Top 5 Use Cases of Leveraging Analytics in Procure-to-Pay

Your business generates a vast amount of data during the procure-to-pay (P2P) cycle. But can it use all this data generated from multiple source systems? Does it have a system in place to organize this data and derive useful insights?

The inability to use this P2P data often leads to process delays and inefficiencies and exposes your business to several risks. It can also hamper communication and relationships with key suppliers.

Too many levels of authorization needed by procurement and accounts payable to meet financial controls can cause further delays and aggravate the situation.

But you can prevent this situation by collating the entire P2P data, analyzing it and using it to optimize the cycle.

To bring all this data in one place and analyze it, you need tech-powered P2P analytics.

What is P2P Analytics?

P2P analytics aggregates, organizes and analyzes a vast amount of data that flows through procurement and finance teams every day. It creates opportunities to identify and act upon insights gathered from information that flows through the P2P organization. It can also provide prescriptive information to enhance business and financial performance.

The use of data and analytics helps to streamline several processes in the P2P cycle. These include identifying suppliers, negotiating contracts, placing orders, approving invoices and processing payments.

In addition to optimizing procurement processes and workflows, P2P analytics helps to identify potential risks and inefficiencies by providing end-to-end visibility throughout the entire cycle. In this process, it can also reveal key pain points and process bottlenecks. For example, by measuring the average time spent in approving a purchase order , it can highlight specific workflows that must be optimized.

Also Read: How Procure-to-Pay Technology Help Optimize Resources

Advantages of Leveraging Analytics in P2P

Here are the top 5 use cases of leveraging analytics in the P2P cycle:

1. Analyzes Spend:

By gathering spend data from multiple sources, P2P analytics can review the total business spend and identify specific areas or categories where spend exceeds the allocated budget. It can also help determine whether the business is getting the desired value from suppliers and assess the need to identify new alternative suppliers.

2. Monitors Workflows:

Internal teams, at times, take a lot of time to identify specific needs and create purchase requisitions. Analytics can help determine the average time taken to approve a purchase order from the time of creating a requisition. By detecting such bottlenecks in processes, analytics can uncover reasons for any delay and suggest ways to speed up things. Such analysis can also help optimize workflows in business-critical projects.

3. Aids in Supplier Performance Management:

Contracts with suppliers often document the key performance indicators (KPIs) such as delivery timelines. With P2P analytics, you can collate all data related to supplier performance in one place. For example, you can track the number of deliveries received in full, made later than agreed or not delivered by the due date. You can also track the percentage of returns or rejects and compare this data among different suppliers to accurately measure performance.

4. Analyzes Payment Cycles:

A quick analysis of payments made to suppliers can highlight payments made in time as well as those made beyond the cut-off time that led to missed discounts. Such analysis can also provide an opportunity to optimize payment terms and savings and renegotiate contract terms.

5. Identifies Risks:

Risk identification is another key advantage of P2P analytics. But how does analytics help to identify risks? By classifying spend by function, location or end-user, P2P analytics can identify unauthorized purchases and maverick buying. For example, it can detect inconsistencies such as:

• Invoices with no matching PO
• Orders without a contract
• Split PO to avoid higher-level approval
• One-time suppliers or employees registered as suppliers
• Variations from contract pricing
• Invoices from unknown vendors

Conclusion

When used in the right manner, the vast amount of data generated in P2P operations can uncover several opportunities to optimize procurement processes. P2P analytics makes this possible by monitoring enterprise spend and supplier performance and detecting any irregularities.

Learn how GEP’s AI-powered P2P solution can help your business get more value from procurement processes.