Introduction - MultiBriefs · And automating the entire Procure-to-Pay process. Each best practice...
Transcript of Introduction - MultiBriefs · And automating the entire Procure-to-Pay process. Each best practice...
Introduction
To stay competitive, you know how important it is to find new ways to streamline and save on your company’s operations.
Learning how leading companies handle commercial payments can give you deeper insights into where and how you can
improve. Help you understand how to run your Procure-to-Pay processes more efficiently. Enhance visibility into corporate
spend. Gain better control and compliance. And ultimately, help enable you to add more profit to your bottom line.
Visa commissioned Deloitte Consulting to conduct 90 in-depth interviews in with more than 60 global/multinational,
mid-size and large corporations as well as federal and local government agencies across the world. In 2010, Visa
commissioned Deloitte Consulting to update each of the following 28 Travel and Corporate Card Best Practices from the
comprehensive study to include current trends, updated case studies, and additional key findings. See the section entitled
“Study Methodology” for additional detail. The Visa Global Procure-to-Pay and Commercial Card Best Practices Study describes
how these organizations implement and optimize their Procure-to-Pay processes and commercial card programs. The
study gives you access to best practices for a variety of topics: Maximizing the benefits of purchasing and corporate card
programs. Streamlining travel and entertainment management. Taking advantage of the latest innovative best practices.
And automating the entire Procure-to-Pay process.
Each best practice is divided into three useful sections—a recommendation overview, a benefits outline and steps for
implementation—so you can quickly find the information you need. For more information on the Visa Global Procure-to-Pay
and Commercial Card Best Practices Study, contact your commercial banker.
Table of Contents
Establish Center-Led Management of Critical Procure-to-Pay Functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Study Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Note: Survey results, research and practice recommendations are intended for informational purposes only and should not be relied upon for marketing,legal, technical, tax, financial or other advice. When implementing any new strategy or practice, you should consult with your legal counsel to determinewhat laws and regulations may apply to your specific circumstances. Visa is not responsible for your use of the information, including errors of any kind, orany assumptions or conclusions you might draw from its use. Much of the information contained in this document applies internationally, but a certainamount of information applies only to certain countries or regions. Although Visa tries to mark all country- and region-specific information with a countryindication, it does not warrant or represent that all information without indication applies internationally. You should check the applicability of anyinformation in this document to you or your organization.
Establish Center-Led Management of Critical Procure-to-Pay Functions
Determining the degree of centralization of Procure-to-Pay functions is a critical
organizational design and management decision. A company’s strategy, culture, and
organizational structure will strongly influence this decision.
A center-led management approach ensures consistency of key Procure-to-Pay
activities across the entire company, while allowing requirements and restrictions to
vary slightly based upon business unit / regional needs. Activities that often have
centralized oversight with location-specific tailoring as needed include:
• Strategic sourcing
• Contract administration
• Order placement
• Supplier payment
• Commercial card program administration
• Expense management
• Travel administration
• Control and audit
• Reporting and analysis
• Technology strategy and implementation
• Development of policies and procedures
• Communication and training
A center-led approach to Procure-to-Pay management can enable significant cost
savings eliminating any duplication of effort across business units or regions, while
maintaining local customization in areas as needed such as procurement and travel
policies, reconciliation and approval processes, and training delivery. Additionally, a
center-led approach allows for improved monitoring and control over the
Procure-To-Pay function through consolidated company spending and compliance
reports.
Many organizations achieve center-led management of Procure-to-Pay functions by
establishing a shared services organization. Shared service organizations centralize
and streamline functions across a company such as Procurement, Accounts Payable,
and Accounts Receivable. Companies are able to reduce costs by taking advantage of
economies of scale and process standardization of key Procure-to-Pay functions.
A global communications organization moved to a shared services model to eliminate
redundancies and standardize roles and processes across its Procure-to-Pay function.
Central management was able to focus individuals on specific roles, increasing
ESTABLISH CENTER-LED MANAGEMENT OF CRITICAL PROCURE-TO-PAY FUNCTIONS
Leading global companies
incorporate
representatives from
each operating region
into the center-led
management of the
Procure-to-Pay function
to ensure global
alignment.
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productivity by over 60 percent for selected tasks. Increasing the productivity and
efficiency of the Procure-to-Pay process shifted the organization’s view of the
Procure-to-Pay function from a service provider to a strategic advisor to the
organization. This also allowed resources within the Procure-to-Pay function to spend
more time with the various business units on cost savings and efficiency improvement
projects related to each business unit’s specific needs. In addition to improved
efficiency and cost savings, the shared services model increased employee satisfaction
by providing employees training and development opportunities across the various
shared services functions.
