Taking P2P to the next level
e-procurement only works for stationery, IT consumables and other, simple indirect categories. It’s a generalisation but one that broadly reflects the truth. The cases where e-procurement has effectively penetrated further into a business than indirect categories are the exceptions rather than the rule but it is gratifying to see that this situation is changing and I’ve had my eyes opened in the last 12 months when visiting organisations who have successfully taken P2P to the next level
Let’s face it, despite its 20-year heritage, e-Procurement has gone no further into the enterprise than stationery and other indirect categories in most organisations. Automating the complex purchasing processes for direct materials has remained an elusive goal for most organisations, and automation is really only achieved by heavily customising ERP modules.
Most e-Procurement implementations address the indirect purchasing process — a simple linear process that goes from requisition and approval through PO creation to receipt, match and pay. Despite its simplicity, it is surprising how many organisations struggle to automate even this process.
Compare this with a direct material purchasing process in a manufacturing organisation where the complexity is compounded in every possible dimension. POs can be multi-page long with literally hundreds of line items. And these orders don’t remain static. An order with many lines may undergo multiple changes prior to delivery. Any single variable within a single line item may change the complexion of the entire order—from pricing to delivery dates and anything in between. Point even a world-class e-Procurement solution at a purchasing process like that and it will shrug its shoulders and give up.
Last year, I visited some of Nipendo’s customers. I wanted to understand why their story was different. I discovered how Nipendo can deliver both the simplicity of e-Procurement and at the same time can manage the intricacies of even the most complex supply chain situations that have traditionally relied on heavily customised ERP modules or bespoke in-house systems.
Pete Loughlin can be found on twitter @peteloughlin