Best practice companies establish a Procure-to-Pay strategy that is composed of short and long-term goals. The short-term goals range from one to two years, while long-term goals range from three to five years. The goals and initiatives are best developed by incorporating feedback from key stakeholders throughout the organization. Successful strategies contain goals for:
- Overall spend
- Spend by commodity type
- Spend by order placement mechanism
- Spend by payment type
- Cost savings (estimated by activity-based costing or full-time equivalent [FTE] savings)
- Supplier sourcing goals
This strategy is the foundation of the company’s Procure-to-Pay process and should be a component of the company’s overall business agenda.
Benefits
- Cost Savings and Process Efficiency – A well defined and prioritized Procure-to- Pay plan enables companies to identify achievable cost savings goals and increases execution efficiency
- Supplier Management – Increased organizational alignment improves a company’s ability to manage and rationalize suppliers
- User Satisfaction – Procure-to-Pay goals aligned with organizational needs receive increased support from key stakeholders and employees