incudes the supply chain, but crucially, many experts say the supply chain will actually be key in helping get broader society back to normal.

Interestingly, this will likely start as a cascading effect beginning in China, according to the World Economic Forum. After all, China - the country from which the novel coronavirus originated - is one of the world's leading importers and exporters as well, meaning that it will get its supply chains up and running at full capacity as cases of COVID-19 dwindle within its borders, and will then require closer collaboration with partners in the U.S. and elsewhere.

Supply chains continue to adapt to the 'new normal.'Supply chains continue to adapt to the 'new normal.'

All involved will have to proceed with some measure of caution, of course, the report said. It's all but a certainty there will be more coronavirus outbreaks - though perhaps not at the current scale - through the end of 2020, into 2021 and potentially beyond, and that could also cause supply chain disruptions. Planning for these eventualities, and having effective fallback plans in place, will also be a must.

Potential positives?
It may seem strange to talk about some of the consequences of the pandemic - and its attendant economic impact - as being positive, but experts in the supply chain say that it has necessitated a reordering of existing processes, according to CNBC. By altering previous norms out of necessity, companies may be able to put themselves on better footing going forward - ironing out wrinkles that were previously acceptable or even invisible.

Even still, it may take months or even years to fully realize just how much coronavirus has affected the global supply chain, the report said. whether that's a good or bad thing depends entirely upon the industry's response.

"I don't think things will return to normal as we've known them over the last couple of decades," Alex Capri, a visiting senior fellow at the National University of Singapore's business school, told the network. "We are in a completely different new era now and globalization as we've known it in the past is over."

Getting back on track
With all this in mind, it's important for companies to have contingencies on their contingencies, especially over the next few years, according to the MIT Sloan Management Review. After all, it will be difficult or even impossible to predict when or where another outbreak will occur, and they cannot be left flat-footed when supply chains were cut off as they have been in recent months.

The more companies can do to strategize for just about any issue that arises in their supply chains, the better off they will be when it comes to getting back on their feet - and serving the needs of partners, consumers and the society in general. That, in turn, provides a net benefit to all involved, and makes sure everyone is more responsive to the next big slowdown.

With living in the current times of Covid-19, things are changing and people are adopting a new normal.  For many people, this new normal includes working from home.  Like anything, there are some drawbacks to working from home, however there are some major benefits emerging from this.

One con that may be everyone's immediate thought of the downside of working from home is the loneliness.  A survey conducted by Blind, asked about 10,000 professionals various questions about their mental well-being during social distancing.  One key takeaway from this survey was 52.9% of respondents answering yes to increased loneliness during work from home and 56.4% reporting they experienced increased feelings of anxiety during work from home.  Although the current situation of work from home cannot be changed, different efforts can be made to mitigate these issues.  Additional virtual meetings for check-ins can be added to the calendar, utilizing messaging platforms can increase daily communication, and so forth.  The added communication channels can ease loneliness and anxiety by increasing the sense of community, which in turn may increase productivity levels.

Some of the benefits that arise from working from home is the lack of commuting, greater flexibility, and improving on your work/life balance.  Commuting for some can be very time consuming and expensive.  By eliminating this need, the time saved can be put towards completing additional work and the money saved may ease financial concerns or just increase happiness.  Although many people are still expected to work their normal working hours from home, people are making some adjustments.  By working from home, you can alter your schedule to align with your most productive times.  This allows people to complete their work in a timely fashion, yet do so on a timeline that is best suited to the person.  Lastly, working from home can improve your work/life balance.  Currently, there is definitely less "life" opportunities as many stores and activities are closed, however people can use this opportunity to spend additional time with their loved ones at home.  People with children at home are adjusting to fulfilling the role of teacher among many other titles.  Since they are working from home, they are better suited to jump in and conduct activities with their children.  The more flexible schedule allows for both parental and work duties to be completed.

This new normal of working from home has opened people's eyes to the pros and cons this brings.  The cons of this can be lessened by putting more emphasis on various communication channels.  The pros of this allows workers to maximize their effectiveness and efficiency, while also accomplishing household tasks.  Distractions can arise from working from home, however they also exist in the office.  Using ones self-discipline will help get over common distractions.

Accounts Payable is often thought of as just a cost center that needs to be controlled, and many finance organizations consider it a necessary evil. Historically, it’s true: Accounts Payable made sure invoices were entered into the books, approved, and paid. This does not have to happen today, and that mindset needs to change. The best way to do it is to stop the Accounts Payable organization from solely pushing paper and begin using the resources in a strategic fashion.

The first thing that needs to be asked is: What does management care about? Asking senior managers & CFOs who oversee AP will often provide one or more of these three metrics:
  • Invoice cycle times
  • AP employee productivity (i.e. invoices processed per team member)
  • Percentage of invoices paid on time
The common thread between all three of these metrics is that they only show whether AP is worth the cost. They are important metrics, but they only show the cost of AP while neglecting to show the value.

The key to making Accounts Payable profitable is thinking strategically beyond the above metrics and identify areas the team can help the business beyond the tactical. Any report to an executive should include additional metrics that detail the amount of money the department has saved. Some key examples are:
  • Identifying and stopping duplicate invoices or other fraud
  • Negotiating and meeting early payment terms
  • Persuading vendors to accept credit cards (that offer a rebate back to the business)
While the first one is important to any AP organization and will absolutely demonstrate value, using the latter two as the basis to perform an Accounts Payable transformation can elevate the role of AP from cost center to a potential profit center.

