Though digital transformation has swept the retail landscape, most businesses still function using a traditional paper-based processing flow. According to statistics, only 69% of companies have total visibility over their supply chains.
Each company within the supply chain passes on information from one party to another using paper checks, letters, emails or faxes. This process has remained unchanged for decades.
Here’s a typical scenario where a P2P system isn’t involved.
As a retail business owner, you know that it’s essential to keep your store fully stocked with products that your customers want. The traditional procurement process can be time-consuming and prone to errors, which can impact your bottom line. Without a P2P system, your purchasing process will usually flow like this:
1. Need Identification: Sales team identifies a need for new inventory items to meet customer demand.
2. Purchase Requisition: You submit a purchase requisition to your purchasing department, specifying the type and quantity of inventory items needed.
3. Vendor Selection: Your purchasing department selects a vendor and requests a quote for the required inventory items.
4. Price Quotes: The vendor sends a quote to your purchasing department, which compares it to quotes from other vendors.
5. Purchase Order: Your purchasing department creates a purchase order and sends it to the vendor.
6. Goods Receipt: When the inventory items arrive, your receiving department verifies that they match the purchase orders and sends a copy of the receiving report to your purchasing department.
7. Invoice Processing: The vendor sends an invoice to your accounts payable department, which then matches it with the purchase order and receiving report.
8. Payment: Your accounts payable department processes the payment and sends it to the vendor.
As is evident here, this process can consume a lot of time and resources, putting an enormous strain on your business. It can also be prone to errors such as incorrect pricing or quantities ordered, which can impact your bottom line. Implementing a P2P system can streamline this process and reduce errors. It also has the power to automate many manual steps in the procurement process, such as vendor selection, purchase order creation and invoice processing.
Your business needs a more effective solution. A change that can streamline the traditional supply chain process from procuring a product to the payment cycle.
A Procure-to-Pay (P2P) model is a streamlined and automated approach that integrates the entire purchasing process from procuring goods to paying the supplier.
Since the P2P process is automated, tasks are completed faster with fewer errors. Though the process involves the same steps from need identification to the payment cycle, the entire approach is simplified and integrated cohesively with a P2P or inventory management software.
Implementing a Procure-to-Pay (P2P) system can provide numerous benefits for businesses, including:
Efficiency :
By automating the procurement process, P2P systems can significantly reduce the time and resources required to complete tasks such as creating purchase orders, processing invoices, and reconciling payments.
Cost Savings :
By streamlining procurement processes, P2P systems can help reduce the costs associated with manual processes, such as paper-based workflows and manual data entry. They can also help businesses negotiate better pricing with suppliers and identify opportunities for cost savings.
Greater Control and Compliance :
TP2P systems provide greater control and compliance, with increased visibility into the entire procurement process, from requisition to payment. They can help ensure that purchases are made within a certain budget, regulatory and compliance requirements are met, and the credibility of suppliers is vetted.
Monitoring Performance :
You’ll also be able to monitor supplier performance by looking at their average response time or how many times they’ve failed quality checks during shipment. This is especially helpful if there are issues with delivery times or quality assurance.
Order Fulfilment :
It’s important to keep track of the status of your orders and the performance of your suppliers. With P2P software, you can do this easily and quickly. You’ll know if an order has been fulfilled or not, avoiding guessing games about when it will arrive in stock.
Improved Supplier Relationships :
P2P systems can help improve supplier relationships by providing faster payment processing, improving the communication between businesses and suppliers and providing greater visibility into supplier performance.
When you have access to real-time data on orders, invoices, payments and other transactions related to your supply chain processes, it becomes easier for everyone to stay informed about what’s happening real-time.
Data-driven Decision Making :
P2P systems generate valuable data that can be used to identify trends, track spending, and make data-driven decisions about procurement processes and supplier relationships.
P2P Sytems for the Future :
The future of procurement services is changing, and businesses need to be prepared for the new demands and opportunities they present. Implement a Procure-to-Pay (P2P) system, enhance the performance of your organization and grow your revenue.