Is Procure-to-Pay just a matter of process efficiency?
Procurement Departments have worked a lot in the past few years to achieve effective savings and lower companies’ costs. Now the request for excellence in the whole procure-to-pay process is increasing and Procurement is facing new opportunities and challenges to accomplish corporate strategic goals. Focus on the procure-to-pay process with Giulia Marinoni, pre-sales consultant at SynerTrade.
The Digital Transformation phenomenon is profoundly affecting also the Procurement Department. Business, activities, processes, competencies and models are rapidly changing thanks to digital technologies and the “Nexus of Forces” effect is wide-spreading. Mobility, Cloud, Big Data and Social Networks are all elements that are profoundly affecting our way of living and working. Procurement needs to react to the challenging and ever-changing environment in which operates by addressing new expectations, serving diversified stakeholders, attracting new talent and much more.
Given these conditions, Procurement Executives are turning their focus to procure-to-pay(P2P) processes and technologies. Best-in-class organizations have proven that driving excellence throughout the full P2P process integrating the saving-driven source to contract process with the transactional downstream, from requisitioning, through ordering and delivery till invoice management- will create a lot of benefits to the organization. Are these benefits only a matter of process efficiency?
1/ Achieve optimized process efficiency
Achieving optimized purchasing operations, leveraging on process efficiency, represents an important benefit derived from Procure-to-Pay Excellence. Best-in-class organizations leverage their eProcurement technology to digitalize approvals, improve order delivery, and manage the invoice process – cutting days to weeks out of the purchasing process while lowering manual operations. Reduced requisitions to invoice cycles can provide additional benefits, including the ability to take advantage from early payment discounts. Operational Procurement is one of the main cause of efficiency gains and savings throughout the entire organization. The best practices include:
· Requisition to Invoice Process Automation: By leveraging technologies in the procure to pay process, companies can reduce both time cycles and transaction costs, while increasing the percentage of spend on purchase-to-pay process.
· Rationalize the Supply Base to reduce the overhead: As the spend amount to be managed increases, a bigger number of resources is needed to manage it. By reducing and rationalizing the supply base, an Organization can gain more efficiency.
· Reallocate to strategic activities: As a result of automation and technology adoption, Procurement Executives can reallocate their resources on more strategic tasks adding value to the entire organization.
Nevertheless, streamline the full procure-to-pay process is not only about achieving optimized process efficiency throughout the Organization, it is much more.
2/ Maximize value creation improving internal and external communication
Firstly, when a Company enters a program to reinforce its procure-to-pay process, it maximizes the value creation for its own organization by lowering the communication barriers and favoring a transparent relationship between Procurement, the other functions or departments of the organization and in general its whole supply market. Best in class organizations take advantage of the integration of the Supply Base in their procurement process. The best practices include:
· Identify the right Supply Base: Not all the suppliers need to be integrated into the procurement chain. The relevant supplier base is made by those suppliers that make the major part of the transactions. Narrowing the target supply base equals to increase the “return on connectivity”.
· Implement a Supplier Relationship Management Technology: By adopting a specialized SRM Tool, it is possible to exchange and interact with the suppliers throughout the full procurement chain: from contracting, via ordering and receipts till the invoice.
· Set goals: In order to maximize value, it is very important to define clear objectives and KPIs, to measure and control them to continuously improve the overall performance.
3/ Ensure stakeholders satisfaction
Another driver of procure-to-pay excellence is the ability to ensure stakeholder satisfaction. Today more than yesterday, Procurement is asked to provide to all company’s employees a real “shopping experience”, offering a wide range of options and availabilities in purchasing goods and services.
By ensuring stakeholders satisfaction, the percentage of adoption of an eProcurement technology increases sensitively causing relevant gains in terms of efficiency and saving. The best practices include:
· Provide Mobile Options: In today’s world, users leverage on mobility to attempt a lot of functions. Also in procurement, it is possible to take advantage of mobile options to perform simple and intuitive functions like approvals.
· Leverage on “Social” functionalities: We were talking about communication between stakeholders, you can increase this communication and relationship with the social apps of your eProcurement solution.
· Keep it quick and simple: Reduce the number of clicks for no-value-added activities and shorten the buying experience making it simple and intuitive.
4/ Enhance Contract Compliance
Finally, enhancing the P2P process is also about favoring the overall Procurement Compliance by strengthening the coherence between purchases and the agreed contractual prices and terms. Best in class organizations take advantage of contract compliance. The best practices include:
· Prioritize the spend categories to be managed: It is important to define a priority strategy while defining the core spend categories in which working to enhance the contract compliance.
· Leverage on reporting capabilities: A powerful reporting tool integrated in a specific eProcurement tool, can enhance and document the visibility over the overall contract compliance.
A good management of your Procure-to-Pay process allows you to increase the efficiency and performance of your purchasing departments, but it also creates benefits for the whole company! Savings, added value creation, digitization, agility, innovation, communication... the list is non-exhaustive.
Giulia Marinoni, Pre-Sales consultant at SynerTrade
Giulia Marinoni, Pre-Sales consultant at SynerTrade