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Integrated Procure-to-Pay Measurement to Drive End-to-End Improvement

Ask any leader of a Shared Services organization what their key measures are for Accounts Payable and they will most likely know them, as well as how much they have improved year over year. However, ask them the same question regarding the full scope of the Procure-to-Pay process (“P2P”) and, often, neither they nor anyone at their company will know the answer.

A Peeriosity PeercastTM in the Accounts Payable research area featured a global company that has developed a comprehensive measurement and improvement program for their P2P process, which has helped them identify priorities, organize appropriate resources and optimize the value of P2P across regions and functions.

As with all Peeriosity PeercastsTM, participants answered iPolling® questions that helped frame the discussion:

While there is no doubt an abundance of measures can be found throughout the P2P process, the poll would indicate that there has not been a great deal of integration of measures across geography or functions. In addition, without this integration and alignment, it would be difficult for an organization to truly optimize the end-to-end process.

The PeercastTM feature company has been extremely successful implementing Shared Services globally. They have recently redeployed resources from implementation mode to end-to-end process improvement mode. Three critical resource groups have been empowered to:

  1. Assess Process Performance
  2. Plan and Implement Improvements
  3. Manage Change

The three critical resource groups that have been established within their company to drive the end-to-end process improvements are:

  • Business Process Owners – Set strategy and direction focused on end-to-end process performance with emphasis on measures for Total Cost of Ownership, quality, service and benchmarks.
  • Process Management Teams – Facilitate strategy and Superuser Groups to ensure best of top-down and bottom-up opportunities are realized. Focus is on delivering measurable performance improvement.
  • Superuser Groups – Representatives from internal customers of the process (often activity or sub-process experts). Focus is on leveraging local hands-on knowledge to deliver improved service and performance for them to be the best provider within their local markets.

The feature company went on to outline some of the initial steps they took after the Business Process Owners and Process Management Teams were established, as well as the Superuser Groups were identified for the P2P process:

  • Identified P2P stakeholder management across regions and functions.
  • Agreed the critical high level P2P metrics with stakeholder management.
  • Developed the P2P KPI Dashboard with key categories of measures including:
    • Safety and Satisfaction
    • Cycle Time
    • Quality
    • Cost
  • Detailed analysis of metrics yielding initial initiatives for consideration.
  • Identification of root cause of deviations and related action plans (Note: The organization already had established Lean Data Management and Kaizen toolsets to help facilitate this).
  • Action plan implemented and improvements measured.
  • Set new initiatives agenda.

In 2012 alone, the new focus on the end-to-end P2P yielded exceptional results, including:

  • Cycle time invoice to ERP reduced nearly 50%
  • Vendor set-up time reduced 40%
  • First Pass Yield increased by over 40%

The total cost of the P2P process is coming down and, just as importantly, the overall effectiveness is getting better. The alignment to a common set of measurement targets and initiatives to drive the improvement has brought the stakeholders together on the agreed priorities for the entire process rather than their individual components.

The PeercastTM  closed with a discussion on lessons learned in implementing P2P measurements and continuous improvement initiatives across the entire process. Some representative comments include:

  • If possible, establish common P2P dashboard metrics during systems or shared services implementation phases when change is already occurring.
  • Common systems don’t necessarily yield common processes or measures that translate across regions. Don’t rely on systems to bring about standardization.
  • An established continuous improvement methodology that grounds everyone in a common language/culture and tools helps align cross-functional groups quicker.
  • Make sure there are clear decision rights from the outset. A RASCI chart is a good place to start.
  • Targets must be specific, measurable, understood, and converted to an achievable goal.
  • KPI’s must be cascaded so that they are “line of site” changes that can be measured and impacted at the local level.
  • Measures should be timely, transparent, analyzed and discussed. Just publishing is not enough.
  • Root cause analysis of missed targets and agreed upon actions need to be done quickly.

How are you measuring the P2P process at your company and what steps are in place to improve it?

Who are your peers and how are you collaborating with them?

1 “PeercastsTM” are private, professionally facilitated webcasts that feature leading member company experiences on specific topics as a catalyst for broader discussion.  Access is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from attending or accessing discussion content.  Members can see who is registered to attend in advance, with discussion recordings, supporting polls, and presentation materials online and available whenever convenient for the member.  Using Peeriosity’s integrated email system, Peer MailTM, attendees can easily communicate at any time with other attending peers by selecting them from the list of registered attendees.

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