In Part 1 of this series, I voluntarily limited myself to discussing the Procure-to-Pay process in the context of digital transformation without going into Contract Management, Supplier Performance and Information Management, and the Strategic or Operational Sourcing process. In this part, let’s take a quick look at how those factor into a successful digital transformation.
The need to execute and manage contracts is at the heart of Procure-to-Pay. For instance, subscription contracts allow you to pay maintenance and energy costs, service contracts can be executed based upon specified deliverables deliverables, and contracts with minimum volumes or end-of-year discounts, etc. can be managed as such.
Contract Management (contract library, contract templates, clause creator, collaboration, self-service, electronic signature, Smart Contract Blockchain) adds to the features available to users without changing Procure-to-Pay’s ROI.
The Procure-to-Pay process emphasizes the needs of the requestor and Contract Management can be implemented under the same premise. When a user requests a contract via an integrated Procure-to-Pay solution that includes Contract Management, ROI is locked in because the ease of use over time incentivizes adoption.
Supplier Information Management
The ability to have a supplier self-register on the Procure-to-Pay platform by entering their information, answering questionnaires, and filing certificates is part of the success of a Procure-to-Pay project. Indeed, the supplier database is sometimes destined to become the defacto supplier directory for the company. In this case, controlling how new suppliers are created can become a critical part of the project and contribute to ROI – for the company and for suppliers.
It is important to start by distinguishing between operational sourcing and strategic sourcing. Strategic Sourcing, led by professional buyers who define their action plans by category or industry, is rather different from the daily and mass transactional aspects of Procure-to-Pay (operational sourcing). Including Strategic Sourcing in the full Procure-to-Pay process offers advantages in the long term, but in practice it is rarely done with consistency across the organization.
Operational Sourcing starts with a requestor. In the absence of a response from a catalogue, it is natural to allow a requisitioner, procurement agent, or buyer to interact within the process for a multi-quote-type operational sourcing. Integrating sub-processes is easy and adds value.
Digital transformation and Procure-to-Pay implementations require focus from the top down and the bottom up. There needs to be an overarching vision to drive the effort, a clear understanding of how it will affect sub-processes (Contract Management and Strategic Sourcing), and an awareness of relatively small details such as whether invoices are digitized in isolation or with all of the controls and conditions that will be relevant over their lifecycle.
You’ll find a wide range of information, whitepapers and webinars on our resources page to help you get familiar and get started on your journey to digitization – and greater ROI.