At-A-Glance: Optimizing DPO Across $40B Annual Spend
Grocery stores manage a high volume of goods with a short shelf life across thousands of vendors which can make payment management challenging. After their latest acquisition, a leading US grocery retailer sought to rationalize payment terms across five banners and align payment process and policies with Days Payable Outstanding (DPO) best practices. They partnered with PRGX to optimize their DPO, resulting in significant working capital improvements and bottom-line impact.
30K+
Number of Vendors
$130M+
Positive Cash Flow
$27M
Annual EBITDA gains
Challenge: Aligning Payment Processes to Improve Working Capital Management
Aligning policies and data after an acquisition can be especially challenging across 10 separate data sources. Disconnected data can hamper visibility and lead to inconsistent payment processes that can affect working capital. With complex vendor management spanning 30,000 suppliers, the national grocer was looking to standardize DPO best practices across the organization. The other challenge they faced was communicating with the suppliers in a consistent manner about the new terms so they could ensure a smooth relationship going forward.
Solution: Applying DPO and Supplier Relationship Management Best Practices in a Four-Step Approach
PRGX implemented a strategic, data-driven approach to transform the client’s payment term management that included advanced analytics, target payment terms and implementation, a vendor outreach program, and an interactive visualization solution for tracking. The PRGX DPO Optimization program delivered significant measurable benefits that include $130M in positive cash flow through strategic term extensions and $27M in annual EBITDA improvements by increasing term discounts. These working capital improvements are sustainable through standardized processes including 100 detailed supplier and category playbook targets. Now the national grocer has clear visibility across all banners and vendors and can continue to grow the financial health of their business and their bottom-line.
Ready to Optimize Your Working Capital with DPO Optimization?
PRGX can apply our decades of experience with global and national retailers to help you unlock trapped working capital, standardize payment terms across operations, improve supplier relationship management, and drive significant bottom-line impact. In fact, 75% of the world’s top global retailers rely on our industry-leading expertise in data-driven analysis to thrive. Contact a PRGX expert today to learn how DPO Optimization can transform your working capital management and deliver measurable financial results. Or see our AI-powered analytics in action in demo.
