AI-Enabled Benchmarking of Rates Disrupts Operating Expense Reduction Industry

Why is data vital for the operating expense reduction industry?

Have you ever wondered if you are being overcharged due to a lack of transparency? You might not be getting overcharged, but it does happen. We are living during the fourth industrial revolution, and data is vital for the operating expense reduction industry. In simple terms, new technologies and a new way of interpreting data go beyond what the traditional operating expense reduction industry can offer, as McKinsey puts it.

 Leveraging the power of data science benchmarking is opening a new way to disrupt the operating expense reduction industry, as shown in these two examples.

The new patterns in the operating expense reduction industry

The movie Moneyball shows that data science application outperforms all the traditional ways of evaluating performance in baseball. The baseball team turned its financial disadvantage into an advantage by using data science.

 The team was able to use data science to identify high-performing players who other teams had overlooked using traditional methods. The team acquired these players at a low cost. The Moneyball team regularly beat higher-spending teams thanks to data science. Similarly, data science benchmarking of rates provides insights into OpEx data and patterns that were previously unavailable.

 The second example is United Parcel Service (UPS), the global transportation and logistics corporation.  They used data science to develop On-Road Integrated Optimization and Navigation (ORION), their system that enables optimization of delivery routing.  The result is improved customer experience and hundreds of millions of dollars of savings.

 AI-enabled benchmarking of rates disrupts the operating expense reduction industry is a paradigm shift.  It’s no longer good enough to “have a Rolodex and make a bunch of phone calls” to vendors and suppliers. Without benchmarking across millions of companies and trillions of dollars of OpEx invoice spend, you’re shooting in the dark.

 With benchmarking, organizations can clearly see areas where they are overpaying, and have a rational basis to seek reductions in rates to get in line with the benchmarks. Put another way, how do you know what you’re paying compared to your competitor down the street? You don’t until you compare your general ledger to the benchmarks.

 Most vendors and suppliers will negotiate lower rates when confronted with the benchmarks showing where you’re overpaying. In those instances, there are no changes in vendors. When a vendor refuses to reduce rates after being shown the delta between current charges and benchmarks, often other vendors are happy to step in with more aligned rates.

Two vital stages of a tech approach in the operating expense reduction industry

Stage 1: Are you identifying areas for improvement?

The biggest challenge is that organizations lack transparency in their processes and costs. The identified area for improvement is obvious: provide a means for transparency.

 The tech approach in the operating expense reduction industry enables users to leverage AI, advanced analytics, big data, and process-mining tools to identify cost-reduction opportunities.

 Fintech ingenuity has found a creative way to provide a solution: a revolutionary and proprietary system that leverages AI to benchmark a multi-billion data lake of operating expense data from millions of companies across numerous vendor categories, to compare current spending and find cost-cutting opportunities.

 The Frank Howard Group's solution allows an organization to know if the rates they are being charged are over the benchmark. Previously, only Fortune 500 corporations had the luxury of data-analytics teams to provide this rate transparency. Now any organization can benefit from:

 ●     Benchmarking

●     Negotiations with your vendors and suppliers on your behalf

●     No up-front cost to you and no risk

●     No need to burden your IT staff with a time-consuming project

 Stage 2 - Are you automating processes and working smarter?

One of the main things that McKinsey and others recommend in the operating cost reduction industry is automation of processes.  Many organizations automate their operations, but often they fail to effectively automate their administrative processes where indirect costs can clutter.

 Organizations that have Accounts Payable (AP) and/or shipping operations have an outstanding opportunity to achieve 1) significant reductions in operating expense, 2) increase in operating efficiencies due to automation and optimization, and 3) improvement in cash flow by transforming AP from a cost center to a profit center.

 In addition to data-science benchmarking, the Frank Howard Group provides automation, optimization, and monetization services that improve cash flow:

 ·      Shipping Systems Optimization

·      Accounts Payable Monetization

 For Shipping Systems Optimization, one solution fully integrates shipping operations. It allows companies to kick their old disjointed vendor systems out the door and say hello to a sleek tracking and reporting platform that applies dynamic scenario-based rules and optimized rate delivery.

The solution enables every company to identify shipping system solutions that mesh seamlessly with their needs. Abandon the many website visits, the juggling of rates, and form fills on the shipping-vendor platforms that are designed for their benefit, not yours.

 For Accounts Payable Monetization, we provide a total AP platform where you can tap into your company’s full wealth potential by creating global corporate payments that fit your specific needs. You can be fully integrated and automating payables in as little as two weeks with zero downtime.

 Most organizations still pay their vendors and suppliers by paper checks and ACH transfers, neither of which provide any monetary benefit to the payer. We help you reduce costs, save time, reduce fraud, and create revenue from the smart application of virtual cards to drive rebates.

 The Frank Howard Group works with companies, non-profits, healthcare, academia, and government clients to drive cash-flow improvements through data-science benchmarking, automation, and greater administrative efficiencies.