How a Venture Capital Fund Manages Procurement for 11 Companies

Location: United States
Industry: Venture Capital and Private Equity Principals
Website: https://www.redbudbrands.com/
Company size: 51-200 employees
Using Precoro since: August 2021
Users: 12
Client’s rating of Precoro: 9/10
Featuring: Jim Henson, SVP of Supply Chain; Jennifer Murray, Purchasing Manager

What is Redbud Brands?

Redbud Brands is a venture capital fund that targets “disruptive” brands and helps bring their innovative products to the market. It supports these companies during their growth stages and in the steps beyond to ensure their viability.

With headquarters in Austin, Texas, Redbud Brands is a fast-growing company that now has a team of 100 members who work remotely from all over the USA and offers the expertise of 30 executives across all areas of consumer business.

Create. Accelerate. Scale.

Redbud Brands works with companies at different stages of their development. They help new brands discover and establish their identity in the market. The fund also invests in emerging brands (below $5M in revenue) who are looking for capital and industry expertise to accelerate their performance.

Redbud Brands also works with more mature companies that are already generating $20M+ in revenue and looking to scale and monetize their assets. The fund provides capital access to such companies and helps them with their corporate strategies, IPO readiness, and exit planning.

Another aspect of the team’s work is to set up and support ongoing processes, like marketing, strategic planning, and operational activities like procurement. As part of this, Redbud Brands sets up their clients’ procurement processes and carries them out.

“We specialize in being very hands-on – creating products that are market disruptors.”
— Jim Henson, SVP of Supply Chain

This very moment, Redbud Brands is working with ten different companies, incubating some, and already in the aggressive scaling stage for others. For each of these companies, Redbud Brands manages the flow of goods and services and helps them build a reliable supply chain that enables growth.

Redbud Brands takes care of procurement for 10 portfolio companies, helping them to set up and execute necessary processes. Let’s see how the fund manages to run the procurement flows for all of the companies in their care.

How Procurement Looked Before Precoro

Before implementing an automated solution, Redbud Brands didn’t have unified templates or automated workflows to manage procurement activities for multiple companies at once. “There was not a lot of structure,” Mr. Henson explained. Employees responsible for procurement would simply type up the purchase orders in Excel spreadsheets and email them to the suppliers.

After that step, there was a gap where staff couldn’t follow if the purchase order had been received, viewed, or approved. Some cases were more complicated than others, as for some projects, staff from their client companies also had to be involved in the approval process.

There was no tracking system in place on the procurement nor on the finance side. Redbud Brands could only wait for the suppliers to notify them that a PO was accepted; if the supplier didn’t respond, they had to manually follow up. Obviously, this decentralized system caused numerous delays in PO processing because staff didn’t have clarity about document statuses or purchasing progress.

“We felt that we didn't have the correct level of communication between the supply chain team and finance. We really needed to close the loop.”
— Jim Henson, SVP of Supply Chain

Because of the amount of entities and purchases they had to work with, it was challenging for the Redbud Brands team to manage the invoice flow and make the payments on time. And since there was no established process, there was a lack of visibility on how the document should flow, so the finance team wasn’t sure when the invoices would arrive and when they were to be paid.

Missing payments could challenge supplier relationships, and Redbud Brands couldn’t risk supply chain disruptions due to the fact that they relied on these suppliers for so many companies. Any complication in the availability of required goods and services could become a significant problem for emerging companies where timing and quality are especially crucial. Therefore, Mr. Henson reported that implementing the automation solution early on in the fund’s operation was an easy choice.

Introducing Precoro

Redbud Brands was looking for software that would give them three main benefits — standard templates, organized suppliers, and documentation visibility. The company needed to have a structured list within a single database that included all of its suppliers and the suppliers of companies it procures for. Management also prioritized a tool that came with a standard purchase order template to send out to all of the suppliers.

In addition to this, it was very important for Redbud Brands to achieve visibility of when a purchase order is sent, received, and approved. Tracking the PO status would help the finance team estimate invoices’ due dates and ensure that payments would be made on time.

Mr. Henson himself initiated the implementation process. He was searching online for a solution that would meet several criteria:

• It had to be an out-of-the-box solution
• It could be implemented quickly
• It needed to fit a midsize company like Redbud Brands

Precoro did meet those requirements and also stood out with the “clean layout, price point, and easy setup,” as Mr. Henson pointed out.

