In this guest post, Procurement Leaders invites Doede van Haperen to apply his experience as a software consultant to scrutinise the Purchase-to-Pay (P2P) system. Following his previous post, Doede looks at the issues around bundling categories and advocates investing in analysis over interface.
Never trust any consultant who promises you ’amazon.com-like user experience’. These promises can be famous last words when it comes to P2P implementation; P2P is and always will be more complex than internet shopping on your couch at home. So, how do we decide on the best tooling when we try and look beyond the issue of interface? Well, simple: your procurement process or operations manager has to be a black-belted bundle-master! Let me explain what I mean...
As the adage goes, any chain is only as strong as its weakest link and that applies just as well to P2P setups as it does to anything. But where to find that weakest link within P2P? Can it be pinpointed in general or does this differ per instance? In my opinion, for the majority of projects this link can be found in a structural misfit between process, tool and procurement characteristics. This misfitting already starts at the initiation of procurement channels. I have been in several projects where channels were only created around the tools that were already available. It’s a viable approach, but if you ask me, procurement channelling asks for a little higher developed set of talents than that. Channel strategies mean bundling categories, and the bundling of categories takes a keen eye to what procurement operations is actually about.
Where, then, to start the journey to P2P excellence? At proper analysis.
Check all your procurement categories for comparable characteristics and start designing as little homogeneous processes as possible that cover as many categories as possible. Do not step into the pitfall of combining categories just because they reside under the same category manager.
Example: car lease and personal laptop computers might both be HR procurement, I do not think that anyone really considers one (monthly payments and no asset registration) similar to the other (buy-once with a challenge in asset management). Some organisations split these two product groups over the category leads for facilities and IT, but then we can compare them just as easily with meeting-related catering or server park maintenance. Operational processes will simply not mix. In the end it all comes down to allowing yourself to keep an open mind and consider every product group as a separate one that needs evaluating on its own characteristics.
Procurement categories can regularly be bundled based on their specifics, becoming the driver for requirements to procurement channel design. The heterogeneous full-scope group of categories transforms into several sets of (more) homogeneous sub-scopes. The number of sub-scopes is your desired set of channels, it is that simple. But where to focus to catch the differentiating characteristics that matter? A nice way to arrange your first split is to think about "Who gets mad".
Centralised warehouse delivery or service execution on the working floor?
Master data driven or catalogue? Supplier maintained catalogue or internal?
Is it stock material or will the purchase be transferred into an asset? Direct cost centre administration or volatile project administration? PO-based or directly into the General Ledger?
Self-service decision, budget approvals or purchaser’s involvement required?
For some of you there are no easy answers here, but really, this is the beginning of a journey into P2P excellence. It delivers on a first rough grouping of combinable purchases which lead you to requirements, effective blueprints, manageable business cases and happy (well, let’s not overdo it, but you catch my drift) end users that recognise their daily business. This way, P2P can create the power to perform.