Till now we discussed the current state of P2P process, the measures of P2P process efficiency and the steps lagging performers can take to improve the process efficiency. (Click here to read intro, part 1 and part 2 of the blog series)
So what is the action plan for closing the current P2P efficiency gap?
- Automate Core Requisition-to-Order Processes:
Just tackling the front end of the P2P process, or the first “P” of P2P, can yield significant efficiency gains and much higher end-user satisfaction where standard catalog order cycles take only 3 business hours to go from requisition creation through approval and PO transmission to suppliers for the top performers, and just 16 hours for ad-hoc/or non-catalog requests.
- Rationalize the Supply Base to Reduce Overhead:
It just stands to reason that the more indirect suppliers the procurement organization has to account for, the more resources required to manage them. Consider that world-class performers have one-third fewer suppliers per one billion dollars of indirect spend (4,786 Vs. 7,160) than all others and set your supplier reduction targets accordingly.
- Implement Self-Service Tools for Buyers and Suppliers:
Reallocating procurement resources from tactical buying tasks to more strategic activities, means enabling self-service adoption of easier-to-use tools that empower the end-user and supplier to complete compliant and “touchless” transactions that do not require buyer intervention, unless on an exception basis.
In the next blog we will talk about the strategies top performers are adopting to enhance P2P efficiency.
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