Ariba Knowledge Nuggets
How close are you to P2P Best Practices?
Organization structure to support P2PGroup Procurement/Sourcing responsibilities into Regional Centers of Excellence by categories (commodities).
- Select a lead regional center to determine the category process and suppliers, and receive support and feedback from the remaining procurement/sourcing offices.
- Assign categories to a lead Regional Center of Excellence based upon the region and users.
- Actively obtain feedback from the all regions.
- Use of electronic tools reduces cycle times, manual work, and errors and allows personnel to spend at least 1/3 of time on strategic work.
- Written procurement/sourcing policies are followed.
- Executives and Finance/Compliance ensure that exceptions are not allowed.
- Uniform approval processes (names change but the approving group is the same). Full use of electronic process for PO/Contract/Invoice creation, approval, and transmission.
- New process/technology used for one region/commodity as a pilot before common use.
- Local variations are supported, as required by law or practicality.
- Supporting functions (such as A/P) are often done by associated Shared Services organization.
- Formal training is embedded in all departments.
- New users do not struggle.
- Exception reporting is used to discover issues before they become problems.
- Company aggressively supports continuous improvement. Not afraid to change current procedures.
- Suppliers are actively involved in all aspects of P2P.
Organizational Focus for Successful Use of P2PAt Project Start
Assign team members who will become the company P2P experts (must have time to focus on P2P project and continue with P2P focus after the project is completed)
- Start P2P project with training for the team
- Plan for some quick wins to gain momentum
- Use of on-site Consultants can ensure P2P team members will be self sufficient when the project is completed Plan to maximize use of automatic features (such as two-way and three-way matching, workflow, contract limit notifications, invoicing directly from contracts) to allow users to focus on exceptions
During the Project
- Implement what you really want (since it is difficult to go back and change)
- Involve end users early (to reduce their fear and get their acceptance)
- Concise but focused training is critical (use Quick Reference Guides)
- Concentrate on what is most important
- Executives must be visible supportive of the P2P project
At Project End
- Expect and demand adherence to P2P policies (no exceptions tolerated)
- All spending must be pre-approved (via a Contract or requisition / PO)
- Must be willing to use the stick if the carrot does not work
- Ensure new users have training and support from local power users to help them follow your P2P processes
The New Face of Travel Procurement: End-to-End Solutions Provide a More Effective Way to Manage Costs and Drive ComplianceUnder increasing pressure to implement processes and solutions that deliver savings and efficiencies, companies are beginning to look beyond point solutions that focus exclusively on travel and leverage offerings that allow them to manage their spend in a more comprehensive way. A combination of technology and best practices, these end-to-end solutions help companies integrate travel with the rest of their spend so that it can be more effectively tracked and managed. From online and offline travel booking to expense reporting, these offerings enable companies to manage travel procurement using a single interface – the same interface used to manage procurement for all other categories. The result? A closed-loop system that empowers companies to get control of their travel spend side-by-side with all other categories, drive savings more quickly to the bottom line and fuel compliance with internal policies and external regulatory requirements. (White paper attached)
When it comes to Procurement, Traditional Outsourcing is not the Answer: Understanding the Managed Services AdvantageWhile procurement and supply chain cost reduction initiatives have been around for decades, businesses are only just beginning to understand a compelling savings opportunity that can materially improve their financial performance. This new approach, managed procurement services (MPS), can help add several percentage points to a company’s bottom line each year. Managed procurement services is the transfer of responsibility for managing specified categories and processes to an expert, third-party provider who can provide sustainable, ongoing purchasing improvement. MPS goes far beyond transferring headcount via procurement outsourcing by helping companies achieve new levels of savings and efficiency over time. The good news is that leading executives are beginning to understand that these relationships can achieve:
- Lower risk (while avoiding becoming a “guinea pig” for multi-billion dollar outsourcers who are just coming up to speed on procurement)
- Increased savings primarily related to spend (not labor or transaction costs) of five to eight percent year-over-year savings over the life of the relationship
- Broader Spend Management impact (targeted to at least 50-60 percent of overall SG&A expenses)
It is not only about the tactics of doing what an organization is already doing today, only in a cheaper manner. Rather, it is about focusing on the right set of initiatives and leveraging the tools and expertise of a partner to drive ongoing results. Throughout this white paper, we will explore why tactical outsourcing places strict limits on the results that a company can achieve in procurement by working with third-party providers. Given that a significant majority of the overall $350+ billion outsourcing market is IT-focused, this fact is lost on traditional outsourcing providers that find it challenging to adopt a new approach to procurement where labor cost savings is less than 10 percent of the answer. But existing paradigms do not have to get in the way of an organization’s success. The good news is that by closely examining what is possible with MPS, executives will not only learn about the type of year-over-year savings they can achieve working with the right solution provider but will also learn to ask the right set of questions to make the best possible decision before starting their MPS journey.
(White paper attached)