Press Releases
Visa International Launches Paper Highlighting Ways to Increase Efficiency in the Supply Chain
New report from Visa International and Stanford University professor recommends integrated electronic payment systems for improvement of financial flows in supply chain systemsROME, ITALY, March 8, 2005
Visa International today launched "Financial Flows & Supply Chain Efficiency," a new white paper outlining the benefits of linking financial flows and supply chains to increase overall business efficiency. The paper, sponsored by Visa International and authored by Professor Warren H. Hausman of Stanford University, was released at Visa's annual Multinational Council event, which is attended by a network of Visa banks that offer Visa payment and information management solutions to meet the needs of multinational corporations.
The paper focuses on the current state of financial flows and supply chain efficiency, noting that the two systems have developed independently over time, with improvements in financial flows trailing behind those in supply chain management. Unrealized savings exist in the supply chain system because many current systems do not adequately address the financial flow, but instead focus on the flow of goods. Visa's commercial payment systems address this divide by providing a convenient bridge to other sectors of an organization's operations, resulting in benefits for their overall business.
"The flow of goods is often the barometer of efficiency and success for supply chain management, while financial flows within the chain go unnoticed," said Aliza Knox, senior vice president, Visa Commercial Solutions, Visa International. "By streamlining financial flow processes through the use of electronic payment solutions such as Purchasing accounts, Distribution accounts and Electronic Invoice Presentment and Payment (EIPP), system challenges can be addressed and cost savings can be achieved, shifting company financial resources to more business-critical areas."
Visa Commercial Solutions offer businesses cost-effective ways to address the supply chain and financial flow inefficiencies identified by Professor Hausman's research. Because such solutions are poised to provide major improvements, making financial flows faster, more reliable, more predictable and less costly, Professor Hausman recommends that organizations evaluate their current processes to better understand how automated payment tools can enhance operational performance and increase profitability.
"Increasing the use of automated payment solutions reduces processing costs and accelerates payment, thereby eliminating the need for large amounts of funds to remain in working capital," said Professor Hausman. "Electronic payment systems can go a long way toward helping a company's cash flow, and, ultimately, the bottom-line."
Payment system solutions to inefficiencies include:
- Purchasing accounts: "P-cards" make purchasing more efficient and cost-effective and allow companies to collect spend data quickly to help enforce compliance and to negotiate vendor discounts. They also increase overall financial transparency.
- Distribution accounts: Distribution accounts assist in streamlining accounts receivable processes, transforming collections into quick, paperless electronic payment, thereby reducing costs and improving reconciliation significantly.
- EIPP: EIPP (Electronic Invoice Presentment and Payment) allows for quick, error-free information transfer and reconciliation of shipping receipts, invoices and corresponding purchase orders.
In addition to the benefits outlined above, these innovative payment solutions contribute to improved supply chain performance metrics, as financial flow key performance indicators have a direct correlation to product supply chain performance metrics. For instance, P-cards, distribution accounts and EIPP may result in reductions in both accounts receivable and accounts payable for companies in the supply chain.
The "Financial Flows & Supply Chain Efficiency" white paper is available for download at www.visa.com/supplychain.
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Notes to Editors:
About the Author: Warren H. Hausman is Professor of Operations Management in the Department of Management Science & Engineering at Stanford University. He also holds a Courtesy Faculty Appointment in Stanford's Graduate School of Business. Professor Hausman earned a BA degree in Economics from Yale and a Ph.D. from M.I.T.'s Sloan School of Management. Prior to Stanford, he taught in business schools at Cornell, M.I.T., and the University of Rochester. He is the author or co-author of over fifty technical articles in supply chain management and operations management which have appeared in journals such as Management Science, Operations Research, Naval Research Logistics, and IIE Transactions. He is also a co-founder of www.supplychainonline.com, which provides web-based supply chain management training to corporations.
About the Visa Multinational Program: The Visa Multinational Program enables issuers of Visa Commercial Solutions to offer cross-border payment and data solutions for multinational clients. Key payment solutions include Visa Purchasing, which streamlines the purchasing process, reduces paperwork, and provides global purchasing power to employees, and Visa Corporate, which offers a flexible system for employees to pay for travel and entertainment expenses, both locally and globally. Multinational clients enjoy superior management reporting and analysis services through the integrated suite of information management tools called Visa Information Management. Tools for multinationals include multinational data consolidation and web reporting services and enhanced data services, empowering enterprises to track and review expenses at a summary level by subsidiary or office, as well as on a consolidated basis for the entire organization.
Additional information on Visa Commercial Solutions' Multinational Program can be found at www.international.visa.com/fb/products/comercial/multinational/main.jsp.
About Visa: Visa is the world's leading payment brand generating more than US$3 trillion in annual card sales volume. Visa has unsurpassed acceptance in more than 150 countries. The Visa organization plays a pivotal role in developing innovative payment products and technologies to benefit its 21,000 member financial institutions and their cardholders. Visa is a leader in Internet based payments and is pioneering the creation of u-commerce, or universal commerce--the ability to conduct commerce anywhere, anytime, and any way. For more information, visit www.corporate.visa.com.
Contacts: Sabine Middlemass, Visa International Tel. +1 650-432-8307 at globalmedia@visa.com or Kellie James, Burson-Marsteller, Tel: +1 415 591 4109 at kellie_james@sfo.bm.com