In the procurement space, organizational compliance, and adhering to strict spending caps is a challenge.
Occasional noncompliance may seem harmless, but overspending becomes a problem when the economy becomes more volatile. We build spending caps into our work flow to avoid vulnerability to major swings in the economy, not for marginal profit padding when the outlook is good.
In a period of stable economic growth, like that experienced by the US and global economies from the end of 2009 to today, it’s easy to forget about the challenges of economic downturns.
As a safeguard against any coming market fluctuations, it’s important to get corporate controls and compliance squared away. Fortunately, modern procure to pay (P2P) software solutions represent a novel way to hardwire compliance to spending caps into your work flow.
The Value of Perfect Compliance
Production begins with procurement, and having the confidence to plan around a fixed spending cap is invaluable.
The organization as a whole can benefit from increased agility with precisely calibrated spending controls and compliance. With absolute certainty around spending, it’s no longer necessary to pad general budgets for the contingency of out-of-compliance spending.
This “wiggle room” goes a long way for increasing organization-wide effectiveness and enables a more efficient and accurate budget.
A hard spending cap is a ceiling, but with perfect compliance, spending should almost always fall significantly short of that cap. Additional savings are nice, but the true value of compliance comes from the ability to plan with certainty around a fixed procurement spend ceiling.
Modern P2P in a Nutshell
“Procurement to Pay” (P2P) is an umbrella term used to describe the procurement process from start to finish.
A P2P solution is a software tool that helps an organization complete the tasks that make up the P2P process.
Initially, organizations adopted software solutions to improve specific parts of the P2P process. Various solutions, such as Excel, RFQ management software, and electronic payment systems are examples of single-task solutions that were traditionally used in conjunction to complete the procurement process.
P2P solutions have followed the same trajectory as many other task-specific software solutions: developers consolidate features to enable the same piece of software to perform a higher number of tasks. Like ERP and other cloud-based, SaaS software suites, P2P software that automates every part of the P2P process is now the industry state-of-the art.
How P2P Drives Efficiency
The beautiful thing about an integrated cloud-based P2P solution is its simplicity. By automating and managing RFQ data, integrating with production-side software such as ERP to make purchasing decisions, electronically managing paperwork, and automating electronic payments; a complete P2P solution reduces human labor and error dramatically.
The benefit of keeping all pricing and spending data within a single cloud solution is that all relevant information is secure but accessible for procurement staff remotely wherever an internet connection is available. Perhaps more importantly, this information enables the software itself to make informed procurement decisions automatically.
Combine that with insight from ERP, production and inventory data and your organization has the power to optimize spending with completely automated processes.
An Agent for Perfect Compliance
When your P2P solution is able to automate procurement and spending decisions, it’s easy to achieve 100% compliance to corporate spending controls.
Enabled by predictive analytics, a P2P solution can predict quite well when materials prices may cross a spending threshold. With this predictive ability and access to production and inventory data, it can prepare for such an event by purchasing in advance.
Just as procurement is a cornerstone of your operation, a powerful P2P solution is most effective when it works in tandem with the software that aids the other aspects of your business.
Getting all of these pieces into the right place is a nuanced and important process, and successful transformation will set your organization up for success in the years to come.
Learn about ISS Group’s Business Process Improvement (BPI) solution to see how we can help optimize your work flow. We recognize that every business is unique and have a variety of approaches to optimization, such as identifying KPIs that are most important to your business and benchmarking with relevant best practices. Contact us and we can work together to find the solution that’s right for your team!
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