I was asked to comment in Procurement Magazine on how to navigate the complex and manually intensive process of Purchase to Pay.
The Challenge
- 77% of executives can’t access real time spend
- 50% can’t find alternative sources of supply quickly enough
- 42% experience reconciliation issues with invoices
- 37% have semi-automated or manual systems
- 41% say they find adoption of systems difficult
- 47% say they are vulnerable to disruption, upstream costs, and labour costs
- 43% say they don’t have visibility of their supply chains down to tier four
Even if the function has a really good procure-to-pay (P2P) system on board, but it is not adequately integrated into the business, it raises the questions: Do you have effective control of what you’re buying? Do managers have enough visibility of their financial commitments properly to manage budgets? Are you getting the best value for money? Are you managing the payment process efficiently?
Procurement can be a complex, manually intensive process. There are many challenges to manage – from maverick spend, value leakage, lack of agility in moving to new suppliers to limited access to supplier and spend information. Procurement is often seen as painful and prohibitive when it can be proactive, predictive, and powerful.
Often the percentage of spend under contract and spend under management is suboptimal-even if you have good systems in place. It’s the policies, processes, practices and relationships that you have with the business that ultimately controls spend.
The Way Forward
The benefits of a successful P2P strategy include freeing up staff time for more strategic tasks, the business and procurement working more closely are together, better forecasting and budgeting capabilities, reduced invoice reconciliation issues, the ability to draw down accurate spend data (per supplier per category real time), and a simple and effective ordering process which can be accessed outside of the office.
In a recent survey 37% of companies taking part stated that they’ve got semi-automated and manual data processes, So from my point of view this is a business issue with a valid case for change. P2P technology can help to accurately load and interpret data in a cost-effective manner and provide the business with good real-time management information. Procurement can then demonstrate the benefits an integrated system can bring, from faster decision making to proactive risk management and showcasing what suppliers can bring to the business. Advanced procurement systems can be highly effective but only if they are hard wired into the business as usual culture.
Conclusions
For me, the old adage of “build it and they will come “ applies. If you have simple, effective systems and practices in place then people will engage with procurement organically – but ultimately the most successful strategy is one that is supported and endorsed by the board encouraging the business to work in lockstep with you. The systems are only as good as the application and integration of them into the business through the human connection.
For more information see the full article here.
https://procurementmag.com/articles/navigate-p2p-complexities-with-technology-policies-buy-in
You can also see the article in the Procurement Mag digital edition.
https://publication.procurementmag.com/mag/0705070001706523398/p56
https://publication.procurementmag.com/mag/0705070001706523398/p58