Procure-to-Pay, tips for the Enterprise

As more companies are seeking to move beyond procurement into fully deployed supply chain systems, a key challenge for many companies is in the area of improving efficiency in their procure to pay cycle for many of their contracted services, especially in the area of facilities maintenance and on-site contract management. There exist multiple challenges in environments where field associates are working from manual or electronic systems, requisitioning on-site services for maintenance or other activities, and ensuring that this information is captured effectively. In addition, there exist significant challenges to ensure that the proper service level agreement is fulfilled, the correct price is charged, the purchase order is transmitted correctly, the invoice matches, and finally, that the supplier is paid the correct amount for the actual services delivered. While many enterprise systems claim that these elements are simply defined within their structural logic, the truth is that there are plenty of opportunities for error, and that without a planned process for managing the procure to pay cycle, the organization may be bearing significant costs due to non-compliance to system or process requirements.

So here are a few tips that should help

• Develop common processes and procedures for the P2P process, and roll-out training at site level to ensure that people are comfortable with the approach. Be prepared to modify minor elements the process to accommodate site-level requirements, but keep the essential elements of the process flow intact. Emphasize the importance of this approach to the entire P2P cycle, including accounts payable, invoicing, and blocked and parked invoices. Explain the impact of lack of adherence to process – and that the supplier will not be paid in a timely manner for their work if errors occur in the process.
• Improve master data robustness and integrity. Whether this involves ensuring proper audits of external vendor catalogs, or internal content management, clean master data is a mundane but critical element to supply management and P2P best practices. Minimise opportunities in the P2P process for keystroke and free text errors to occur, by error- proofing the system and mapping the process to identify where errors are occurring. Recurring training will also ensure that errors are reduced.
• Explore punch-out roundtrip and other approaches to exploit external content management approaches. This is especially important to ensure that the most efficient buying channel is selected.
• Exploit the use of procurement cards for high transaction volume, low transaction value purchases. Pcard technology has evolved significantly, and companies need to identify opportunities for hard dollar savings through this approach via rebates.
• Be sure to update master data and pricing rates on an on-going basis. In particular, attention should be paid to units of measure, appropriate industry-standard nomenclature, updating of labor rates based on market conditions, and on-going clarification of requirements against existing contracts.
• Establish how you are buying products and services, and document the buying channels through which these purchases are occurring. Inevitably, you will discover that purchases are occurring through improper or less- efficient channels, which is detracting from your team’s ability to engage in strategic value-added approaches. Get out of the transaction management business! To do this, you need to establish standard processes and procedures, and commit to a change management plant to ensure that people are using the right buying channels for the different types of spend.
As technology and business requirements evolve, the P2P cycle will certainly need to be re-visited from time to time to ensure it is meeting the needs of internal customers, and that suppliers are satisfied with the system.


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