Vendor sourcing from India

A recent survey found that multi-vendor sourcing is moving from a country-specific approach to a more global approach. Once you have decided to outsource your business processes, products, component, raw material, the next big step is selecting a vendor. Selecting the right vendor for a long-term relationship is a critical task. A well-organized vendor selection process can take anywhere from six weeks to six months. Onshore, nearshore, and offshore vendor selection is a complex, multistep process. Vendor sourcing is complicated by the fact that there are different vendors for different processes, components, products. Med-devices vendor outsourcing services comes from its rich resources and experience in field, with a deep understanding of medical devices manufacturing and business processes. We are in highly developed supplier selection process to eliminate the selection of a wrong vendor thus selecting the right vendor the first time. Worldwide sourcing, procurement and buying services are available to our clients wishing to broaden their international purchasing horizons. Our Services Follow a Modular Approach: Phase I Extensive networking in the medical devices industry. Operate as an extended cost reduction arm by strategic-alignment of the supply chain Vendor identification, short-listing & arranging visits to the supplier facility for the clients quality and purchase personnel. Phase II Auditing of the vendors facility and quality and environmental management systems. Phase III Complete vendor development using the specified standards, traditional services such as supplier assessments, capability/capacity assessments, inspection, expediting, etc., to ensure a totally integrated procurement support process.

source

Paying Outsourcing Vendors

Posted by Anthony on Friday, February 22, 2008 · 3 Comments

Most good outsourcing contracts require the customer to fulfill only two primary obligations: protect the vendor’s intellectual property and to pay for services in a timely manner. While most buyers have little challenge with upholding it’s confidentiality obligation, vendors universally will point to timely payment as the number one problem they experience with their customers after implementation. As an executive managing an outsourcing vendor, mundane invoice processing unfortunately gets second billing. The process of paying vendors actually is more strategic than you think – and it is the subject of this article. Read on to learn how to manage this important vendor management process more effectively.

As a background on outsourcing financials, vendors universally focus on cash flow. The reason is simple: The vendor’s largest expenses are labor, telecommunications, leases, depreciation, and maintenance. Large equipment, software, and facility costs tend to be financed separately, often using a client’s “initial payment”. If clients have net 30 or net 45 payment terms, vendors must still pay their employees, landlords, and other service providers in a timely manner. As a result month-to-month liquidity is the most significant business challenge small and medium-sized vendors must resolve. Usually, the issue is resolved through a commercial line of credit, but most vendors want to avoid carrying multiple months of expenses using interest-bearing vehicles. Obviously, 30-45 net payment terms create stress, but late payments create even more stress, which leads to the escalated communications that vendors’ account management teams are compelled to use.

More importantly, however, invoice payment has a true strategic value because what shows up on the invoice may not accurately reflect contractual obligations. While timely payments are definitely an issue, compliance with contract pricing terms is more important to vendor management teams. For some reason, when it comes to invoicing, vendors begin to add new fees, reflect inaccurate quantities, and forget to assess service level credits accurately. In fact, a number of procurement and strategic sourcing analysts have suggested that compliance with contract terms can cost a company up to 15-20% of a contract value. After spending so much time in tense negotiations to make a deal, don’t allow the vendors to tack-on new fees.

Sometimes, vendors leave items off invoices and carry them over to the next invoice, which affects your budget accruals. Surprisingly, invoices are rarely submitted on time, which can also affect budget accruals and financial reporting.

Finally, the vendor invoices are incredibly hard to read and understand. Auditing vendor invoices is similar to reading Egyptian hieroglyphics. When your internal auditors show-up, or your finance team begins to ask questions, you’ll be hard pressed to appear knowledgeable if invoices are formatted oddly.

Effective outsourcing executives use the following best practices to transform problematic invoice processing into a strategic vendor management process.

Dictate Invoice Format and Content – If you didn’t negotiate this in the contract, make the change now. Vendor management teams should create an invoice format using Microsoft Excel, preferably. The format should be an easy to read table with the following columns: item number, item/service description, quantity, unit price, and extended price (quantity * unit price). In regards to content, don’t leave the table empty. Create a row for every contractually allowable vendor fee. Examples include cost per transaction (if you have multiple transaction types, use a different line for each transaction type), voice telecommunications, data telecommunications, toll, service level credits/incentives, volume discounts, and training fees. Fill in the descriptions, contractual unit prices, and create the formulas. Then lock the worksheet and allow the vendor to only fill in quantities or undefined pricing elements.

Require Supporting Data Be Attached – It’s not that the vendor shouldn’t be trusted, but that effective vendor managers double check everything to ensure invoices are accurate. The invoice should contain a page where other files can be attached, such as SLA results, expense receipts, and telecommunications details. We recommend that vendors be required to attach root cause analyses of failed SLAs to their invoices, which encourages the analyses to be completed in a timely manner if the vendor wants to be paid. If the vendor attaches data that you cannot understand, create formats for this or ask them to provide a master “how to read” document.

