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How Procure-to-Pay Process Improvement Supports Business Growth

12.19.2017

The pressure to increase bottom-line performance in today’s business environment is greater than ever.  While there are many areas that are ripe with improvement opportunities, the procure-to-pay process is often where organizations begin their efforts.

5 Questions to Ask When Considering Procure-to-Pay Process Improvement

Business leaders often ask these questions when their companies are considering a procure-to-pay process improvement initiative:

  • Are there opportunities to reduce costs by negotiating better deals?
  • Are processes efficient and effective and will they support future growth?
  • Are we making well-informed purchasing decisions that are in the best interest of the company?
  • Are we exposed to possible fraudulent disbursements?
  • Can we rely upon our vendors to deliver quality goods and services and protect our sensitive information?

An organization’s greatest opportunity for savings is often realized through strategic and well-informed approaches to sourcing and contracting. However, these savings can be difficult to duplicate year over year and primarily just focus on cost reduction. Process optimization and control should also be a component of an organization’s procure-to-pay process improvement efforts. This ensures their processes are designed to support organizational growth, improve decision making, manage vendors and effectively manage costs on an ongoing basis. 

How a Global Company is Enhancing Efficiency

How does this work in the real world? Recently, a growing company with global operations recognized a need to enhance the efficiency and effectiveness of its procure-to-pay process and related internal controls. Working with a consultant, the company went through an assessment that focused on identifying and addressing service, capacity and risk challenges, by:

  • Developing an understanding of the procure-to-pay process, systems and governance structure.
  • Evaluating process maturity, performance metrics, policies, procedures and controls.
  • Identifying opportunities to improve efficiency and effectiveness of the organization’s people, process and systems.
  • Prioritizing improvement opportunities and developing strategic options and a roadmap.

The assessment identified various initiatives and next steps to enhance the procure-to-pay process, including establishing or enhancing:

  •  A vendor management process.
  • A procurement organization.
  •  Policies and procedures.
  • A source-to-settle system strategy.

A Three-Phased Approach

By adhering to the following three-phased approach, the company will have a clear roadmap for service, capacity and risk improvement:

1.    Operational performance review – The key service, capacity, and risk challenges and opportunities are identified and prioritized.

2.    Improvement strategy development – The assessment findings are evaluated while leveraging multiple methodologies, including Lean Six Sigma, benchmarking and process mapping. A recommended strategy and roadmap is developed to address the identified challenges and opportunities.

3.    Execution and transformation – The developed strategy is managed and executed.

Team

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