Imagine a company with $200,000,000 in invoice payments that spends $300,000 on an AP department. If they can demonstrate how they have negotiated 1% early payment discounts on $25m of spend and paid another $20m with a credit card that give a 1.5% rebate, that $400,000 AP department cost has earned the company $550,000.

A 1.8 ROI wouldn’t be considered great for a revenue generating department, but it allows AP to transform its role from a cost center to a department that can directly improve the bottom line.

Beyond considering the process to achieve this, the other key aspect is having clean, accurate data to report these Accounts Payable KPIs. Without that, executives will constantly question the validity of them. I've worked with clients previously who couldn't provide data for these revenue-generating numbers beyond shrugs and anecdotes. Getting them to accurately track these areas enabled them to report the numbers and confidently stand behind them.

Improving Accounts Payable will take some effort and require a shift in operating among all employees in the organization (Working from home is a great time for an Accounts Payable process transformation). If your organization runs almost entirely on paper, there will likely need to be some technology adoption (such as AP Automation) in order to manage it all. The end results though, can demonstrate that AP is more than just a cost of doing business.

In Part 1 of this blog posting, I discussed the topic of why you should still invest in marketing activities during a recession, along with the overall benefits that you can receive as a marketer. Today, I want to focus a little more on the nitty-gritty of it all and dive into the execution piece, which involves leveraging digital platforms. Studies show that during the COVID-19 pandemic, consumers are spending significantly more time on digital devices due to quarantining/social distancing. For marketers, this means that increasing your focus in digital is an absolute priority. In my first post, we discussed investing in market research, positive brand value, loyalty tactics, and advertising. Let’s break down how you can use digital marketing in these areas during a recession. 

      1.       Digital Market Research

With the proper market research, you can properly steer your brand and interact with your target market(s) at the right touch-points. Effective market research will provide you the right information to execute, and improve your strategies. This means you can produce better content with strong calls to action (CTAs) that could increase conversion.
All things digital, including SEO, Email, Social, and paid advertising, can and should be used as primary market research. You should be tracking how well all of these campaigns perform and focus on the “Three T’s… and one R”: Test, Track, Tweak, and Repeat. In a nutshell, great SEO will allow your customers to find you easier; a great email campaign can be used in a plethora of ways from loyalty programs to brand information and benefits; social media allows for conversations with your customers along with interactions with your content (and allows you to understand more about who they are and what they value); and paid advertising allows you to reach new customers and present your brand as a market leader. With every campaign run in these categories, you learn more about your customers. Every tweak made will change the performance of your KPI’s so ensure that you pay extremely close attention to the results and always look to find ways to improve.

      2.       Loyalty Tactics within Digital

Great rewards and loyalty programs can become so automatic that a customer can actually forget that they’re part of a program. If an online system can recognize a customer by name, phone number, or payment info, the customer doesn’t need to remember details like punch-cards or codes, and the rewards program is often out of sight and out of mind. This is an area that we’ve all likely dealt with in digital automation as I know I’m not the only person who’s forgotten a password since Apple introduced touch ID.

Using email, apps, and social interaction can be a wonderful way to enhance a loyalty program. DSW launched a personalized email campaign in 2017 to remind their customers about their program by detailing snapshots of points earned and the number of points needed to earn their next $10-off certificate. Starbucks and many other companies tie their loyalty program into their app so they can collect and consolidate their customers’ information. In doing so, they have a database of knowledge, which they can use to personalize specific benefits to the customer. Using social media, Foot Locker ran an incentive for members of their loyalty program where Houston Rockets All-Star guard James Harden challenged Foot Locker “VIP’s” to a game of HORSE. In this program, customers recorded a video of themselves performing a shot and posted it to social media with specific hashtags, and Harden would try to meet or beat their submissions.

There are many ways to enhance a loyalty program using digital tactics. Consider leveraging your own market research to learn about your customers and work on a strategy that complements your brand and your customers’ interests.

      3.       Continue to invest in TV Advertising – For Positive Brand Value

In Part 1 of this blog, I mentioned how local TV stations are getting a surge in viewership during COVID-19; however, the stations aren’t making more money off of the increase since many companies are pulling back advertising. In a nutshell, this means that prices are down for TV spots in a time where you’re likely to reach larger audiences. It’s a buyer’s market out there so if you see an opportunity for local TV and the budget dollars are available, go for it! Even when everything seems to be going digital, TV still works for reach and brand awareness, and it’s also a great opportunity to speak from the heart. Since COVID-19 came to the US, Guinness produced a commercial for St. Patrick’s Day with a heart-warming message to raise each other up; and Verizon made a commercial talking about ensuring that they’re doing their part to help customers stay connected. Right now is a great time to use TV advertising as a way to show off your brand’s goodwill with a wider audience, so consider calling your local TV stations to get your brand on the air. As I mentioned in my last post, your brand is likely to be more noticed and your company could be better off for investing in advertising once normalcy returns.

Marketing during a recession can be a scary time, but solid opportunities exist for your budget investments. As a Marketing sourcing professional with agency and practitioner experience, I recognize that every brand is different and not every tactic presented in this blog series will apply to your overall marketing campaign now or ever. At the end of the day, marketers know their brand better than anyone else. If a new investment makes sense to drive consumer engagement and sales during this time, and outside support is required to execute, Corcentric can help you source a potential new partner, leveraging our market intelligence and knowledge of the dynamic agency landscape. And if you happen to be in cost mitigation mode, as many companies are, we also have the know-how to properly engage marketers and identify the right opportunities to optimize your Marketing budget.