Levers for P2P optimization
Though each of the eight P2P components can be evaluated from multiple perspectives, businesses are advised to assess their P2P end-to-end lifecycle design with a focus on cost reduction or cost avoidance given today’s ongoing economic uncertainty. With this approach, the following five levers should be considered across all P2P focal areas:
Cost reduction lever: Eliminate
Activity: Execute an end-to-end process analysis to remove redundant or unnecessary tasks and identify opportunities to reduce or reallocate resources. This can lower costs and minimize organizational complexity
P2P lifecycle focal areas: Process accounts payable, process payments
Cost reduction lever: Consolidate
Activity: Identify and unite common processes during periods of high growth (organic or acquisition-based). Teams and processes can become decentralized and diverse, resulting in duplicative costs, operations, and management. Unifying these common end to end processes into a Center of Excellence may reduce operational redundancies, costs, and optimize control and process simplification.
P2P lifecycle focal areas: Strategic sourcing, contract management, process accounts payable
Cost Reduction Lever: Standardize
Activity: Standardization within P2P removes separation and streamlines operations in a more direct, harmonized fashion. Data and systems that point to a single version of truth will reduce inaccuracies.
P2P Lifecycle Focal Areas: Strategic sourcing, receive materials and services, process accounts payable
Cost Reduction Lever: Automate
Activity: Automation opportunities can be evaluated simultaneously as part of an end-to-end process assessment—specifically where repetitive, routine tasks are performed that are prone to manual errors and longer cycle times. This allows manual resources to focus on increased value-added activities.
P2P lifecycle focal areas: Manage requisitions, process accounts payable
Cost Reduction Lever: Service delivery model
Activity: To enhance operational efficiency, organizations should assess their service delivery model for P2P processes, activities and tasks that are repetitive and transactional and cannot be automated. If automation proves impractical or unrealistic, consider outsourcing options, like co-sourcing, nearshoring or offshoring. This strategic approach not only reduces costs but it also enables the organization to channel its efforts towards crucial value-added activities, thereby optimizing overall productivity and focus.
P2P Lifecycle Focal Areas: Purchase materials and services, process accounts payable, process payments
