By definition, dramatically changing or reengineering a process requires looking at the entire process from end-to-end, and not focusing only on parts of a process that reside within a functional area or within a department. The challenge often comes from the difficulty of getting a significantly high enough level of sponsorship and funding to support the creation of a change project that crosses multiple functional areas. This is particularly true with the Purchase to Pay process, where often the drivers for the change, and the supporting project resources, are from the Finance or Accounting parts of the process, without overall ownership from a global Purchase to Pay process owner.
Even though sponsorship issues and crossing functional boundaries can be an issue for all companies, having a Global Business Services orientation as a starting point can be a big enabler, even for companies who don’t include all sourcing activities as a part of GBS. For many, significant opportunities exist to drive improvements based on a clear understanding of Purchase to Pay as an end-to-end process, with direct improvements to many of the processes and sub-processes that are within the scope of your GBS organization.
A recent Peeriosity PeercastTM featured a large global company with over $20B in annual revenue discussing their experience with driving improvement across the end-to-end Purchase to Pay process. A first step was to create a clear definition of work activities, starting with 14 different processes ranging from processes for Sourcing and Contracting, Requisition and Procurement, Receiving, Payment, and Process Management, with each of the 14 processes further defined at a sub-process level. Next, all processes and sub-processes that touched Global Business Services in some way were targeted for process analysis and improvement, working in close coordination between all process owners.
At a tactical level, examples of transformation efforts included increasing electronic invoicing to 75%, increasing electronic payments from 35% to 80%, and a range of vendor management initiatives including implementing new vendor self-service tools, and a better definition of single-use and repeat vendor cleanup processes.
For details, Peeriosity members are encouraged to sign into the member’s area to view the complete presentation and listen to the recorded Peercast.
iPollingTM Results Review
The results from a recent Peeriosity poll created using the iPollingTM technology provide a good background regarding the Purchase to Pay end-to-end process at Peeriosity member companies. The first question in the poll looked at the overall status of the Purchase to Pay process with respect to quality, efficiency, and cost. The results were overwhelmingly positive, with 42% indicating they considered themselves to be “among the best”, with an additional 42% indicating that they were “good and getting better”. Only 16% indicated that they had significant challenges and were “working to improve”.
The second poll question asked about the most significant opportunity to drive improvements in the Purchase to Pay process. Process Automation was cited by 32% of Peeriosity members, with 21% reporting that increased standardization was the greatest opportunity, and an additional 21% suggesting that changes to the organizational structure or responsibilities would create the greatest impact. Of the remaining selections, 11% cited improving communications with customers and partners as being the most significant opportunity. Here are the details:
A few of the comments from members include:
- Increased standardization will create the biggest impact, and Process Automation will also be a key enabler.
- Resolving exceptions is our biggest efficiency/time drain.
- We have many purchasing channels and methods which leads to complexity.
- Opportunities within each of these: A. Change in organization structure or responsibilities: If Global Purchasing was within shared services; B. Improved communication with customers and partners: using a vendor portal; C. Increased standardization: One ERP system; our company has different ERPs for the different business units; D. Process automation: More RPA; E. Technology improvements other than automation: Vendor portal.
- Improved operational audits ensuring accuracy and trust between vendor and customer.
Identifying and then taking advantage of opportunities to drive process improvements based on an appreciation of the interrelated work steps that are part of the end-to-end Purchase to Pay process is difficult, even under the best circumstances. Getting high-level sponsorship and dedicated resources are important factors to create a successful project. For those companies lucky enough to have mature Share Services operations, there is often enough critical mass to get a project defined and completed, even when the primary objective is focused on optimizing the work activities that are within the scope of the Shared Services organization. Taking an end-to-end perspective ensures outcomes that optimize benefits for the entire company.
What is the overall status of the Purchase to Pay process at your company? What are the opportunities or changes that would create the biggest impact?
Who are your peers and how are you collaborating with them?
“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.
“iPollingTM” is available exclusively to Peeriosity member company employees, with consultants or vendors prohibited from participating or accessing content. Members have full visibility to all respondents and their comments. Using Peeriosity’s integrated email system, Peer MailTM, members can easily communicate at any time with others who participated in iPollingTM.
Peeriosity members are invited to log into www.peeriosity.com to join the discussion and connect with Peers. Membership is for practitioners only, with no consultants or vendors permitted. To learn more about Peeriosity, click here.