Still debating maverick spend in your organisation, griping about tail spend or struggling to implement the right systems? Perhaps P2P is holding you back!
This article was written by Eva Milko.
Is it me or has not much changed in the world of Purchase-to-Pay (P2P)? Twenty-five years have come and gone and yet we continue to discuss maverick spend, we gripe about tail spend and struggle with the right systems and the right processes to enable the simplest of transactions a company has in its portfolio: buying stuff.
In the meantime, those who realised that their value sits in higher areas of supply chain opportunity are doing wonders to automate, digitiSe, codify and outsource P2P work to those who have become transactional experts. Entrusting a part of your procurement house to others is not an easy task, many failing in the process, but I argue that it is somewhat necessary when the world is getting more complex, challenges more broad and opportunities often surpass the risks.
The CPO seat belongs to the one who carefully coordinates all aspects of the source to pay process with a keen eye on what can be standardised, outsourced, digitised, robotised and automated, balancing that with strategic decision making on where to place their precious human resources.
P2P buying systems remain a mystery. They are the most disliked, worked-around and challenged factor by employees in almost any company. Our research found that only 36 per cent of stakeholders find procurement systems favourable and comfortable enough to engage with. Our internal stakeholders are screaming “make it easy for us” and yet we continue to throw them into the bowels of twenty process steps, multiple buying channels and layers of authorisations. That’s not to mention lost time and corporate energy.
Molson Coors Procurement Office recently hosted an Executive Roundtable on this very subject and we challenged ourselves to envision a world of guided buying where the stakeholder is not exposed to procurement rigmarole but interacts with an intuitive and interactive set of buying steps. We called it Procurement Prime, taking our inspiration from the most admired ordering system in the world; Amazon Prime.
Many procurement executives and their friends in finance will say to me “but wait, we need to mitigate and monitor supplier risk” …..True, and it is possible with a set of algorithms and predictive tools embedded into your P2P ordering process, alerting the requisitioner at the time of purchase of the supplier’s health status, including fulfillment capabilities, shipping disruptions, banking and payment alerts, further yet, providing alternative solutions.
If you can imagine it, you can plan it. If you can plan it, you can get it done. Paying attention to how your corporate buyers embrace the P2P steps (or not), diving into their buying methods, listening and empathising will go a long way. Interestingly enough, we found that Procurement functions aligned to the Chief Supply Chain officer have much greater alignment in their organisations than those who report to the CFO. Is is time to change alliances? Not so fast! Here are a few enablers to make such transformations possible.
Changing your functional and corporate mindset
Let’s start by recognising that your procurement value does not reside in chasing requisitions around the office and beating internal stakeholders into procurement policy submission. Successful companies are taking a much more customer-centric approach, focusing on relieving the organisation of procurement jargon and building sophisticated systemised methods, especially for more repetitive buying. Think Guided Buying and think Procurement Prime! This is your future and #tomorrowstartsnow
Changing your skill set
This is pivotal to opening up these conversations and imagining the possibilities. In procurement, we do not hire enough creative people who are empowered to challenge the status quo and bring forth cool solutions. We need more inventors, technology savvy, stakeholder centric entrepreneurs who are bold, persuasive and get things done! Yes – these transformations take money, take energy and take skilled resources to get it done, but thinking long term possibilities versus short term barriers will unshackle the organisation from procurement processes horrors and free up resources to address much more interesting issues.
Changing your focus
In our recent study, we found that 84 per cent of procurement organisations remain firmly rooted in functional effectiveness and cross functional collaboration buckets. What goes with that are correlating trends of declining year on year cost savings, the most admired and used procurement metric on the planet. Enhanced value, total shareholder return, enhanced recognition, awesome jobs and great pay will not come from these areas.
Getting rid of the important but non-essential procurement work and entrusting it to someone much more capable is part of the transformational focus that all CPOs need to consider embracing. Successful partnerships are built on a shared long term vision, shared values and a solid long term plan.
In our research, we found that that introducing robust supplier collaboration, supplier enabled innovation and total value chain coordination is where procurement can truly make a difference for the organisation. Some organisations have made the leap but many struggle to make ends meet.
My prediction for these organisations is bold: transform or die – become de-prioritised, outsourced or automated. #tomorrowstartsnow
This article, by Eva Milko, was originally published on LinkedIn. Eva is Managing Director at Procurement Leaders.