Assign Clear Internal Roles and Responsibilities – Assign responsibilities for people who will receive the invoice, review the invoice, and communicate disputed amounts. Don’t have the invoice mailed to Accounts Payable – the vendor management team needs to review. Finally, know who has to approve the invoice before paying it and be sure that person is senior enough to understand the other conversations occurring with the vendor so that approvals are aligned with other corporate objectives.

Hold Invoice Review Work Sessions – One best practice is to include invoice review in your monthly close meetings. Include the vendor in the conversation, in fact, make them present the invoice. It’s a great way to quickly get approval to pay invoices.

Pay Undisputed Amounts on Time – Not early. On time. If you negotiated net 30, pay on the 30th day every time. Depending on your accounts payable processes, you may need to submit the invoice a few days early to make the cut-off. Some accounts payable systems have the ability to withhold payment until the term requires payment. Regardless, no matter how much the vendor whines about “quarterly reporting” or “annual closes”, you should pay on time and never early. The exception is if the vendor offers you fast pay discounts. If so, hopefully the discount offsets our company’s internal cost of capital and you can save the vendor and your company a few dollars by paying early.

Pay Disputed Amounts After the Dispute is Resolved – No early. Not on time. Only when the dispute is resolved completely. Ensure the vendor is aware that you’ve withheld a portion or the entire payment due to a dispute. Do not go easy on the vendor who has an obligation to invoice accurately. Incorrect invoice amounts should be rejected and vendors should submit revised, accurate invoices. Never agree to pay the vendor until the dispute is resolved. Good vendor managers understand that regardless of the relationship with the vendor (good or bad), invoice disputes need to be resolved before payment is made. Finally, do not focus on the bottom line total of an invoice. The line items need to be accurate.

Coordinate with Accounts Payable – Large multi-million dollar payments need to be coordinated with your AP team, especially because you may have internal chargebacks and multiple cost centers and GL accounts to consider. Design a process that gives AP the time to pay your invoices accurately and on time. Do not let AP approvals hold-up your payments – work out a process that ensures there is no hold-up in invoice processing or cause to have invoices lost. Furthermore, your treasury or cash accounting teams may want some heads-up on large payments.

Measure Invoice Payment Metrics – Good vendor managers measure a few key invoice metrics. First, invoice payment accuracy, which is measured as the sum of all absolute values of the inaccurate invoice line item variances divided by the number of numbers of dollars the invoice should have contained. This means that dollar amounts cannot offset – over billing one item cannot offset under billing of another line item. Second, invoice receipt timeliness, which is the variance from the date of the vendor’s required invoice submission (vendors should be required to submit invoices on specific dates). Third, invoice payment approval timeliness, which is the number of days after receipt that the vendor is paid.

Do you have other ideas? Let us know by commenting below or pinging us with a question here.

• 

Related posts:

source

Offshore Outsourcing Clients looking towards India for cost-effective and quality oriented business models need to look past basic cost-cuts and sops offered by Indian offshoring service providers and concentrate on the ultimate and measurable ROI figures besides best practices honored by the companies. A look at current choices for affordable transmigration of business models that offshore outsourcing clients can consider for continuity of business operations and expansion: while the leading offshore outsourcing clients are serviced by countries like India, China,Canada, Mexico, South Africa, Ireland, Russia and the Philippines, these are continually being challenged by newcomers to the offshoring industry, such as Brazil, the Caribbean region, Malaysia, Bangladesh, Korea, and Sri Lanka. Reasons why India is leading in current offshoring market: offshore outsourcing client advantages when choosing India for delegating business functions. India has been riding the constant wave of successful, cost-effective and consistent quality of service providers that meet offshoring needs in the IT and Finance sectors since the early 1980’s, but since then has diligently converted masses of others from varied industries to avail its rich talent pool of other qualified workforce too. Thus, a proven track record and discretionary handling of client relationships by established Indian IT service companies cleared the way for other industries such as banking, legal, medical and education fields to offer favorable wage differentials and their high-quality, English-speaking talent pool to the offshore business owner keen to be a part of India's emerging power as a global outsourcing center. Besides the above, India has been a preferred outsourcing hub for offshore outsourcing clients looking for more than simply tech-support as there is a lot more to the Indian shores apart from the fact that it generates 200,000-250,000 engineering and computer science graduates as well as 2 million other graduates, typically the majority of whom have good communication skills in English. Now, it shouldn’t come as a surprise then that a NASSCOM-McKinsey report puts India's business process outsourcing (BPO) industry growth levels to beyond the $21 billion by 2008! However, even with all these great incentives offered by India, there are some guidelines that are necessary to follow in the vendor selection phase so that offshore outsourcing clients get to make a wise choice. Here are some pointers from www.eupath.com, your India offshoring services provider focusing on serving you better: First decide on the country you wish to outsource to and then have a tentative list of vendors before you, based on the business models they offer and their competitive pricing. Ask of each how much their experience is (how many projects have they completed?) and their core capabilities. Ask your chosen vendor, what are your technological capabilities? Vendors should be able to satisfactorily answer, what their development methodology is. Also enquire about security issues like how do they ensure client confidentiality and what kind of protected infrastructure do they have in place. If you are unsatisfied by their answer, drop a line to info@eupath.com and the leaders in the offshoring business will show you the way!

