Purchase to Pay – So You Think You’re World Class?

Purchase to Pay – So You Think You’re World Class?

Posted by Pete Loughlin in Purchase to Pay, Purchase to Pay Process, The Rest 05 Jul 2010

Purchase to Pay, P2P and Dynamic DiscountingWhatever stage of P2P maturity your organisation is at, it is almost certainly not world class. You see, you might be good. You might even be very good but you’re never as good as you could be. That’s why it’s good sometimes to know how high the bar can really go.

World Class Purchase to Pay

So what does the World Class Purchase to Pay Organization look like? Let’s look at it in simple terms of People, Process and Technology.

People – Purchase to Pay Structure and Governance

The problem in most organizations is that P2P is either p2P (owned by finance with procurement being the junior partner) or P2p (owned by procurement with finance being the junior partner). Inappropriate governance is the Achilles heel of most purchase to pay programmes. It often doesn’t fit culturally to have purchasing and finance reporting to the same point. But without it your P2P organization is dysfunctional.

The world-class organisation has “P2P” with purchasing and finance being equal partners – right? Wrong! – you forgot about the supplier.

Process – End to End Purchase to Pay Process

To get Purchase to Pay right, you need to embrace end-to-end processes. But ask yourself, where are the ends? Does it start with the requisition and end in receipt? Or does it start at P.O. and end in Payment? This is way too simplistic and it’s not a linear process. World Class Purchase to Pay starts at the supplier. If P2P doesn’t create synergy between the supplier’s and buyer’s processes and systems, it will miss out on the potential for win-wins that truly reduce the cost of doing business.

Technology – Use it Or Lose It

IT systems are like musical instruments. At their best, they are amazing albeit expensive but without a talented player to draw out the best in them, they are a waste of money. It is not good enough to spend millions of dollars on great IT if its full potential is not exploited. And, I guarantee that if you employ the best IT that is out there but fail to invest in training of your people to use it to its maximum, the next time you ask the CFO to spend big time on IT he’ll reject it.

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