Thursday 18th January 2018,
Payables Place

P2P Optimization Breeds Procurement Success

P2P Optimization Breeds Procurement Success

While a fully automated Procure-to-Pay (P2P) process remains the exception and not the rule in today’s market, Best-in-Class procurement departments are keenly aware of the importance of process automation in driving efficiencies and improving visibility into both enterprise spend and the underlying processes of the function. Ardent Partners research finds that Best-in-Class procurement departments automate their P2P processes much more often than their peers in the marketplace and ultimately leverage these automated processes to drive higher compliance rates. These organizations also manage considerably more spend than all other procurement departments. Coincidence?

People, Process, and Suppliers

While P2P automation can help pave the path to procurement success, many organizations struggle to fully leverage their P2P technology to drive business value. These organizations typically fail across several major areas: user adoption, supplier enablement, and program management. In contrast, it is the Best-in-Class leaders, whose strategies in these areas help their teams optimize the total P2P-driven value. They are more likely to link eProcurement to other key systems. Here are a few of the other main strategies (or habits) that they employ:

User Adoption Strategies

A major hurdle to the success of any technology deployment is the inability of the organization to effectively map their processes to systems. P2P initiatives are no different. Best-in-Class procurement departments minimize this issue by investing more time in the up-front development of their processes. One other key area of their focus is to ensure that a strong linkage occurs across all of the different activities or sub-processes within P2P. And, once the solutions are deployed, these leaders do not take a “set it and forget it” approach as they are much more likely to make strategic process improvements to what was initially deployed.

Supplier Enablement Strategies

For many of the Best-in-Class procurement organizations, the largest opportunity to drive incremental value is to manage their spend more effectively. To do so generally requires greater engagement and collaboration with their suppliers. As a result, Best-in-Class Chief Procurement Officers (“CPOs”) are twice as likely to be focused on improving supplier collaboration and introducing specific initiatives to achieve this plan. One strategy that the Best-in-Class employ to a greater degree is the use of Supplier Networks that leverage a common infrastructure and integrations to connect more trading partners, faster.

Program Management Strategies

In some quarters, operational or transactional procurement is viewed as a necessary evil used to support more strategic operations. While Best-in-Class CPOs use their P2P systems to drive efficiencies and reallocate resources to higher-valued activities, they remain focused on continually improving their P2P operations. These leaders incorporate P2P activities and results into their annual strategic plans and are twice as likely as all other CPOs to utilize competency matrices to help improve the capabilities and performance of their P2P staffs.

Final Thoughts

P2P optimization can be a tricky endeavor for CPOs and procurement teams that aspire to best-in-class status. Many talk of linking procurement with payments in an automated and holistic manner. But doing it is another matter. Mapping processes to systems, electronically enabling suppliers (either on business/supplier networks or not), and making P2P part of procurement’s long-term plan for enterprise success are solid ways that CPOs can optimize P2P for greater procurement success.

RELATED ARTICLES

The Role of Technology in a More Holistic P2P Process

The Value of Analytical Thinking for the P2P Team

Driving Procurement Transformation Upstream with Procure-to-Pay

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