Using Coupa Advantage for Cost Reduction Opportunities to Combat High Inflation
Inflation at its highest levels in 40 years has brought new urgency to procurement. Rigorous cost containment is no longer a nice-to-have — it’s become a top priority for chief procurement officers (CPOs) and the business at large.
Inflation is further aggravating economic uncertainty unleashed by supply chain disruptions, high post-pandemic demand, and geopolitical conflict. Rising interest rates complicate the equation while driving up the cost of capital. The dreaded R word, recession, is appearing in news headlines.
Economic conditions are subject to varying interpretation, but one thing is clear — businesses need innovative ways to combat inflation that’s risen far beyond the nominal 1% and 2% annual increases seen throughout most of the past dozen years.
“Many professionals in procurement have never seen the inflation rates we’re seeing today,” as Andrew Bartolini, Founder and Chief Research Officer at Ardent Partners, a supply chain consultancy, says in CPO Rising 2022: The Data Revolution. “Savings are going to be more important for this year and certainly for 2023. This isn’t something that goes away.”
Coupa Advantage: A structured roadmap to spend analysis & cost control
Your CPO, procurement, and sourcing teams may not be able to curb inflation, but you can take decisive steps to manage it with Coupa Advantage. Coupa Advantage harnesses the power of $2 trillion of Coupa Community spend for optimized procurement and strategic sourcing strategies across a trusted network of vetted suppliers.
Coupa Advantage consists of two offerings:
- Instant Advantage: Delivers pre-negotiated savings, terms, and contracts from trusted suppliers for commodity items like office supplies. Customers enjoy instant access to punchout catalogs across multiple categories without requiring IT support or tricky integration.
- Sourcing Advantage: Lets you join other customers to leverage combined spend and maximize buying power at sourcing events professionally managed by Coupa experts, typically in high spend, mission critical, and complex categories such as freight, MRO, energy, travel, safety supplies, and others.
Coupa Advantage provides the purpose-built cost savings, spend management, and spend analysis that experts say are vital as inflation persists.
“Global economic uncertainty in a hyper-inflationary environment is forcing organizations to reevaluate business spend initiatives and cost management practices to strengthen cost regulation and oversight,” Isaac Gould, Research Manager at Nucleus Research, said in a conversation with Coupa Advantage. “Now more than ever, high visibility into business spend and vendor relationships is crucial in maximizing business value and reducing risk.”
Save money and reduce sourcing workloads
Both Coupa Advantage programs equip procurement and spend management teams with strategic analysis of current and historic spend with the goal of providing visibility and identifying cost reduction opportunities.
The more advanced program, Sourcing Advantage, offers sourcing events that aggregate Coupa Community customer spend for greater savings. Sourcing Advantage amplifies group and volume discounts at a scale not possible when companies source goods and services on their own.
With Sourcing Advantage, suppliers are presented with a unified bid package across all participating buyers. For example, instead of bidding on individual orders for 5,000, 10,000, and 25,000 widgets, suppliers bid on an aggregated sum of 40,000.
Run by an expert Coupa sourcing team using the Coupa Business Spend Management Platform, Sourcing Advantage provides buyers with visibility through deep spend analytics to guide immediate needs and longer-term strategic sourcing. Plus, buyers are able to utilize and build a network of trusted suppliers that best meet their needs.
Sourcing Advantage participants see three key benefits:
1. Maximize category savings
Coupa customers participating in a Sourcing Advantage event see weighted average savings of more than 20%. As an ROI example, return on investment runs in the 6.5x range based on an average customer’s spend of $4 million at a sourcing event. ROI typically rises with higher spend.
The power of community sourcing was seen early in the Covid pandemic. Sourcing Advantage brought together nearly 100 businesses to procure critical goods such as personal protective equipment (PPE), IT hardware, and janitorial supplies. As a result, Coupa was named one of Fast Company’s Most Innovative Companies for 2021.
2. Reduce sourcing workload
Businesses can often avoid the time and cost of preparing for and managing sourcing events including RFP preparation, reaching out to suppliers, analyzing responses, following up for clarification, and so on.
Offloading that workload to Sourcing Advantage frees procurement staff to focus on higher-value initiatives, and reduces the need to attract and retain top procurement talent in a tight job market. Plus, you can more quickly get from RFP to contract award.
3. Run better sourcing events
Quality and value increase with white-glove service from Coupa experts. Using advanced Coupa Sourcing Optimization (CSO) software, our team analyzes your data and bids, helps rationalize SKUs, runs what-if scenarios, and utilizes combinatorial bidding strategies, conditional offers, and bid feedback.
Ultimately, a Sourcing Advantage event arms buyers to make informed decisions on suppliers based on programmatic expertise and data analytics. Plus, procurement professionals can make new peer connections and tap into expertise outside of their companies that can pay off for months and years to come.
How a Sourcing Advantage event works
With dozens of events a year across North America and EMEA, a Sourcing Advantage event is easy and secure, based on proven processes across four key steps:
- Join: Find and join an event to start collaborating. Review event timelines, and provide requested data to Coupa.
- Prepare: Coupa securely aggregates data from all buyers, validates the bid package with you, and finds SKU rationalization opportunities.
- Execute: Using the power of CSO, Coupa executes sourcing events, analyzes bids, and presents you with bid options.
- Finalize: You select the winners and award the business. Coupa provides an optional term sheet, but you control the final contracting process.
Be an inflation-fighting hero
No magic wand will make inflation disappear overnight. The stakes are high, as inflation can swiftly erode the bottom line with rising costs and lost revenue, if costs are passed along to customers.
With Coupa Advantage, procurement teams have an opportunity to play a heroic role in navigating through inflationary times as affordably as possible. It’s a move that pays off not only with cost savings, but with procurement efficiency and new expertise that your team can leverage today and into the future.
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