Creating an efficient Procurement & P2P process
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The document outlines strategies for enhancing procurement and purchase-to-pay (P2P) operations, focusing on cost reduction, efficiency, and compliance through various methods including strategic sourcing and supplier management. It emphasizes the potential for automation in the P2P process, proposing self-billing and e-procurement solutions that streamline operations and improve supplier cash flow. The text highlights the importance of managing supplier risk and offers insights into payment solutions that benefit both suppliers and clients.
Creating an efficient Procurement & P2P process
- 1. CREATING AN EFFICIENT PROCUREMENT & P2P OPERATION
- 2. Procurement FUNCTIONSPECIFICOPPORTUNITY:PROCUREMENT • Review and modify procurement channels to reduce operating costs • Manage product and service demand through effective procurement approval processes • Reduce time required in procure – to – pay process cycle Purchase-to-pay processes Strategic sourcing • Extend strategic sourcing to complex indirect sourcing categories / increase spend under management control • Review existing contracts to identify cost savings opportunities • Restructure supply base to take advantage of multi-skilling/ multi-tasking • Improve Source-to-Contract processes Reduced spending by 5% - 25% Compliance • Reduce contract leakage and maverick purchasing • Compliance and exception reporting process - providing insight to "on" vs. "off" contract purchases • Define preferred suppliers for top spend categories Supply Chain Risk Management • Review and optimise supply chain costs (supply chain cost analysis) • Define supplier risk exposure and develop risk management strategy Reduced cost by 5% - 10% Reduced cost by 3% - 8% Reduced cost by 5% - 20% Sourcing and Procurement are among the top 5 areas for achieving major savings and improving the organisation cost structure Example Potential
- 3. INTEGRATINGTHREECOREELEMENTOFSPENDMANAGEMENT Automation of P2P Integrated Self Billing Early Supplier Payment If the average cost of full P2P process - £125 per transaction – Accenture research and Best in Class is <£15 per transaction, the key question is what are your transactional processing costs? Significant opportunities exist to automate and simplify the end to end P2P process, delivering major efficiency gains, improved control and creating an additional stream of revenue Integrate an efficient e-procurement solution Remove the need to reconcile invoices Use of payables solution
- 4. SELFBILLINGOPTION Self Create Invoice Goods Ordered - Requisition Agreed Price – Purchase Order Goods Received - GRN All reconciliation is undertaken by Supplier Even if Supplier queries 10% of payments, you reduce your activities by 90% Ideal for catalogue/ rate card pricing Why wait to receive an invoice from a Supplier, undertake all of the reconciliation work and authorisation activities, when ‘Self Billing’ can remove much of this effort?
- 5. PAYABLESSOLUTION •Issues Payment Instruction to Bank - EDI Yarra •Establishes a 16 digit account code •Instructs Supplier to charge this code with specific amount Bank •Charges account code with amount – full payment of goods supplied •Pays Bank a Merchant Service Charge Supplier • Direct contract between client & Bank • Bank enables Suppliers to Payables solution • Acts as a reverse style invoice discounting arrangement – Bank is providing credit to Suppliers on the back of client’s credit worthiness • Suppliers pay a Merchant Service Charge – negotiated direct with Bank • Client receive a rebate based upon ‘spend’ going through process • No financial cost to Client • Ability to pay suppliers earlier – option to negotiate better terms Banks are now offering innovative payment solutions that can enable organisations to make controlled payments to suppliers earlier, thus aiding the suppliers’ cashflow, without impacting their own cashflow position.
- 6. CONTACT US xynergie Limited Blackburn Business Centre, Davyfield Road, Blackburn, BB1 Tel: +44 (0) 845 1309031 Email: enquiries@xynergie.co.uk Web: www.xynergie.co.uk