An efficient SAP Procure to Pay (PTP) process enables SAP to perform the heavy lifting of a procurement department’s day to day activities, transforming the team’s role from day to day execution into one of managing exceptions.
This shift in mindset can lead to drastic reductions in manual intervention allowing any procurement department to evolve into a strategic unit within the company that can then be empowered to develop relationships with suppliers, identify and mitigate risks in sourcing and optimizes inventory levels.
Benefits of an optimized Procure to Pay process include:
- Reductions in manual PO creation and maintenance
- Increased visibility of spend
- Improvements in supplier performance
- Supplier spend and lead time reductions
- Mitigation of the risk of stockouts
- Better visibility of centrally negotiated prices and terms
- Improvements in on-time payment performance
- Inventory reductions
- Increased return on the investment in SAP
Challenges
In the world of procurement, the perceived costs of transactional overhead are often weighted more heavily than the benefits obtained from a mature SAP procure to pay process. Circumventing the system then becomes the norm in the form of free text purchase orders, a failure to utilize purchase requisitions, invoices that arrive before purchase orders are created and physical material movements that are out of sync with their systematic counterparts (just to name a few).
Under these conditions, SAP is unable to provide valuable insight as each shortcut provides the system with something less than the complete picture. As the system’s view becomes further misaligned with an organization’s actual position, the more incoherent its requisitions and exceptions seemingly become. The result is a complete lack of trust in the system, more shortcuts and an increasingly less valuable tool for your business.
The good news is that well designed and disciplined procurement processes are possible and can deliver overwhelming benefit to its users and entire organizations. SAP can handle a substantial portion of a company’s day to day activities and can transform buyers into strategic talents capable of lowering inventory levels while decreasing business risks, lowering material costs and increasing organizational efficiency.
Solution
It is important to build an understanding of the activities consuming buyers and planners each day and additionally identify those processes which are causing the system to fall out of sync with what’s physically happening on the floor. Knowledge transfer is key and buyers should be trained on the tools available to them in standard SAP and how to leverage them to facilitate a shift from completing day to day tasks into performing value-added and exception management activities. Benefits of an optimized SAP procurement process include:
- Reductions in manual PO creation and maintenance
- Increased visibility of spend
- Inventory reductions
- Reduced business risk
- Increasingly valuable workforce and improved morale
- Improvements in supplier performance
- Supplier spend and lead time reductions
- Better visibility of centrally negotiated prices and terms
- Improvements in on-time payment performance
