Tag: procurement strategy

Import and Export

How Can a Cost-effective Strategic Sourcing Process Benefit Companies?

Strategic sourcing process

Even now, many companies consider purchasing to be simple and merely a means to an end. The key aim of any procurement team is to meet the financial requirements while minimizing costs for their organization. Most teams, therefore, pitch competing suppliers against one another to cut purchasing costs. This hardly gives companies any scope to formulate an effective procurement strategy and build goodwill among suppliers. As a result, companies find it challenging to implement a strategic sourcing process and improve their overall purchasing efficiency. Following this traditional purchasing approach results in a lack of visibility, missed opportunities, and cost synergies for businesses. The absence of a strategic sourcing process also hampers the quality of products and negatively impacts the decision-making process.

At SpendEdge, we understand the impact that following a cost-effective strategic sourcing process can have on your business. And to help sustain profitability, our team of experts has highlighted some of the key benefits of following a strategic sourcing process. Though knowing more about the key benefits of a strategic sourcing process can help businesses achieve significant cost-savings, let’s first understand why companies need it and the impact it can have on your business. (more…)

procurement services

Top 3 Procurement Challenges and Solutions Companies Need to be Aware of in 2019

The future of supply chains is not just confined to ensuring reduced price and timely delivery of goods. It is dominated by various other factors such as legal issues, sustainability concerns, and regulatory compliances. This creates the need for companies to utilize procurement services that can enhance the speed, efficiency, and accuracy of their processes. Through this article, we’ll discuss what are the major challenges that companies face while procuring goods and services and why they need procurement services providers like SpendEdge.

Why use procurement services? 

Maintaining domain expertise in every category of spend is still an expensive and difficult task for many organizations. Leveraging a procurement service provider can assist companies to conduct a rapid analysis of an organization’s spend, negotiate with suppliers, and avoid the burden of building an effective procurement infrastructure for non-strategic categories.

At SpendEdge, we understand that not every organization can employ a strategic sourcing process and train employees on sourcing automation tactics and category and supply market assessments. Therefore, our team of experts has highlighted some major challenges that companies face while sourcing good/services and have offered viable solutions that procurement services can offer.

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How can procurement services address top supply chain challenges?

Challenge 1: Complex spend

Every year, businesses make millions of purchases that are either too small to be handled or are too infrequent to be included in a single vendor catalog. For most businesses, such categories are sourced manually using internet searches or emails, increasing the complexity of the process.

Solution

By utilizing strategic procurement services, companies can prioritize categories on the basis of market size and product innovations and provide a comprehensive overview of all efficient suppliers in the market. Companies can even employ online procurement solutions to decrease the complexity of spend.

Challenge 2: Risk

Not only big businesses, but mid-market companies are also becoming vulnerable to various strategic and operational risks in their procurement process. They require a holistic risk strategy that can minimize total risk exposure and enhance their supplier risk management.

Solution

Procurement services help companies with risk mitigation investments and risk transfers. They analyze the suppliers before onboarding them and continuously monitor them to improve supply chain visibility and reduce the risks of working with new vendors. Also, procurement services help companies to evaluate the procurement process and manage procurement risks across various business units.

Devising a holistic risk strategy can be a herculean task for many companies. Request a free proposal and know how our portfolio of procurement services can help you successfully mitigate risks.

 

Challenge 3: Information

Companies sticking to traditional methods can never gain a competitive edge in the market. They need their procurement department to be comfortable with advanced data mining and analysis technique in big data to become market leaders.

Solution

Firms offering procurement services possess the capability to analyze data from multiple sources and prioritize business processes. They help companies to recognize the equipment and applications associated with each business process and provide the needed procurement services.

Want to implement advanced techniques for extracting valuable insights from data?  Request a FREE demo below and know how our procurement services can help you.

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procurement solutions

What is the Real Reason for Procurement Companies to Leverage Procurement Solutions?

