Building a business case for P2P
Becoming that well-equipped procurement and supply management organization means recruiting the right talent into procurement, adopting proven best processes and using technology strategically to: overcome human limitations for processing information; remove physical obstacles to collaboration; ensure efficiency and maximize return on investment in procurement. Procurement today faces myriad of challenges in areas such as supplier management, low cost country sourcing, compliance etc.
For procurement to succeed as an explicit driver of business performance, they need to
- Thoroughly understand the spending needs of the business
- Extract the greatest possible value from global supply markets
- Build collaborative relationships with high-performing suppliers
- Minimize supply risks,
- Obtain collaborative and corrective behaviors from the people who spend and
- Align every strategy and activity that procurement undertakes with such business performance measures as cost of goods sold, working capital, cash flow, profit, shareholder value, market leadership and innovation
A typical procurement organization is involved in the sourcing of a lot of materials - direct & indirect purchases. As the organization grows and spreads so does its purchases and the number of suppliers from whom the purchases are made. As the volume increases, it increasingly becomes difficult to monitor each and every purchases happening within an organization.