About The Author: [ VIEW MY PROFILE ] For More Information: ht

source

Gartner can help you better understand your options for offshore sourcing in India. Below you'll find analysis and Vendor Ratings of both larger and small/midtier offshore external service providers (ESPs). For more details, read A Look at India for Offshore Sourcing Options.

	Gartner uses various criteria to rate vendors based on its corporate viability, market offerings and customer service / support initiatives. Cognizant Technology Solutions Overall Rating: Positive Cognizant has delivered consistent financial results through good execution. It must differentiate from its Indian top-tier competitors and break out of commodity-based pricing. Covansys Overall Rating: Promising Covansys' challenge for growth is to clearly articulate the benefits of this value proposition and compete with leading companies in India and the United States for the emergence of global options for end-user buyers. HCL Technologies Overall Rating: Promising HCL Technologies is among the larger IT service companies in India. Its growth has been predominately through its technology-led software engineering work. Infosys Technologies Overall Rating: Positive Infosys has established itself as a top vendor among its peer group in India, however competition beyond Indian IT services provider is formidable. To move to the next level, Infosys must harness its ambitions to focus on managed growth. Patni Computer Systems Overall Rating: Promising Patni clients report solid performance. Yet, while Patni is known in India, it is not well known among U.S. and European buyers. Patni needs to increase its brand equity. It also needs to differentiate itself from its peer group in India. Satyam Computer Services Overall Rating: Promising Satyam is one of the largest vendors among Indian IT services providers and a select group of its competitors. To achieve continued growth, Satyam must differentiate itself and expand its offerings to offer higher value-added service categories. Syntel Overall Rating: Promising Syntel is a hybrid U.S. - headquartered IT professional service company with investments and capacity in the United States and India. It needs to articulate the benefits of this value proposition and compete with leading Indian and U.S. companies. Tata Consultancy Services Overall Rating: Positive As the company with the largest revenue base among Indian service providers, TCS is clearly a leading contender to join the ranks of the large global external service providers. Wipro Technologies Overall Rating: Positive Wipro Technologies has established itself as one of the leaders among Indian IT service providers, along with a select group of its competitors. Its challenge is to differentiate itself and move beyond commodity selling.
	A Look at India for Offshore Sourcing Options 29 July 2003 Use our Vendor Ratings and qualitative analyses of IT service providers that deliver work with Indian resources to develop sourcing strategies that combine on-site, domestic, nearshore and offshore services from various vendors. Small/Midsize Offshore ESPs: Application Outsourcing Vendors 29 July 2003 When evaluating external service providers, bigger is not necessarily better. Numerous viable options exist in the small to midsize vendor category. Small/Midsize Offshore ESPs: Packaged-Application Focus 29 July 2003 Several small and midsize offshore external service providers are viable choices for enterprises in need of packaged-application competencies. U.S. Offshore Outsourcing: Structural Changes, Big Impact 15 July 2003 As offshore outsourcing ramps up, the dislocation of IT jobs in the United States is becoming real. CIOs must anticipate the potential loss of talent, knowledge and performance. The Impact on People When Going Offshore for IT Services 18 July 2003 The $556 billion worldwide IT service market is experiencing one of the biggest changes in its history -- a paradigm shift to offshore sourcing. There are implications for one of the industry's most precious assets -- the people. India Will Generate $13.8 Billion From Offshore BPO Exports in 2007 20 June 2003 Gartner Dataquest expects that offshore business process outsourcing services will represent 14 percent of the total BPO market by 2007; India's share of supply will be around 57 percent. Reaping the Benefits of Offshore BPO 21 July 2003 Offshore business process outsourcing providers are proliferating, as are the options available. The market is evolving rapidly and enterprises must evaluate the long-term strategic benefits of offshore BPO. Counter-Revolutionary Strategies for the Offshore Revolution 14 July 2003 For now, service providers should absorb and help shape the offshore revolution. In the long term, they should move to annul it.

source