With cost reduction initiatives becoming a top priority in 2019, most stakeholders have started to scrutinize expenditures more carefully. They are finding ways to better manage costs and expenses. According to a recent study, companies waste as much as 30% of their total expenditures. These expenditures are deemed wasteful as they add no value to the customers or companies. Therefore, it becomes imperative for businesses to have an effective procurement system in place so that they can cut the right costs through strategic reductions that don’t impede their ability to remain competitive in their respective marketplace. Strategic procurement can impact the company’s bottom line, but not every business possesses the resources and expertise to optimize their procurement capabilities. 

Some companies find it quite challenging to manage a budget when unexpected costs arise. They lack procurement strategies that can best identify the alternate approaches for them and provide a realistic assessment of risks. This not only increases the entire cost for businesses but also hampers the efficiency of organizations. Therefore, it becomes crucial for companies to leverage procurement solutions to enhance their capabilities.

At SpendEdge, we understand that procurement can be very complex and cost consuming in many large companies. So, our team of experts has highlighted three major objectives that companies should try to achieve while utilizing procurement solutions to thrive in a competitive marketplace.

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energy sector

4 Tips That Will Help You Ace Energy Procurement

Prices in the energy sector are highly volatile, which makes formulating procurement strategies a difficult task for companies. The energy sector is a broad market consisting of different subsectors. While the range of activities in the energy sector is broad, two distinct features set the energy sector apart from other industries: First, the world’s energy requirements are on the rise and are expected to continue so for a long time to come. Secondly, the growing need for renewable and clean sources of energy has resulted in new regulations and statutory emission requirements to regulate the supply of power from renewable sources. The changing economic landscape has seen many projects being restructured, downsized, suspended, or abandoned altogether. While the energy sector is far from immune from the effect of economic pressures, it benefits from a series of factors, which means that its expansion and further development is assured. Here are four tips for companies to better manage their energy procurement strategies:

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Set the goal

Due to the uncertainties in the energy sector, it is vital that for companies to set the goals of procurement strategy well in advance. Since every business is unique, either due to their tolerance for risk or the budget they have available,  it is essential to tailor the strategy to fit the requirements of each organization. Throughout the procurement stages, these targets can then be referred back to for any clarification.

Market comparison

Though in most businesses loyalty is rewarded by suppliers, it is not the case in the energy sector. Therefore, when it comes to the energy sector, comparing the markets is often the best approach. Also, to avoid increased prices when re-signing contacts with a current supplier, it is advisable to check what other suppliers are offering before making the deal.  Undertaking price comparisons while creating energy procurement strategies will help companies get a broader picture of the market.

Flexible contracts

Though fixed energy contracts can offer several benefits for companies, such as avoiding risk as prices fluctuate, ease of management, and a fixed rate for a fixed contract period, many companies are now turning to a more flexible approach. Flexible price contracts offer businesses a method of procuring energy that helps them to keep them on top of market movements and eliminates the risk of fixing the price during a peak point in the market. Wholesale power can be purchased in smaller amounts, throughout the period of the contract, allowing companies to buy energy at the best times and take advantage of favorable market prices.

Analyze data

It is imperative for every company to have clear-cut data on the energy consumed by them before formulating procurement strategies. This will help businesses gain better insights on the type of energy contract that they require. Companies can resort to energy management software that can help them to monitor consumption patterns and identify potential areas for savings. By analyzing energy consumption data, businesses can also keep track of overconsumption and take corrective action to rectify this.


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sourcing and procurement

An Effective Procurement Strategy is a ‘Bird in Hand’ For Your Business

Procurement is one of the key decision-making areas for business, wonder why? The answer is because it directly impacts an organization’s profitability. Therefore, a cost-effective and optimum procurement strategy is important for the sustainability of business in the long run. So how exactly do you decide on a procurement strategy that suits your business? How do you measure the extent of its effectiveness to your business? What are the things to keep in mind while formulating an effective procurement strategy? Let’s discuss.SE_Demo2

Intelligent Procurement Strategy: Go Digital

Procurement can be a complex process, but thanks to digitization and various digital procurement platforms and solutions, the procurement process is more simplified now. Digital procurement solutions cover the entire procure-to-pay value chain which enables an organization to collect huge amounts of data. This data supplemented by external data provides buyers all the information that they require for sourcing, managing and monitoring the supplier relationship from one end of the procurement value chain to another. However, to make optimum utilization of the enormous data processed with the help of digital procurement, the data must be measurable and should facilitate the procurement managers to analyze the data and draw the right conclusions to forms an optimum procurement strategy.