Several organizations in the study used center-led management as a platform to
outsource non-strategic Procure-to-Pay functions, such as invoice and payment
processing, increasing the ability of staff to focus on strategic initiatives, such as
supplier negotiations. One global manufacturing company outsourced the majority of
its Procure-to-Pay activities, including invoicing, payment, and reconciliation
processing in order to minimize costs and enable the Procure-to-Pay function to
become a strategic partner of the business units. As a result, the Procure-to-Pay
function was able to customize its services to assist each business with strategic
sourcing activities to achieve the company-wide goal of reducing the number of
suppliers across key spend categories.
Options for Best Practice Adoption
Best practice organizations maximize the efficiency and value of their Procure-to-Pay
function by centralizing management and control, while allowing for customization to
accommodate local market needs, and streamlining non-strategic activities.
ESTABLISH CENTER-LED MANAGEMENT OF CRITICAL PROCURE-TO-PAY FUNCTIONS
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Option I Option II Option III
Options for Adoption Establish center-led
management of the
Procure-to-Pay functions
Establish center-led
management via a shared
services organization
Establish center-led
management via
outsourcing of non-strategic
Procure-to-Pay activities
Benefits• Increases
compliance with
Procure-to-Pay
policies and
procedures
• Improves supplier
management
• Improves user
satisfaction with a
central point of
contact
• Increases cost
savings due to the
elimination of
redundancies
• Increases process
efficiencies
• Improves ability to
focus on strategic
activities in the
Procure-to-Pay
function
Key Considerations• Requires
collaboration across
Procure-to-Pay
functions to assign
roles and
responsibilities
• Requires clear
guidelines for areas
that can be
customized locally
to prevent too much
deviation for a
central standard
• May require a high
level of effort to
consolidate Procure-
to-Pay functions into
a shared services
organization
• May require time
and resource
commitment to train
third party
Benefits
Study participants report that center-led management and control of the
Procure-to-Pay function results in a number of organizational benefits.
ESTABLISH CENTER-LED MANAGEMENT OF CRITICAL PROCURE-TO-PAY FUNCTIONS
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Category Benefit Obtained
Control and Compliance Consistent development and communication of policies and procedures
provide enhanced employee compliance.
Cost Savings and Process
Efficiency
Center-led management helps eliminate redundancies and increase
process efficiencies across Procure-to-Pay functions.
Supplier Management Center-led management of the Procure-to-Pay function enables
centralized negotiations with suppliers which enhances the negotiating
strength of a company.
Implementation Steps
The development of center-led management and control of an organization’s
Procure-to-Pay function requires the following steps.
# Description of Action Step
1 Evaluate the Procure-to-Pay process to develop activities that are best managed centrally
and activities that require local customization
2 Identify and assign roles and responsibilities – both the centralized roles as well as
business unit / local office responsibilities
3 Develop and communicate policies and procedures for the center-led management
function
4 Define reporting criteria to measure the performance of the Procure-to-Pay function
centrally and locally
5 Periodically review policies and procedures and program reports and update as necessary
ESTABLISH CENTER-LED MANAGEMENT OF CRITICAL PROCURE-TO-PAY FUNCTIONS
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Study Methodology
The objective of the Visa Procure-to-Pay and Commercial Card Best Practices Study
was to better understand the changes in the segment and to gain a comprehensive
understanding of best practices across the Procure-to-Pay process and within the
commercial card program. Visa commissioned Deloitte Consulting to conduct 90
in-depth interviews in the summer of 2007 with more than 60 global/multinational,
mid-size and large corporations as well as federal and local government agencies
across the world. In 2010, Visa commissioned Deloitte Consulting to update each of
the following 28 Travel and Corporate Card Best Practices from the comprehensive
study to include current trends, updated case studies, and additional key findings. The
evaluation of the Procure-to-Pay process included sourcing, order placement, payment
and settlement, reconciliation, control and audit, and reporting activities. For the
commercial card management process, the assessment focused on practices related
to the purchasing and corporate card program strategy, management, and reporting.
Interviewees included Regional Controllers, Chief Procurement Officers, Directors of
Strategic Sourcing, Procurement Managers, Accounts Payable Managers,
Global/Regional/Local Commercial Card Program Managers and Travel Managers.
Study participants had a range of commercial card programs in place including
purchasing card, corporate card and commercial “one” card programs with each of the
top three card providers: Visa, MasterCard and/or American Express.
STUDY METHODOLOGY
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