Negotiation Strategy: Parent/Supplier Max
The video explains the "Parent/Supplier Max" strategy in the ADA Platform, outlining how it identifies the highest contractual payment terms across different spend lines within the same supplier and ultimate parent, showcasing the algorithmic analysis, unlocking of the strategy, and detailing a specific negotiation opportunity, ultimately providing a holistic approach to optimizing payment terms.
Parent/Supplier Max Strategy Overview:
- The video discusses the "Parent/Supplier Max" strategy, explaining that it involves identifying the highest contractual payment terms among different spend lines within the same supplier and under the same ultimate parent.
Algorithmic Analysis:
- The ADA Platform examines the higher spend file, detecting instances where the same supplier or a different supplier under the same ultimate parent has higher payment terms than the user's current terms.
Unlocking the Strategy:
- If instances of higher payment terms are found, the strategy is unlocked, allowing users to consider optimizing their payment terms.
Implementation of Strategy:
- Users can click on the strategy to expand and gain a more in-depth understanding, with an example illustrating an opportunity to increase payment terms by one day, from 44 to 45.
Cash Flow Opportunity:
- The video emphasizes that implementing this strategy can unlock a cash flow opportunity, with the specific amount, in this case, $14,500, reflecting the potential benefit of negotiating for extended payment terms.
Consideration of Parent Max:
- The strategy considers the "Parent Max," which is the highest payment terms within the same ultimate parent, showcasing an analysis of the total amount paid at the parent max and the percentage it represents of the total parent volume.
Negotiation Opportunity:
- Users are informed that there is an opportunity to negotiate with the supplier to raise the payment terms by just one day to align with the parent max of 45, unlocking the mentioned cash flow opportunity.
Individual Spend Line Analysis:
- A reminder is given that users can examine each spend line individually by clicking on the different spend tabs.
Holistic Payment Term Optimization:
- The video underscores that the strategy considers both the supplier and parent max, offering a holistic approach to optimizing payment terms based on contractual terms within the ADA Platform.
0:00 - In this video, we're going to talk about the strategy of parent supplier max. The parent supplier max is the highest contractual payment terms in any of the spend lines within the same supplier and within the same ultimate parent.
0:16 - The higher spend file which you uploaded and finds instances of the same supplier or a different supplier owned by the same ultimate parent of the supplier and sees if there's any instances of higher payment terms that you have with those suppliers currently.
0:31 - Then it becomes a strategy that's unlocked. In this example, there is a opportunity to increase by one day from 44 to 45 days.
0:41 - So if you click on the strategy, and this is the same for all strategies, if you click, it expands to the right over where the overview was gives a more in depth look at that strategy.
0:52 - The parent max is 45. So there's an instance in this analysis in a different supplier that you're paying that parent 45 days.
1:02 - cash flow opportunity of raising just one day with the supplier would unlock $14,500. This number would be reflected based in the currency which you selected in the top bar.
1:14 - are seven spend lines in this group of, for the supplier and there's 22 suppliers in the group. Group. there's no opportunity to optimize our payment terms based only on the supplier max as there's no other spend line within the same supplier at higher payment terms.
1:30 - But when we look at the parent max, we see that within in Incorporate. In this example, there's a total of $451 million that we pay at 45 days.
1:41 - This represents 94% of the total parent volume. there's an opportunity to negotiate with the supplier and raise it just the one day to the parent max of 45.
1:52 - Thus unlocking $14,500. a reminder, we're looking at the entire supplier here. If you want to look at each individual you can do that up here by clicking on the different spend taps.
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