Archive: April, 2015

Transformational P2P

Last week I attended the launch of a white paper at the Ritz London. I would probably have attended just to have breakfast at one of the world’s most famous and luxurious hotels, however, I pleased to say that the event offered a lot more than just coffee and toast (albeit beautifully served)! Pete Loughlin, the respected procurement blogger, was presenting his report called Transformational Purchase to Pay on why, despite years of effort, many organisations struggle to implement purchase to pay technologies effectively.

The case for P2P is well known although different disciplines tend to emphasize different benefits. Finance tends to highlight reporting and fraud while operations focuses on supply chain disruption and administration overhead. From a procurement perspective, I am more interested on the improved negotiation position that a robust P2P process provides and the confidence it offers when forecasting savings.

The white paper provides a number of interesting insights:

  • We tend to think of supply chains as linear structures, however, the data flows that are generated are much more complex and look more like organic structures. A short video explains this in more detail. If we don’t fully appreciate all the data flows then information will be lost.
  • The basic data for a purchasing transaction already exists before a requisition is created. Leveraging existing data can only be achieved if data standards are consistent and compatible – not necessarily the same – across supply chains and business functions. Many organisation fail to fully recognise this which results in manual data input, errors and missing information.
  • Different disciplines tend to be responsible for designing and managing different parts of the process. Consequently, the end to end process is fragmented preventing the smooth flow of information.

The white paper makes the case for 100% compliance to the P2P process. For clarity, this includes direct as well as indirect spend, maverick spend such as marketing and non-standard categories such as insurance.

To achieve 100% compliance the P2P process needs to be easy to use, the data must be consistent and compatible across all systems and it must be designed and developed by P2P specialists. If this happens, then users will be as keen to use the P2P process as they are to log on to Amazon or eBay.