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Stack Your Lineup for Procure-to-Pay Excellence

Ted Williams, Bobby Doerr, Johnny Pesky and Dom Demaggio

Baseball season is winding down in North America, and so is the time for making references to the national pastime. As I write this, the Boston Red Sox and Oakland A’s have the two best records in baseball. Few, if any, would have made that forecast at the start of the season.

One explanation for this performance is lineup depth. Every batter, from the top of the order to the number nine hitter, has made a contribution to run production for these two teams.

In a networked economy, the depth of process improvement across the procure-to-pay function separates the leaders from the laggards. For organizations that fail to achieve the expected results from procure-to-pay transformation, a narrow focus—the equivalent to a hole in the lineup—may be at fault.

Take electronic invoicing as an example. Streamlining the receipt and processing of an invoice is a noble goal, but if the initiative stops at the invoice, you ignore an essential related document—the purchase order (PO). Organizations that consolidate the processing of POs and invoices over one business network will enjoy advantage over those that focus on the invoice only, or that manage the processing of POs and invoices over separate networks.

Another important component of an efficient and effective procure-to-pay process is the management of catalogs. When you drive purchasing off catalogs, you ensure that everyone in the organization is buying the right products at the right price, from a preferred supplier. Ignoring this aspect of the procure-to-pay process leaves a hole in your lineup.

Non-PO invoicing is like the number eight or nine hitter in a lineup, buried at the bottom of a batting order with low expectations. Today, however, advances such as contract invoicing bring new potential for high performance in this area.  The ability to leverage a business network to invoice against contracts can streamline the processing of non-PO invoices, simplifying one of the most challenging tasks in all of accounts payable.

In baseball, depth in the lineup sets up new opportunities for the “big inning,” where teams can score in bunches of three, four and five runs or more. The analog in the procure-to-pay process is dynamic discounting, where early payment discounts can be taken on a sliding scale up to the due date of the invoice. As you streamline your processes on the back end, you can profit on the front end by capturing all existing early payment discounts, as well as extending discounts to new groups of suppliers looking to accelerate receivables and improve their cash flow. The business network makes possible this new type of collaborative finance to the benefit of both trading partners.

Business networks also introduce a new dimension to global e-commerce: the ability for buyers and suppliers to identify new business opportunities that can’t be achieved in a disconnected business environment. Buyers can find qualified suppliers and suppliers can find new customers more quickly, and with less risk, as part of a strategic sourcing initiative or as a “pinch-hit,” spot-buy opportunity.

As you look to plug holes in your procure-to-pay lineup, don’t restrict your focus to the specific task at hand. Keep an eye on related business processes so you can stack your lineup with related process improvements when the time is right. Over the long run, that’s a strategy that will keep you at the top of the standings in your industry.

About the author
Chris Rauen
Chris Rauen

Chris is responsible for marketing programs at Ariba that educate finance, procurement, supply chain, and other business professionals on the transformational potential of the Ariba Network and Ariba Financial solutions. Before joining Ariba, Chri... Read More >>>

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