Connecting procure to pay to boost agility

As a global healthcare business managing thousands of invoices and billions of dollars in managed spend each year, the company needed a streamlined procurement and accounts payable organization that could handle such high volumes. But its procure-to-pay (P2P) processes fell behind best-in-class standards and the buyers in the business weren't complying with procurement policies.

The challenge was that many policies were overly complicated because there was little global oversight to enforce and align processes. And, the company had limited performance measurement, making it difficult to hold users to account. When the team faced issues, its inability to resolve them quickly frustrated both employees and suppliers.

A few years earlier, the company had implemented a market-leading P2P platform that hadn't delivered the expected results. As we got to work to help rethink P2P, we realized the problem wasn't technical, the healthcare company had failed to fully embed the technology in its business processes and practices.

A lack of change management and training had held back adoption. What the company needed was to review its policies, governance, and compliance, and understand why its processes were not user-friendly.

Our work on P2P with the healthcare company focused on improving the user experience, increasing standardization, and transforming the governance structure across procurement and accounts payable. Having examined and identified what was holding back P2P, we redesigned the company's policies and processes, making sure they were streamlined and aligned to business objectives.

We also facilitated much-needed change management to help users understand the changes to the P2P process to help the team meet its goals. As part of this transformation program we:

• Simplified and transformed P2P processes and policies, including supplier onboarding
• Strengthened the supplier base by introducing robust governance and recommended ways to consolidate the number of vendors
• Cut 50% of supplier master-data entries by reducing the number of duplicates
• Put in place guidelines for suppliers on how to submit invoices, which reduced the number of invoices the company received after the payment due date
• Implemented alternative buying channels to minimize low-value transactions
• Revamped the purchasing card (P-card) program, importantly policy and usage instructions
• Delivered end-user training and adoption support for the P2P platform to users internally and suppliers
• Created automated dashboards and improved P2P reporting and performance measurement

By aligning P2P goals with business objectives the company improved supplier relations and released significant value . Working closely with the healthcare company we delivered significant impact by:

• Reducing the volume of invoices by over 50%
• Improving payment on-time from 62% to 80%
• Accelerating supplier onboarding time by 50%
• Getting purchase orders approved 60% faster
• Improving goods receipt first-pass-yield on the P2P platform from 40% to 62% by streamlining policies and training users
• Improving PO compliance through higher catalog penetration on the P2P platform, thanks to end-user training and a more robust governance structure
• Increasing P-card usage, which cut invoice volumes by 5%

Integrating P2P across the whole process is essential. Merely focusing on streamlining downstream payment overlooks most of the improvement opportunities. At least half of the issues that affect a global P2P organization come from inefficiencies in upstream procurement operations. For example, instead of simply reducing and resolving exceptions in the procure-to-pay processes, users are now trained with end-to-end accountability in mind. This means that they are more focused on fixing issues for the long term not just clearing the immediate queue.

The company's revised approach means suppliers work with a customer that pays on time, is efficient, and easy to do business with. And internally, the company can dedicate more P2P bandwidth to higher-value activities.

The healthcare leader wants to give its suppliers a best-in-class experience and is partnering with Genpact to drive the next phase of its transformation. The vision is to push for higher levels of e-invoicing adoption, improve working capital, and establish a robust reporting framework. With agile, connected P2P operations in place, the company is ready to realize these goals and more.