What Should an Effective Procurement Strategy Measure?

The main aim of procurement solutions is to help the purchasing department to obtain answers to some of the vital questions that are crucial in the company’s operation, in an intuitive and simple manner. So, what are the questions that the procurement department should keep in mind while formulating a procurement strategy?

  • Can the compliance rate of contacts be tracked?
  • How to check if the supplier has honored the terms of the contract
  • What are the payment terms? Are there any benefits associated with early payment terms?
  • Can the company’s data be benchmarked with the market?

Procurement Intelligence: Key to Business Agility

An intelligent procurement strategy and purchase decision give a company the ability to quickly act upon their market conditions and formulate effective business strategies. Systematic analysis of the plethora of data available through digital procurement can be used to formulate the right strategies and easily identify the gaps. Another key importance of digitalization of procurement intelligence to a business is that it gives valuable information on purchases to other departments. It is not just the finance department that benefits from this data, but it can also prove helpful for other departments such as R&D to make product modifications and also marketing and sales or marketing departments to undertake promotional activities.

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Consulting Services

Technological Advancements in Consulting Services – Corporate Strategy and Financial Advisory

Organizations are exploring multiple avenues and are constantly increasing their efficiency in a bid to remain competitive in the marketplace. They are constantly taking strategic and tactical decisions to tweak functions within an organization in a quest to become the best. However, it cannot be possible for them to possess information relating all industry verticals and business functions. In addition to that, expertise relating to a particular function can lie outside of the organization. Consulting service providers have emerged onto the scene to help such businesses achieve excellence in every field and assist in their decision-making process. For instance, financial consulting services firms employ specialists who work with the company and provide them with professional advice to manage their financial transactions better. The market for consulting services has currently witnessed growth due to major technological advancements that offer more than just a human expertise.

Innovations in Corporate Strategy Consulting Services MarketCorporate Strategy

  • Portfolio analyzer helps buyers to view a visual representation of their current portfolio and potential portfolio for expansion. This application assists the decision-making process by identifying high-growth and high-profit businesses and suggests the current level of investment in such business units
  • Cloud-based CRM solutions help capture all client interactions and helps identify gaps which assist in discovering business opportunities to accelerate growth. For instance, Adams Consulting increased their business by 60% using CRM software to gain new clients and maintain existing ones
  • Deloitte Consulting and Accenture are using integrated ERP and professional services automation which can provide real-time insights on problems and notify the user instantly, without having consulting services firm to perform repetitive administration tasks. The ERP suite can reduce the cost base by about 50% and invoicing cost by 25-75%

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Innovations in Financial Advisory and Consulting Services Marketfinancial advisory

  • Data analytics is increasingly being used across all business functions, and financial consulting is no exception. Data analytics tools can process the large volumes of data produced by finance departments, and relative insights and findings can be communicated to the clients to formulate financial strategies
  • Financial data is of a very sensitive nature and makes data protection their top priority as a result. Consulting services firms are using advanced cryptography and PKI tools to protect such confidential data
  • Delloite launched iDeal, an integrated system of M&A analytics tools, process, and techniques to extract potential target’s data to deliver real-time insights, which, in turn, increases the efficiency of M&A phase

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Agile Procure to Pay Process – Adopting Digitization to Improve Procurement Efficiency

To ensure profitability and success, organizations undertake procurement processes that help boost efficiency in their operations. In order to operate or manufacture products and services, companies either produce these raw materials and input goods in house or resort to external procurement and purchase it from external third party suppliers and vendors. Procurement to pay or P2P, as it is commonly referred, involves the process of acquiring and managing the raw materials and input goods that are eSE_Analystssential to manufacture the final product. A procure to pay process is a seamless process right from the point of order to the point of payment, assisted by technology. Purchase to pay processes entail a transactional flow of data regarding order placement, order fulfillment, and payment between a supplier and the buyer.

