Leading companies are realizing that there are many benefits to using P2P technologies to improve their procurement processes. And, if you’re considering it as an option you might be wondering how you can ensure successful implementation. A helpful strategy to achieve that is to understand what might stand in your path as you try to reach successful implementation.
Paper-based purchasing is still the norm in the maintenance world, according to Tom Singer, of Tompkins Associates, in Oak Brook, Illinois (Singer, 2003, 1). In fact, 86% of MRO orders are not transacted online, and 84% of MRO payments are processed by paper (Aberdeen Group, 2006).
Problems with integration to backend systems, which may have incompatible platforms, are a stumbling block to many E-Procurement efforts. Some companies use multiple ERPs, which may not be compatible. Suppliers need to be able to handle different E-Procurement systems customers are using. Ariba, i2, Commerce One, for instance, each have specific formats (Bedell,2002).
Most manufacturing plants are still using decades-old equipment and parts whose documentation is paper-based and lacks the digital format necessary for E-Procurement systems (Moore, 2003). The original suppliers of this equipment often prefer to sell manufacturers new equipment rather than to make the necessary upgrades to digital format. Manufacturers who cannot afford to replace their aging equipment must forego opportunities to implement E-Procurement. In this article, we’ve put together three of the most common implementation pitfalls and how you can avoid them.
1) An inability to integrate with existing ERP and Procurement systems
To minimize some of these hassles, companies that have successfully implemented P2P solutions have found that cloud solutions often allow companies to drastically reduce the time and effort (i.e. time to value) associated with on-premise installations. Because these on-demand solutions are hosted and maintained as a service, the costs associated with software upgrades down the road are drastically reduced, if not eliminated. However, because not all SaaS solutions address the ERP integration demands, it is important to consider solutions that have standardized integration adapters allowing for efficient integration projects. Down the road, these connectors are certified to work as the ERP systems are upgraded/ updated.
In addition, P2P solutions have the ability to lighten the manual effort demands of keeping supplier related item master and catalog information current. This is possible through a supplier driven and centralized catalog approach—managing indirect spend catalogs outside of ERP, Plant Maintenance (PM), Materials Management (MM) systems, and then integrating with these systems to allow for real-time synchronization.
2) An inability to on-board and support suppliers (in large numbers)
Solutions that allow you to connect to and on-board all of your suppliers in mass deployment fashion take you to a new level of supplier enablement. This can be achieved by leveraging a business network – a centralized “hub” to connect buyers and suppliers, whereby supplier connections can be made through integration’s or via web portals, all connecting through the hub. Business network providers can take over the burden of determining which of your suppliers should be enabled via web portal versus direct integration. Then, mass on-boarding can happen in months, not years
The on-boarding of suppliers does not bring finality to this important activity. Suppliers require ongoing support and assistance as they transact with buying companies. Many P2P technology providers have the experts on staff to support supplier on-boarding and ongoing supplier support 24×7, with support of over a dozen languages. The do-it yourself costs that would be associated with this support infrastructure are an inhibitor for most companies to enable the long tail of a global supply base.
These electronic connections also provide suppliers with tangible benefits, such as more automated and better linked check points in the transaction process (such as PO to purchase order receipt, advanced ship notice to goods receipt, etc.), less manual errors, and in turn, less disputes, earlier payments, and enhanced buyer collaboration that supports effective inventory management and order responsiveness.
3) Complex and unintuitive user interface
As far as P2P systems are concerned, it is critical for professional users that the UI (user interface) be similar to other corporate systems that they are interacting with.
And, careful consideration also needs to be given for the infrequent or “casual user”, so they can order what they are looking for without any training each time they periodically use the system – just like using Amazon. This includes leveraging catalog applications that eliminate or limit the use of punch-out catalogs (which, by their nature, add new UI variety/challenged to the end-user).
If an end-user is in need of purchasing a product/service, and:
-The applications is hard to navigate, making it difficult to find their preferred vendor and product/service in need, the desired product/service is not in the system or price does not represent the negotiated or best value price, or the approval process is too complicated and lengthy, chances are that end-user adoption will be minimal.
-Highly adopted P2P applications offer end-users with consumer-like shopping carts and product/ service search engines, intuitive approval processes, connection to supplier contracts to ensure negotiated products and pricing are captured, transaction status tracking, etc. – a similar user experience that they have come to expect when ordering products and services in their personal lives. When this occurs, the important activities of enforcing and governing these processes become a less burdensome task. This end-user driven requisition approach also makes it possible to eliminate significant free text orders funneling through the purchasing department.
Feel free to contact E-SPIN for E-Procurement infrastructure and performance monitoring, infrastructure and application security.
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