Most companies want to grow. Those lucky enough to do so encounter a few surprises as they scale, Matt Clark said.
Mr. Clark is the COO of Corcentric, a company working to make complex B2B processes run more efficiently by streamlining, automating and accelerating formerly manual processes to improve working capital.
“The main challenge our customers have is managing the cost of growth,” Mr. Clark began.
That’s a challenge because growth isn’t often uniform throughout a company, he explained. Accounts payable and receivable can grow faster than revenue. As consumption grows, so does the vendor list, and that is when opportunities for savings arise.
The problem is those savings often come in areas that are given less attention than a company’s core spends, Mr. Clark noted.
“It’s the indirect spend. Many companies are laser-focused on their core. For a clothing company it’s buying goods that directly impact them like cotton.”
More mundane items such as uniforms and office supplies are delegated to junior staff or to individual locations.
But it is in the meta-spend where huge savings can be realized.
“Companies will say ‘how did we get to the point where our own direct spend go so out of control?’,” Mr. Clark said. “That is where we come in to try and optimize those areas.”
But to address a problem you first have to realize it exists, Mr. Clark said. Senior management may see the opportunity but as it works its way downstream to those responsible for implementation it gets lost. It often takes an external source to identify the problem and spell out how much they can save.
“Part of the problem is you don’t know what you don’t know,” Mr. Clark said. “We paint the picture for them.”
The first strokes come from data, and the more granular the better, Mr. Clark said. Corcentric analyzes it and goes back to the company and identifies areas where savings can be realized. Then they reach out to their network of suppliers, with whom they negotiate volume discounts on an annual basis, to provide savings those companies cannot get on their own.
“We negotiate on a yearly basis with companies on the full portfolio of products available to customers and lock in a price,” Mr. Clark explained.
Those companies include Staples, Office Depot, Michelin, Zep and Grainger. Corcentric comes to them backed by the combined buying power of more than 1,400 client companies.
The buy side benefits are clear and the benefits on the sell side aren’t limited to sales volume, Mr. Clark said. Corcentric sits in the middle of transactions so all of their clients pay them and they pay, say Staples, so Staples gets one payment instead of hundreds.
“Anyone who purchases through us, we take on the credit risk,” Mr. Clark said.