Procure-to-Pay (P2P) is a solution that involves digitising procurement processes.
According to Ian Moyse, a process digitisation expert and a member of the Cloud Industry Forum [1], to simplify the supply chain we must approach each purchase category using an appropriate optimisation methodology.
Ian Moyse looked at Procure-to-Pay's promises regarding indirect procurement, and more specifically Manutan's solution. This Procure-to-Pay solution allows us to cut the overall cost of companies' tail spend by a third [2].
To assess the relevance of Manutan's Procure-to-Pay solution, Ian Moyse answers three questions:
- What are the potential savings for indirect tail spend?
- What is the principle of Manutan's Procure-to-Pay solution?
- What makes Manutan's Procure-to-Pay solution innovative?
What are the potential savings for indirect tail spend?
Tail spend account for an average of 5% of direct spending, but 85% of the total items, 75% of the suppliers and above all 60% of the volume of.orders.
At a company-wide level, committing to the optimisation of tail spend is lucrative. It also helps streamline the number of suppliers and therefore the cost of managing them.
As this is still a fairly new approach, companies that have made this commitment have a competitive advantage.
Furthermore, the low unit cost of tail spend does not detract from their significant contribution to effective business operations. For example, although the cost of de-icing salt is relatively low, a loading area covered by ice—due to a lack of salt—can compromise shipments and therefore have serious financial consequences.
Having a Procure-to-Pay solution is therefore a strategic advantage.
What is the principle of Manutan's Procure-to-Pay solution?
Companies can rely on a dedicated digital solution, which aims to save them significant amounts of money and streamline their tail spend. To cut the Total Cost of Ownership (TCO) by a third, Manutan digitises everything that can be digitised:
- Access to the product catalogue included in the contract
- Purchase request approval workflows
- Orders
- Delivery
- Invoicing
The Procure-to-Pay solution for tail spend also integrates management functions, namely monitoring contract compliance, reporting and analytics. Accessible in SaaS, Manutan's Procure-to-Pay solution is up and running in just a few hours.
What makes Manutan's Procure-to-Pay solution innovative?
1. Manutan's Procure-to-Pay solution overcomes the hurdle posed by data structuring
It is estimated that 80% of data relating to tail spend is unstructured [3]. The dispersion of the purchases concerned and the low attention that companies generally pay them explain the magnitude of the challenge. Collecting, structuring and analysing the data relating to the thousands of transactions made is a much more arduous task than for class A or B purchases. However, the potential benefits explain why companies are addressing the issue of tail spend. Manutan's Procure-to-Pay solution for class C purchases, a.k.a tail spend meets this need.
2. Manutan's Procure-to-Pay solution helps you go further
Without data structuring, optimisation often consists of simply reducing unit costs, with the proven and counterproductive risk of negatively affecting quality and lengthening delivery times. Manutan's Procure-to-Pay solution allows you to go further in optimising procurement processes by streamlining inventory, removing silos and improving demand forecasts.
3. Manutan's Procure-to-Pay solution offers the potential to cut costs by a third
Manutan has developed a revolutionary approach based on data structuring. Its repository of around 100 sets of international data is used to establish improvement measures that apply to all companies.
Using easily understandable key indicators, Manutan is able to offer its customers significant optimisation of their tail spend. Manutan's Procure-to-Pay approach involves analysing purchasing behaviour, comparing this to the repository and using this to establish an operational and quantifiable progress plan.
Although they may appear modest, the savings generated by optimising tail spend are considerable and deserve special attention. Manutan is able to offer a simple and original Procure-to-Pay solution using the Cloud.
[1] The Cloud Industry Forum's mission is to represent the interests of user companies with software publishers operating in the Cloud and digital service companies.
[2] Tail spend include all products and services that companies need infrequently or on an ad-hoc basis.
[3] Manutan white paper — Indirect purchases: Six ways to optimise your strategy.
