The key to P2P optimizations and end-to-end lifecycle excellence
In order to optimize P2P operations, all interconnected aspects of procurement should be considered to ensure a comprehensive and holistic approach is taken. From the strategic considerations of sourcing and contract management to the meticulous steps of procurement, receiving, warehouse management and invoice-to-pay, the end-to-end P2P lifecycle serves as the backbone for organizational efficiency.
Below are select examples of leading practices across the end-to-end P2P lifecycle. These attributes should be considered by organizations when conducting an assessment for areas of enhancement to drive operational efficiencies and cost reduction.
Leading practice examples include:
1. Strategic sourcing
- Conduct due diligence and benchmarking to identify the best potential supplier partnerships.
- Establish, review and simulate contingency plans to minimize risks of business interruption.
2. Contract management
- Develop and maintain governance and standard procedures over the contract negotiation process
- Leverage standard global, regional and geographic contracts for all operating units.
3. Manage suppliers
- Utilize a central P2P system to promote supplier master data management; provide an online portal.
- Automate the supplier vetting and acceptance process to rationalize the consolidation of preferred and strategic suppliers.
- Execute supplier balanced scorecards to evaluate performance against cost, quality and service.
4. Manage requisitions
- Utilize an enterprise-wide supplier portal to contain a single instance of the supplier master file and preferred list of suppliers for goods and services.
- Establish various contract policies, like blanket purchase orders and supplier catalog use, to govern and manage the requisition of routine spend.
5. Purchase materials and services
- Integrate the supplier portal and ERP systems to streamline the end-to-end purchasing order process to promote efficiency and accuracy.
- Leverage a procurement system to drive automation and reduce manual efforts for recurring and immaterial purchases to ensure >85% purchase order compliance.
6. Receive materials and services
- Ensure receipts are recorded in a timely way, by bar code, matching the supplier shipping confirmation and order number.
- Automate spot inspection results so that suppliers are notified for quality reporting and contract term verification.
7. Process accounts payable
- Ensure 80% of invoices are received centrally and electronically.
- Vigorously measure and monitor matching issues and trends, by count and amount, as these are leading indicators of the efficiency and effectiveness of P2P processes.
8. Process payments
- Implement real-time payment tracking and reporting with self-service portals.
- Centralize payment data management to optimize data accuracy and reduce manual efforts.