Procure to pay processes automate the purchase process, production, and operations by improving efficiency and price control. The automated software allows the purchaser to acquire raw materials at the pre-defined purchase limits and ensure compliance with the pre-determined budgets. A typical procure to pay process entails requirement planning, vendor selection, obtaining purchase requests, order placement, invoice generation, and vendor payment.

Key to A Successful Procure to Pay Process – Financial Agility

The key to a successful procure to pay process is financial agility,” as it helps organizations to optimize their purchase cycle, reduce operational risks, and increase control over efficient cash management. There are several factors that ensure financial agility within an organization; they are as follows: procure to pay

  • Organizations can become financially agile by integrating supplier base and implementing user-friendly tools, thereby reducing supply overhead costs and facilitating touchless transactions
  • Seamless integration with the Enterprise Resource Planning (ERP) system, thereby automating process flows and business operations to ensure high visibility and data control

To achieve this agility in finance and to optimize procure to pay processes, procurement managers must implement a digital infrastructure to ensure quick business processes. Additionally, businesses must adopt electronic procurement (e-procurement) to improve organizational efficiency and minimize errors. Companies can also explore new technologies like Robotic Process Automation (RPA) and blockchain technology, thereby ensuring a seamless and streamlined procurement cycle.

procure to pay

Digitalization of Procure to Pay Process

Organizations are moving towards touchless, digital, and streamlined procure to pay process to increase spend visibility and drive profitability. Procurement managers are also focusing on migrating to cloud-based P2P processes for invoice processing and are leveraging mobile technology to gain access to real-time invoice data through mobile devices. Additionally, procurement managers are turning to big data and analytics to have a better visibility of cash management and gain actionable insights that support strategic decision making. A digital procure to pay process has the potential to automate the entire procurement cycle right from order placement to reporting. These digital P2P solutions offer tools to improve visibility, control, and spend management. Digitization in procurement helps the purchase managers to ensure efficient administration, spend control, achieve process efficiency, and facilitates stakeholder collaboration by improving reporting. A digital procure to pay process allows the procurement manager to easily purchase raw materials and shortens delivery cycle time; thereby, reducing processing costs and other overheads. A digital procure to pay system provides the following benefits to procurement managers,

E-Procurement – Transforming The Purchase Function

By adopting e-procurement tools, organizations drive efficiency, minimize errors and eliminate data redundancy in procurement processes. Digital procurement ensures reliable and efficient completion of day-to-day tasks. Companies that adopt cloud-based procurement technology witness a rise in the number of orders over a span of five years, caused by increased efficiency and better customer relationship management. E-procurement entails electronic data interchange, allowing organizations to enhance agility and gain supply chain synergies and adapt operations to changing market dynamics. These tools provide web procurement tools that automatically identify, track, and plan the resource requirements of the organizations and perform procurement functions such as taking quotes and bids.

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RPA and Block Chain Technology Improving the Procure to Pay Process 

Organizations must adopt technology to improve process efficiency and drive profitability. In traditional procurement processes, there are several glitches that increase costs and create process inefficiencies. Until now, businesses follprocure to payowed a tedious invoicing process due to the absence of standardization. The manual purchase order process resulted in organizations following inefficient business practices and data discrepancies; thereby, delaying management approval.

However, robotic process automation and blockchain technology have transformed the landscape of procure to pay process. Robotic Process Automation (RPA) rationalizes invoice processing as robots manage receipt and allocation of invoices. It enables robust monitoring of data through cognitive intelligence to gain actionable insights and study the changing patterns and trends. RPA allows procurement managers to scrutinize data and provides access to standardized portals for storing and updating vendor information, which subsequently ensures quick turnaround time and reduces the process cycle.

On the other hand, blockchain technology drives higher value, eliminates redundant data, reduces transaction errors, and provides access to a wide supplier network. The impact of blockchain technology is higher at end processes that includes payment and invoice processing. A blockchain technology expedites vendor inquiries, supports transparent and real time database access; thereby, streamlining invoice processing and ensuring efficient reconciliation process.

