11 Nov 2010 Single View of The Supplier
Do You know Who I Am?
Have you ever had this experience – in a bank perhaps. You have a query over a payment or a transaction on your credit card payment maybe – and you get treated like a mere mortal. Yet you have your mortgage, your pension savings, your investments – all with that bank – and they still talk to your like – well like any ordinary customer. You want to say “Do you know who I am?” but you don’t want to sound like celebrity throwing a tantrum. The fact is the voice in the call center doesn’t know who you are and probably doesn’t really care.
Banks have got better at this. Over many years, the retail banks have worked hard and spent millions of dollars developing what they referred to as “the single view of the customer”. Having grown through acquisition and merger over decades, the banks and insurance companies found themselves managing many instances of data relating to an individual customer – multiple bank accounts, credit cards and insurance policies, all managed on disparate database and IT platforms. Opportunities to cross sell were being missed and poor customer service common place. They still haven’t got it right but they are getting there.
So if the banks can recognize the problem, why is it that most organizations continue to separate entirely the relationship management of its supply chain?
The whole concept of purchase to pay is to apply best practice and technology to manage a purchasing transaction from cradle to grave – from requisition to payment and beyond. By managing the purchasing process through the procurement function and the payment through the finance function an entirely pointless divide is sustained.
The Dysfunctional Supply Chain Interface
Suppliers love it. For some suppliers the opportunity to divide and conquer allows them to encourage poor contract compliance and make greater margin. Failure to comply with invoice processes creates further confusion from which they can exploit further opportunities. A dysfunctional customer is a dream – a fool and his money are easily parted!
But there are bigger reasons to manage P2P holistically and to build a single view of the supplier. Imaginative use of flexible payment terms can generate a significant return on capital as well as support strategic suppliers through difficult trading environment. Anyone who has ever seen an important project grind to a halt because a strategic supplier has put supplies on stop because of delayed payment will understand how bad things can get.
Supply chain headaches can be minimized when finance share the same strategic view of supplier relationships. Only by developing a single view of the supplier by managing the purchase to pay transaction in its entirety will P2P pay off.
Whether it is managed by finance or purchasing depends on the organization but until this happens – Purchase to Pay doesn’t work.