“I found you guys through doing research and then looped in our finance team for their input as well. We were all very impressed, so it was an easy conclusion for us.”
— Jim Henson, SVP of Supply Chain

Onboarding the Team

Mr. Henson reported that the onboarding process was great. He pointed out that Mary Kornieienko, who was assigned as the dedicated customer success manager for Redbud Brand, was incredibly responsive and provided all the necessary help. Their team was happy with the continued support they received from Precoro through Mary.

The whole onboarding process took less than 30 days and was very smooth. Mr. Henson says the team welcomed Precoro and was eager to get it rolled out because Precoro “really cut down on the amount of noise that we had without using it.”

In addition to this, the team has found Precoro especially user-friendly. Purchasing Manager Jennifer Murray appreciates that when she adds new users whose job is to go in and approve something, they generally don't even need a walk-through because Precoro is such a simple system to use.

Redbud’s Procurement Today

As of today, Redbud Brands has 12 active users within Precoro, which might seem like a small number at first. But the venture capital fund manages eleven companies within Precoro — their own and ten from the portfolio — which makes it a truly interesting case.

“It's definitely nice having one system, even though we have several brands. Placing POs all the same way, having approvals all the same way through the one system — it's very nice.”
— Jennifer Murray, Purchasing Manager

Redbud Brands first provided admin access to Ms. Murray and Mr. Henson. Later on, they granted access to approvers from some of the portfolio companies and set approval limits for each of the users.

For each of the companies, Redbud Brands has a separate entity under which they submit purchase orders for the relevant organization. In total, the fund processes anywhere from 15 to 45 purchase orders per month. At the click of a button Precoro’s user interface allows staff to switch between entities in the system.

“It's incredibly easy to toggle from brand to brand for us and not have to sign out, so it's really easy to use”
— Jim Henson, SVP of Supply Chain

One of the reasons why it is so easy for the Redbud Brands to navigate procurement for several companies is a “streamlined approach to the approval process,” according to Mr. Henson. With Precoro, the fund’s team has a clear understanding of how each purchase order approval is progressing.

At a glance, document statuses are visible on the document overview page. This makes it easy to follow which purchase orders are still being processed, which are overdue or closed, who the next approver is, and when it’s time to send the order to the supplier. The finance team, in turn, doesn’t have to rely on the back-and-forth between departments to find out when a transaction needs to be marked as completed in the books.

Another Precoro feature highlighted by Redbud Brands is the ability to generate custom reports. Because they have so many clients to keep track of, the ability to access thorough reports and track progress is a boon for the fund.

“Sometimes I'll have questions from my colleagues that relate to the POs that have been placed: what's open, how many are open, for which customers? So the ability to create custom reports is pretty cool.”
— Jennifer Murray, Purchasing Manager

Redbud Brands also makes good use of the supplier list. Each time the fund onboards another brand, Ms.Murray can just export the list of vendors and suppliers from Precoro, process the list, and import it for the new company.

With the help of Precoro’s workflow automation features, Mr. Henson reports that now all payments are made on time. Precoro also helped the fund to “drastically cut down on the approval process time,” added Mr. Henson, as well as reduce human mistakes that were not uncommon in the Excel sheets.

Meanwhile, the software’s flexibility and ease of use has allowed Redbud Brands to manage procurement for the numerous brands in their care. Since the software implementation, the fund has gained a truly comprehensive overview of the progress of each particular purchase.

A Great One-Stop Shop

Redbud Brands describes Precoro as a user-friendly software that helped them organize the purchase order cycle. After implementing the tool, the VC fund is now able to easily create, approve, and track purchase orders for several portfolio companies simultaneously. Precoro helped the fund streamline the PO processing workflow, which resulted in improved visibility and timely order payments.

“It's a great one-stop. I’d recommend Precoro to anyone who's cutting POs and wants to do so with a high level of visibility and a clean interface. It's a no-brainer for me.”
— Jim Henson, SVP of Supply Chain

Before Precoro

• Reliance on Excel spreadsheets to create POs
• Messy communication with suppliers via email
• No visibility into purchase order status
• Late payments due to lack of visibility

With Precoro

• Unified templates for creating purchase orders
• Ability to send POs to suppliers directly from Precoro
• Clear visibility into the progress of the PO processing status
• 100% of payments made on time