Navigate P2P Complexities with Technology, Policies & Buy-in

Navigate P2P Complexities with Technology, Policies & Buy-in
Navigate P2P Complexities with Technology, Policies & Buy-in
Navigate the Complex, Manually-Intensive Process of Procurement with Stakeholder Buy-In and a Comprehensive Approach to P2P Strategies

Procure-to-Pay (P2P) - a strategic business process that involves the entire procurement lifecycle from initial requisition of goods and services to final payments. Key stages of the P2P process includes: 

  • Requisitioning
  • Vendor identification and selection
  • Purchase order (PO) creation
  • Goods or service delivery
  • Invoice receipt and verification
  • Three-way match 
  • Approval workflow 
  • Payment processing
  • Payment reconciliation
  • Supplier relationship management

Efficient management of the P2P process is crucial for organisations to optimise costs, enhance transparency, and maintain positive relationships with suppliers. 
In this Special Report, Procurement Magazine takes a look at the challenges in the procurement industry, what a successful strategy looks like, and the role that automated procurement systems and other innovative technologies play in streamlining and improving the accuracy of the P2P process.

Putting context to the complexities and challenges the procurement industry faces (data from SAP and KPMG recent reports :

  • 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

And so, with this in mind, Kathleen Harmeston, supply chain and procurement specialist and CIPS Fellow explains that 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,” says Harmeston. 

What does a successful P2P strategy look like?

A successful P2P strategy is one that takes a comprehensive approach to procurement, while also being efficient and cost-effective. Mark Reddy, Director of Spend & Governance at Advanced states: “It should include a focus on automation, digitisation, and data analytics to improve the overall procurement operation. The use of Cloud-based procurement software is fundamental for enabling collaboration between teams across various locations.”

When you’ve got a really good P2P strategy in place the dashboard at executive level is regularly used, category strategies are understood, the systems are user-friendly and accessible, analysis can be done ad hoc, you’ve got data excellence for meaningful management information, and it becomes a part of the everyday processes and practices. 

“You can get lots of data from a P2P system,” says Harmeston, “but that data needs to become meaningful information to drive strategic decision-making. 

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.”

Technology place in a successful P2P strategy

Playing a critical role in the procurement function, technology enables organisations to streamline its operations by minimising the time and cost associated with manual work, reducing errors, and making processes smarter. 

“Technology also provides real-time visibility into procurement data, ensuring businesses can make quick and informed decisions, while mitigating potential risks too,” explains Reddy.  

Agreeing with Reddy, Harmeston breaks down some of the innovative technologies driving successful P2P strategies: “The obvious is automated invoice platforms with cognitive OCR invoice capture , smart coding and payment approvals which integrate with existing ERP systems  to reduce overpayments, duplicate payments and maintain payment terms. 2Cloud and SaaS solutions can also assist with secure mobile access of P2P systems, anywhere anytime, and thus create a greater service level with stakeholders as well as integrating ERP with CRM and P2P for a holistic supplier perspective.”

“One of the most prominent trends is AI and its analytical and predictive benefits to assist forecasting and budgeting and identifying cost reduction opportunities. Real time dashboard reporting on costs, supply chain audits, certification and compliance is  now readily available as well as e-bidding and tender evaluation. A pull towards supplier collaboration and transparency is the result, helping businesses build strong contract management processes and innovation, whilst being proactive on risk management of key suppliers. 

Cost optimisation and market differentiation can now be realised throughout the supply chain, via automated and streamlined end-to-end processes, taking away potential resentment that stakeholders often feel towards procurement.”

While technology certainly has its place in delivering a successful P2P strategy, “procurement teams do struggle with transformation, and maturity more broadly. The influence of procurement leaders varies a lot so the need to approach transformation at a controlled pace is an imperative,” says Reddy. 

“In a recent survey 37% of companies taking part stated that they've got semi-automated and  manual data processes,” adds Harmeston. 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 “says Harmeston.”

“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” Harmeston concludes.

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