Procurement Transformation Blog

Procurement Transformation Blog

Opinions expressed on this blog reflect the writer’s views and not the position of the Capgemini Group

Your Baby is Ugly

Well, it should come as no surprise that there’s room for improvement in your source-to-pay (S2P) operations – inconsistent processes, outdated technology, zero bandwidth, tougher savings goals, a half-implemented future state model that’s four years old and on and on.  Sound familiar?  Yes, your baby’s ugly and that’s not ok.

Good news…you’re not alone.  However, in this market, it’s tough to pick what areas of S2P to tackle given limited financial and people resources.  Few are in a position to do it all and have to make real operational decisions around what pieces can be addressed when and with what resources.  What project(s) is/are going to yield the best ROI, and realistically how much can we really achieve?  On top to that, factor in your day job of keeping the wheels on and moving forward.  Adding a large transformation seems impossible…or does it?

“The only person who likes change is a wet baby,” Mark Twain noted over 100 years ago.

Top 5 Projects In 90 Days Over the years, a theme has emerged on the best projects to start with initially because that are minimally invasive, take a limited number of resources (time, people, money) and deliver hard cost savings to the bottom line.

  1. Spend Analysis:  I’m consistently surprised at how few companies have a true view of their spend.  “Well, we have lots of systems and [fill in the blank]…”  This isn’t a moon shot.  At the end of the day, it’s basic data classification and arithmetic.  With a bit of consulting work and a 3rd party service that has SaaS based tools, you’ll have a proper spend cube, and the tools to drive some rather sophisticated analytics.  All of this and sometimes more inside of 90 days.  Now that’s powerful.  In nearly every case, opportunities abound.
  2. Sourcing Execution:  Anyone can save you 10%.  Yes, I’m using a big brush but essentially it’s true.  The difference comes in the level of effort it takes execute the sourcing strategy internally and with consistency.  Is this activity and/or category your core competency?  Does it need to be?  Can someone else do better?  Probably.  “Well, our categories are really complicated.”  Consider a bit of consulting to discuss the category matrix, enterprise goals, competencies and category plans.  Leverage 3rd parties to execute your category plans.  They’ve got the expertise, market knowledge and tools to execute as well as deliver.  Consider a gain share model to put some fees at risk for success.  “Well, we’ve already gotten all of the low-hanging fruit.”  Of course we know, it grows back when you take your organization to the next level of capabilities.
  3. Compliance:  Ohhhh, that sounds messy.  Compliance can be surprisingly easy depending upon the approach.  First, don’t try to throw your hands around the entire S2P process right out of the gate.  End-to-end process compliance is a goal…not a first step.  Consider a small consulting team to help support a focused compliance program or compliance light.  In this way, the scope is contained and manageable.  Start with a review of all spend categories.  Your category managers should have a good feel for which categories are more or less compliant.  Use simple High, Medium, Low rankings for compliance.  Take that information and plot it on a 2x2 matrix with the y-axis being level of effort to drive compliance and the x-axis being time.  The size of the bubble on the 2x2 should correspond with the size of the opportunity.  Select your top 3 and starting pulling POs and contracts.  Analyze price and terms variation for that category / sub-category.  You’ve just created visibility.  Leverage this to have a conversation with the category owner (business unit).  Now go save some money.
  4. ePayables:  How many invoices have you paid twice?  It’s more common that anyone wants to admit, but it’s true.  Do you have a no PO, no pay policy?  Why not?  How many different kinds of payments do you make?  ACH, EFT, paper checks…more?  Again, a little bit of consulting can go a long way.  In conjunction with 3rd party partners in this space, together we can deliver significant savings in efficiencies, rebates and compliance.  These programs need continued focus but more than pay for themselves right out of the gate.  As more suppliers participate, the savings continue to increase and are sustainable.  This function has evolved significantly, and new, innovative service offerings can deliver real savings quickly.
  5. SaaS Solutions:  If the S2P solution(s) are more than 12-18 months old, then you should consider leveraging SaaS as an opportunity to drive a step change in your ability to capture and realize savings.  This is especially true for spend analysis, strategic sourcing, sourcing project management and contract lifecycle management functions.  P2P typically requires a sizeable amount of integration and change management across the buying community (enterprise wide).  A subscription-based software model enables the S2P function to perform an initial pilot with a significantly reduced cost structure that delivers a full-featured solution.  No, your special blue button and favorite custom report won’t be there, but all the other features that make a difference will be.  In some cases, these solutions can be configured (within reason) and up running inside of 30 days.

Learn More

Capgemini Consulting offers existing and potential clients the opportunity to discuss these and other projects designed to deliver real results quickly.  We can also provide a view of how these initial projects fit into a broader S2P transformation.  For additional information, please contact Matthew Shull or Adrian Penka.

About the author

Matthew Shull
Matthew Shull
Mr. Shull leads the Capgemini Consulting Procurement practice in North America. He has over 20 years of diversified consulting and business experience, primarily in supply chain transformation, procurement & sourcing, strategy, risk management and operational excellence. Prior to Capgemini, Matthew worked for several years with supply chain solution software companies and spent 9 years working in Asia for Hi-tech manufacturers, CPG and Oil & Gas.

Leave a comment

Your email address will not be published. Required fields are marked *.