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mobile marketing

Leveraging Social Media as Part of the Corporate Procurement Strategy

The growing influence of social media is something which corporates cannot afford to neglect. At the same time, there is a lot of confusion regarding what extent it can help in devising corporate procurement strategies. While there are a couple of challenges which makes it all an ill-fit in the standard procurement cycle, the advantages of adopting it are equally immense. And therefore, we bring you a comprehensive analysis on how procurement strategy can employ social media to its advantage.

Common procurement challenges

Procurement teams usually stick to the traditional tactics of meeting the client’s requirements. Perhaps this is the reason most of them lack the skills of using social media to their advantage. Some of the common challenges which most procurement leaders face are:

  1. Lack of peer connect
  2. Incomplete listing of suppliers
  3. Understanding the external environment
  4. Following best practices

Most procurers just focus on a single media platform, which limits their connection with peers in the same area of work. And, the issue is not just with limited connect with the peers, but focusing on one platform cramps up the supplier listing as well. With restricted list of suppliers, it becomes a challenge to procure in the most cost-effective manner.

Understanding the external environment is a critical aspect in managing social media. This helps in connecting and reaching out to the most appropriate target group. Often procurement teams fail to understand the external environment and leverage the medium to the brand’s advantage.

Lastly, contrary to popular belief, social media has some unwritten rules and best practices to be followed. Going wrong with social is a sure shot recipe for disaster – something which no corporate is looking for.

How to use social media to your advantage?

The simple rule of making the best out of social media is to stick to the basics, and then start innovating. When it comes to procurement, the first step is to engage the suppliers in an effective manner. The informal environment of social media makes it easier to engage with suppliers in a smooth manner by promoting open dialogue. Building good relations with the suppliers not only enables better procurement strategy, but it also improves the overall image and goodwill of the organization.

Secondly, social media has emerged as the source of all the latest news and updates. Procurers can gain access to all the real-time information about suppliers and market trends directly from these platforms. Not being active on it would mean your company is losing out on a free information highway.

Lastly, no other platform makes knowledge sharing so uncomplicated as social media. Procurement is one area which needs innovative ideas at regular intervals. Getting ideas from peers is perhaps the best possible way to keep one’s innovation skills sharp and sound.

SpendEdge’s take on Social Media

Improvising and reinventing are the two essential features of any foolproof procurement strategy. And as we see it, nothing speaks about innovation and improvisation the way social media does. Our experts on spend and supply chain management have repeatedly emphasized the power of social media  in increasing visibility, and advocate the inclusion of this one element in the procurement process to provide an added advantage to category managers.

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contract management

10 Tips for Better Contract Management

Finding and securing a supplier is an essential part of sourcing and procurement strategy, as is maintaining a strong relationship with them. However, a vital part of this relationship is often overlooked or not given enough attention: contract management.

Contract management is not simply about writing and signing contracts. That part of the process is important, but there are many more factors involved. An effective and efficient supplier relationship requires planning and forethought during the contract writing and signing, as well as continued attention throughout the duration of the contract. And when an organization has multiple contracts to manage — sometimes even hundreds — inefficiencies in the process add up quickly. It is therefore essential to budget time and resources for this area of the business.

Here are some tips for effective contract management:

Pay attention to wording: Even if both sides have the best intentions, unclear or improper wording can cause problems somewhere down the line. Poor wording can open your company to abuse, legal action, or simply confusion, making any conflicts more difficult to resolve.

Be specific: If you discuss something with your supplier, include it in the contract. Specify what needs to be done and when, but also include other details on the process and the relationship. If it is well documented, it is less likely to be forgotten, and you will have legal recourse if your supplier doesn’t deliver what you expected.

Be flexible, and build flexibility into the contract: Everything in a contract should be well defined, but that does not mean there is no room for flexibility. Needs and circumstances will change, and if the contract includes provisions for this, it will be easier and less costly to accommodate those changes.

Be willing to adjust terms: While writing flexibility into the contract is important, it still will not account for every eventuality. Sometimes changing terms is advantageous, or even necessary, in order to adapt to unexpected events.

