For distributors and manufacturers, alignment of the procurement and accounts payable processes is becoming a more efficient way not only to cut costs, but also to solve larger problems like minimizing liability, mitigating risk and enforcing compliance.
According to an article on the Supply & Demand Chain Executive website, companies like ING U.S. have used a cloud-based purchasing workflow bring together two formerly disparate departments, and the benefits have been very noticeable.
James McDonald, director of procurement operations at ING, a provider of retirement, investment management and insurance products and services, explains in the article why ING introduced collaboration between procurement and finance and how this change proved successful.
“The opportunity to implement an integrated procure-pay solution suite that could link back to sourcing while enforcing compliance to purchasing policies, provide visibility into spending across all business units, and automate the invoice process were key components of the business case,” McDonald says.
To start, ING used a unified cloud system to consolidate information and increase visibility. The company was among the first to do so in the implementation of a purchasing workflow a decade ago. With this system in place, ING’s procurement and finance divisions work together with greater ease to solve the major procure-to-pay pains.
For both the procurement and finance teams, having one integrated system allows every participant in the purchasing workflow to have the visibility he or she needs. Generating and tracking purchase orders and vendor invoices within one electronic database means procurement and accounting can easily enter and match POs to invoices and quickly identify gaps in compliance.
For executives, this aligned approach to procure-to-pay means a more holistic view. McDonald expounds on this by saying, “this will allow us to monitor KPIs from a dashboard, so we can proactively identify spending trends, and savings and cost avoidance opportunities,” whereas a lack of cooperation between the two departments causes conflicts in data and metrics.
Managing spending across an organization is one of the primary purposes of the procure-to-pay process. A lack of synergy between procurement and AP as well as disparate systems managing the two departments can create an inefficient purchasing workflow.
ING has proven that using one system can transform how the procure-to-pay process works and lead to very positive results. “What makes this easier today is that innovations such as cloud applications reduce the dependency on internal IT resources to drive the transformation,” McDonald says.
By leveraging the cloud, businesses can streamline business processes such as this to increase efficiency, manage spending and increase productivity.
Source: Supply & Demand Chain Executive, August 2013