Drive Procure to Pay Optimization and Growth with Digital Transformation

Time after time, statistics show a strong correlation between a well-defined procurement process and healthy corporate performance. A strong procurement function, irrespective of industry, results in higher revenues and reduced procurement process costs which means it is imperative to ensure the procurement function is optimized and can be taking advantage of the latest technologies. Mostprocure to pay (P2P) organizations have struggled with full process digitization and automation and the focus on procurement and the supply chain during the COVID-19 pandemic has demonstrated the requirement for well-implemented digital solutions to ensure process agility and flexibility.In particular, here are some of the key technology areas that are becoming essential to rapidly evolve the P2P process.

Digitization

Eliminating manual workflows and moving to digital processes has the potential to deliver disruptive business models, enhance supplier relationships and facilitate smarter decision making. Digital transformation solutions not only enable efficient processes but also help procurement teams to play an important role in accelerating enterprise innovation. According to a recent report, 48% of procurement executives are driven to go digital not because they truly understand its importance but because of the “fear of missing out.”There are several challenges such as high costs of invoice processing, lengthy payment cycles, unnecessary errors and exceptions, increased supplier payment status inquiries, and late payments that pose as impediments to agile processes, better visibility and enhanced control. Enterprise should look to eliminate paper invoices from the process as the impact of paper invoicing is severe and far-reaching, so addressing this portion of the process is critical.

Gaining complete visibility into suppliers and spending is a strategic priority for CFOs and CPOs as it is almost impossible to make strategic decisions without that. Another major challenge is that inefficient processes result in delayed payments, putting unnecessary strain on suppliers who rely solely on revenue from customers to stay operational, ultimately impacting their ability to deliver goods and services on time. Or worst case, a supplier that is forced to close their doors greatly impacts your buying organization, and overall global supply chains are weakened as a result of this vicious cycle.

Cloud

Cloud is rapidly becoming the major technology platform for every type of business. Within P2P, the move to the cloud has been consistent but patchy. Both the eProcurement and eInvoicing sectors are well established and growing but cloud based AP solutions are relatively new. In addition, some early eProcurement and eInvoicing adopters have relied on their own on-premisetechnology that is now becoming outdated. Deploying a cloud-based P2P solution offers more than the ability to automate the exchange of purchase, supply chain and finance documents. It provides the opportunity to develop a cloud platform that facilitates efficient, secure and compliant data integration and management across digital business ecosystems—connecting people, systems, and things. It allows organizations to break down the departmental information silos and increasingly integrate the entire P2P process.

Automation

Enterprises are looking to automate as much of the P2P process as possible, where manual intervention for high-volume repeatable tasks – such as purchase requisition to purchase order conversion and invoice processing – is removed.

• AP Automation – Solutions that automate the invoice to pay process are being adopted in an accelerated manner. The solution enables auto posting of invoices, keeps a strong audit trail of workflows and delivers various reports that provides visibility on invoice and payment status to both internal stakeholders as well as suppliers.Touchless processing of invoices is one of the key drivers of a streamlined P2P process, helping to reduce late payments, supplier enquiries, and operating costs.
• Information Management – Information is the lifeblood of procure to pay function. Procurement contracts, supplier proposals, invoices, lorry receipts, approvals and several other information is across physical and electronic formats in multiple systems. Information is not found when required. Enterprises are adopting information and workflow management solutions in a frenzy to manage procurement better.
• Contract Lifecycle Management – The contract lifecycle management (CLM) process demands efficiency at every level of an organization’s procurement, sales and legal teams.Absence of an effective CLM tool can pose numerous challenges including lack of communication among team members, poor renewal dates tracking leading to annual revenue leakage, contract disorganization and inconsistent clause management. Organizations have an average cost savings of 10% and a 20% reduction in hours spent on contract review with effective contract lifecycle management. Implementing contract lifecycle management solution can help avoid litigation from contract non-compliance, reduce costs and time involved in contract management and delivering greater value to customers.
• Vendor Onboarding Automation – Enterprises need to put in place a digital onboarding process to monitor supplier requests, supplier profiling and segmentation, as well as approval workflows to automate and track supplier onboarding approvals.Enterprises are increasingly using self-service portals for suppliers, agents, and buying teams to collaborate during the sourcing process. The master data creation process is being automated to ensure cleanliness of supplier masters for effective reporting.
• Supply Planning & Order Issuance – Enterprises can seamlessly share real-time supply forecast updates electronically with supply partners (suppliers, factories, and agents) through automated systems. This enables factories to analyze fluctuations in demand and plan-ahead collaboratively.The order issuance process needstotal automation. Suppliers need real time visibility to orders issued and enterprises need to automate the order confirmation and order status process to have timely visibility of the delivery schedule.
• Reverse Auctions – The cost of procurement can be significantly brought down with reverse auctions, as prices are determined in a much quicker manner during live auctions rather than traditional long-drawn negotiations.

Data and Analytics

Smarter processes backed by data and powered by automation are the future for P2P operations. When data quality improves, automation becomes all the more effective. Organizations are faced with a growing amount of information from both internal and external sources and harnessing the value of the data is becoming key for business success. While data and analytics were originally used to reactively drill down into operations, capabilities are changing quickly. Using advanced analytics combined with AI and machine learning, organizations can use P2P data to not just look at your current state of operations but make a proactive and informed plan for the future.

Enterprises are fast tracking digital transformation of the procure to pay function as they realize that this is the foundation to accelerating P2P and could deliver a significant competitive advantage when done early.