Purchase to Pay

Standards in B2B are a waste of time. They are a waste of energy, intellectual capacity and money. They have no place in the business world in 21st century. For as long as I can remember, the great and good in the B2B world have espoused the use of standards as a fundamental component of business communication in the technology enabled world - yet they have simultaneously complained abut the number of standards that are out there. Surely its about time that we all realized and accepted that further attempts to evangelize and impose standards will not work. They’ve never worked in the past. If they had, there would not be so many standards today (not to mention the numerous standards bodies). We normally learn from our mistakes - once bitten, twice shy. In the B2B world - once bitten, twice bitten.

Purchase to Pay, P2P and Dynamic DiscountingThere's much talk about dynamic discounting and how it can yield significant returns on investment but dynamic discounting is absolutely not the first step in extracting value out of purchase to pay optimization - it is the final step. Let's go back to basics and remember that P2P is not a core function of an organization. Rather, it supports the core functions such as sourcing and procurement, accounts payable and finance. Purchase to pay develops and installs synergy across the physical and financial supply chain and uses technology to support better ways of working to reduce the cost of doing business with suppliers.

Purchase to Pay, P2P and Dynamic DiscountingA one size fits all approach just won’t work with purchase to pay. And that’s not just intuition or experience informing  that view. The Hackett Group reported this in their May Procurement Metric of the Month :  “Many organizations define sourcing and supplier management processes by spend category as the basis for understanding how to best source and manage their suppliers. However, they often do not specify how to buy from and pay those suppliers based on the nature of the spend category and the needs of stakeholders (spend owners, requisi­tioners, suppliers, etc.). While companies usually have some type of “n-step” sourcing methodology, they may have tens if not hundreds of different ways to buy and pay for goods and services. This can reduce efficiency and customer satisfaction and lead to higher noncompliance rates and greater risk”

Purchase to Pay can sometimes be a hard sell. In a highly siloed organization where purchasing and finance see themselves as different species, getting buy in to an end to end holistic approach to purchasing is virtually impossible. But without the holistic approach some serious stuff goes wrong. Below are to top 5 problems that occur when purchase to pay best practice is ignored.

Purchase to Pay, P2P and Dynamic DiscountingIt is said that only half of advertising actually works, and you can never be sure which half. Better safe than sorry I guess. You don’t want to cut your advertising budget in half if you lose the half that works. But what about the other way round? What if you knew that 100% of your budget worked – but you chose to only spend half of it? That doesn’t make sense does it? So why then do you do it? “Who? Me?” - Yes you! - Well perhaps you if you have anything to do with Purchase to Pay in your organization.