April 11th, 2012

Aligning AP and Procurement – Notes on a Recent Webinar with SharedServicesLink.com

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AP and Procurement Teams Allign to Reduce Costs and Drive ImprovementsEarlier this year, Lavante hosted a webinar with Susie West, Founder & CEO of SharedServicesLink.com, an industry community network that features an array of research and events focused on AP, procurement and shared services.  Joe Flynn, CEO & Founder of Lavante, joined Susie in this session, entitled  Four Truths Unveiled – Connecting Cause and Effect in Purchase-to-Pay.  The event featured some interesting findings from a research survey conducted by Shared Services Link.  You can download and watch the entire event by clicking here.

Susie began by looking four key milestones organizations went through as they moved towards aligning the two organizations to realize  cost efficiencies all while adding significant value to their organization.  These consisted of:

  •   •     Centralize functions for economies of scale
  •   •     Consolidate ERP systems
  •   •     Standardize processes that flows over the ERP
  •   •     Automate processes

At each of the milestones the organizations realized “huge benefits in terms of cost controls, visibility, compliance, etc.”

The survey showed that the key driver for P2P improvements today is Cost Reduction.  This has changed, however, from the results of just two years ago which saw the key driver as Control, now residing at the bottom of the respondent list.

The overall finding of the survey showed that the alignment of AP to Procurement was a mix.  The survey showed that:

  •   •    45% are partially aligned
  •   •    23% are aligned on most things
  •   •    14% are absolutely aligned
  •   •    18% are not at all aligned

Questions from the audience always bring out interesting thoughts and ways of looking at the content.  Here are two of the questions discussed:

  •   •    What are the key challenges you see that are hindering the alignment of AP & Procurement?

    Susie:  One key observation I’ve seen after working with a variety of global companies is the lack of communication between these departments.  There were many times that our organization’s meeting brought together representatives from AP and Procurement where they were meeting for the very first time.  Consistently, we find that each department comes into the discussion with very separate points-of-view, which sometimes can keep them apart.  AP often feels as if it is rather in the shadow of Procurement, and Procurement feels that they are a much more of a value-add, or strategic player in the organization. Once these ideas are put aside, the two organizations can begin the process of aligning processes and goals, which in turn drives much better outcomes for both departments.

  •   •    If you don’t have alignment between the two departments, how can a vendor portal really work?

    Joe – Lavante performed a study around this topic several years ago, where we looked at how many organizations we deal with were planning to implement a vendor portal- which was just around 10% -  vs. how may wanted to deploy a vendor portal solution – which was over 70%.  I look at the results from this survey which shows that implementing a vendor portal is relatively low priority on the planned projects list, against the fact that 30% of survey respondents are dealing with over 10,000 suppliers.  We are finding that especially for companies with large number of suppliers, there is a large demand for a type of  “portal-light” solution, which can handle the most onerous parts of the vendor/client communications.  Having a supplier on-boarding system that can seamlessly deal with the critical, but usually very labor intensive, aspects of collecting contact data along with compliance documents is a very necessary first step.  We also see that because AP usually owns the vendor master files, they are very interested in this type of solution.  The conversation about solving these issues begins the communication process with procurement, which very quickly realizes the benefits a vendor portal can deliver to both AP and Procurement.

    Susie – If AP doesn’t have buy-in from Procurement for an automated, streamlined vendor portal system, it is a good idea to begin making gains in areas that directly impact procurement, and show how much value it can bring to the procurement side.  Similar to what Joe is describing, this type of approach can prove the model and move the project forward.

There is a lot more excellent material in the presentation.  To watch the entire webinar just click here.

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