Communicate: Check in on your partner’s progress, find out if there are any issues and whether the supplier is meeting your requirements. It is easier to detect and fix misunderstandings and other problems early in the process. Also let your partner know of any changes or problems on your end, as well as any other information that might help them better meet your needs. It is dangerous to assume that everything is going well just because you haven’t heard otherwise.

Maintain a good relationship: It is important not only to communicate, but to be on good terms with your supplier. If both parties are on good terms, it will be easier to work together, and you will both be more invested in the other’s success. It will also make your supplier more willing to accommodate changes or problems.

Use key performance indicators: Having objective ways to measure performance will make it easier to monitor progress and detect problems. These can be included in the contract itself in order to ensure that certain goals are met, and to have provisions in place if they are not.

Plan for problems: Make sure your contract has measures to deal with issues with your partner. Even if both parties start out (or seem to) on good terms, it is always possible for a relationship to go sour. You are not being rude to your partner by including these provisions, especially if the contract also provides recourse for them if you fail to uphold your end of things.

Be prepared for the end of the contract: Don’t let the contract’s expiration take you by surprise. Leave yourself plenty of time to either renegotiate or to find a new supplier.

Find a good software solution: Working with multiple suppliers means multiple documents to track and relationships to manage. This can be time-consuming and details can be easily lost. A good solution will streamline the contract creation process and help you keep track of essential and timely information. It will also save many hours of labor.

sustainable procurement

Procurement and Sustainability: What does 2017 have in Store for Sourcing Managers?

Sustainability is growing as a priority for consumers and businesses alike. More and more customers are demanding responsibly sourced products, and it is becoming increasingly important to take the state of the environment into account when operating as a business. Aside from concerns over ethics and consumer demand, however, sustainable practices can also be more economical, and should, consequently, be taken into account when formulating sourcing and procurement strategy.

Transparency and sustainability can be a significant draw for consumers. People can be highly loyal to companies that share and act on their values, and many are willing to pay a higher price for such things. They are also more likely to trust an organization that is open about its processes and sources. In terms of costs, sometimes environmentally friendly policies are also more cost-effective. Reducing fuel use and CO2 emissions, for example, can provide significant savings.

The stats: sustainability is on the rise

EcoVadis has just released its latest report on sustainable procurement, titled “Scaling Up Sustainable Procurement: A New Phase of Expansion Must Begin.” It surveyed 120 companies in a variety of industries, as well as 360 suppliers. The study reveals that 97% of procurement organizations believe that sustainability and corporate social responsibility are important or critically important to operations. The motivation for sustainability varies by region — in the United States, the main motivator is risk mitigation, while European companies are more concerned about brand reputation.

The report also found that 76% of companies noticed an improvement in brand reputation as a result of sustainable procurement activities, and 55% had better supplier relationships. Sustainability is becoming a bigger focus for companies across the board, with the study showing an increase in sustainable activities in several areas over 2013, the year the previous version of this study was released. In order to remain competitive, companies can no longer afford to ignore this aspect of procurement decisions.

Putting it into practice

So how does a company ensure that its procurement strategy is sustainable? The process starts from within the organization. By setting an example at the highest levels of management and encouraging employee investment, it will be easier to integrate sustainability practices at every level. Soliciting suggestions and feedback from employees can bring in new ideas and increase engagement. Making sustainability part of an individual’s goals can also be effective.

Feedback and transparency are also valuable. Not only does more information increase one’s ability to make effective procurement decisions, but it also allows people to see the impact that their suggestions and efforts make, both on the company and the environment and on people around the world.

In terms of implementation, strong external reporting is essential. Without an accurate view of the supply chain and individual supplier performance, it is impossible to manage sustainability throughout the procurement process. By the same token, having a good relationship with suppliers is critical, as communication and cooperation can improve results significantly.

There are several factors to consider when establishing procurement strategy, and it can be difficult to determine what areas to prioritize (production, transportation, etc.). It is important to have a thorough understanding of the supply chain, the company’s goals, and stakeholder values. This makes it possible to narrow down the most important aspects and the ones that have the greatest impact and decide what can be ignored or receive less emphasis. By keeping all these factors in mind, it will be possible to gradually establish a supply chain that benefits both the environment and the company.

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