Procurement is a relatively untapped source of rich information which a mature P2P process can support. In the past, procurement has focused on compliance with corporate policy, for example, to ensure that goods and services are only sourced from authorized suppliers and that the nature of spending is aligned with spend policy and limits. But there is a treasure trove of information within procurement that can have a significant impact on strategic issues such as the dependability and diversity of the supply chain, as well as which supplier relationships are strategic and must be cultivated. In a post-COVID era, organizations are only too aware of the need to pay more attention to the supply chain and supplier performance.
Matching supply and predicted sales demand is a perennial challenge and organizations need to be agile and responsive to both sides of the equation. Procurement data (amounts, deliveries, sources and substitutes) needs to be planned in line with sales forecasts, sometimes over very long periods depending on industry sector. Shortages and delays can have a profound impact on profitability and strategic decision making. Increasingly, integrated business planning (IBP), i.e. the fusion of operational data from, say, procurement and sales order systems with financial plans, is crucial to assessing the robustness of both short-term forecasts and longer-term planning scenarios. It is also vital for managing cash balances and ensuring that suppliers are treated fairly according to stated CSR (Corporate Social Responsibility) policy.
So, it is no exaggeration to say that P2P
has the power to bridge Finance, Procurement and the wider business and drive value into every corner. With the capability to coalesces Accounts Payable, ERP and Procurement, it can play a vital role in informing strategy development and ensuring that organizations remain strategically aligned. Modern finance functions that grasp the nettle now will not only be more efficient but also more agile and responsive to market demands.