Dynamic Discounting and Small Data – 7 Questions

A term that’s trending in a big way at the moment is “dynamic discounting.”

People are reading about it, talking about it, exploring it...and implementing it.

Looking at the market, it seems dynamic discounting has yet to become “mainstream.” Some people have yet to discover what it could do for their business. Those who are informed – and have the right profile – choose a provider, set the project up, and start enjoying the impressive benefits.

During a recent webinar with EXL on The 7 Rules to Analytics, David Silco and Vince Sparrow talked about “small data.” They zeroed in on the so-called classic finance functions of P2P, R2R and O2C. One area that elicited their attention in P2P was, of course, dynamic discounting.

An important KPI for companies entering into dynamic discounting relationships with their suppliers is “percentage of negotiated discounts captured.” This is definitely a big one. But David and Vince’s message was: Keep one eye on the small data, too.

For example:

1. Which suppliers are engaging in dynamic discounting, and when?
2. What is the profile of these suppliers?
3. What are the points of similarity among these suppliers?
4. How does this information help you identify other suppliers who might also be willing to participate in dynamic discounting
5. What kinds of suppliers are slow to engage, or choose not to?
6. What is their relationship with you like?
7. Do these suppliers share a profile, or a characteristic? If so, perhaps you'd be wise to leave out other similar suppliers from your onboarding program in the future, saving, you time.

Shared services are large organizations. Take HP. They process 13 million invoices a year, and receive these transactions from 250,000 suppliers. It is in a shared services organization's interest to get familiar with “small data,” and to know which suppliers will onboard quickly, which will convert slowly, and which will never convert at all – so that your efforts are meaningful, and rewarded.