Once an organization has a Purchase-to-Pay (P2P) framework in place to ensure proper purchase authorizations and enable automated PO/invoice matching, the next big step is to give employees easy access to content (catalogs, contracts and/or supplier websites) for specific goods and services available from authorized suppliers from within the P2P system.
This capability is essential to achieving a high percentage of spend under management. Employees are far more likely to buy the right item from the right supplier when it’s easier to do so than it is to buy from another source. Providing employees with the ability to search for and select the item or service that best fits their needs from within the P2P system streamlines the purchase process for the employee and drives dramatically higher on-contract spend for the organization.
Many organizations find themselves with minimal supplier content available to employees within their P2P system. As a result, employees have no choice but to find what they need outside the system, then enter supplier and item specifics into the P2P system against ‘generic’ items to gain purchase authorization. Not only is this a laborious process for employees, but unless the employee engages with a buyer ‘offline’ to select the supplier and item, it essentially wastes all of the effort Procurement invests in finding good suppliers and negotiating high-value agreements. Manual entry also increases the occurrence of errors in terms of SKUs, prices, coding, etc.
The cost impact is significant:
The organization is also at risk:
- Significant savings opportunities are lost when negotiated agreements are not used and spend is spread across many suppliers.
- There is significant lost productivity in Procurement and throughout the organization.
But when you have hundreds of suppliers providing thousands of goods and service items, there are significant challenges:
- Many purchases are made with suppliers that have not been properly qualified - the potential for supplier non-performance and non-compliance is much higher.
- How do you obtain access to comprehensive, rich item detail in electronic form?
- How do you keep up with constant change?
- How do you make it easy for employees to find and select what they need?
- And…how do you do all of this without high administrative time and expense?
In order to really leverage an organization’s P2P system to improve spend management, Procurement needs to establish efficient, well-controlled ways to provide employees with convenient access to comprehensive supplier content.