Introduction

As humans, it’s in our nature to cooperate with each other. The alternative is competing, but psychologists say that when given the opportunity to choose between the two, we choose cooperation.

Cooperation is extremely important in the workplace, without it, you can negatively impact your wider business outcomes, including productivity, customer satisfaction and revenue.

In theory, cooperation should be easy, especially if it’s in our nature. But most of us know it takes a certain amount of dedication to cooperate in the workplace.

Each department, and even individuals within departments, have very different targets, pain points and goals. Everyone can unwittingly find themselves thinking within their own domain, making cooperation considerably more difficult.

Poor cooperation often results in individuals or departments undertaking their own improvement initiatives, with good intentions, but causing disturbances down the line for other departments.

Combine this with external pressures and deadlines, you begin to understand why some people act uncooperatively. People simply don’t have time to think about how their actions influence other departments and the overall process.

Nowhere is this more evident than in the procure-to-pay process.

The procure-to-pay or purchase-to-pay process, usually shortened to P2P, is a process that touches many departments and can have a direct impact on your company’s ability to achieve its wider business goals.

This article will look at the steps that can be taken to vastly improve this process using a combination of data-driven insights, process optimization and automation, allowing you to achieve business goals in the process.

The procure to pay process

purchase-order

The P2P process involves all purchases a company makes, from office stationery to semi-finished materials and high-value equipment. Core activities include ordering those goods, receiving them and ultimately paying for them.

Although the main stakeholders in the P2P process are the procurement or finance departments, material planning and warehousing can also be involved depending on the situation. The process also has a knock-on effect on the work done by sales, customer support and more.

The wide-reaching and critical nature of the P2P process means that there is huge incentive for companies to optimize it. Any inefficient and rusty P2P processes may result in significant loss of value in the following areas:

  1. Customer satisfaction
  2. Supplier relationships
  3. Employee job satisfaction
  4. Interdepartmental collaboration
  5. Productivity

These are usually some of the most important goals for businesses, and a lot of progress can be made reaching these goals using the power of process mining.

The insights that process mining provides are extremely powerful, and a gateway to technologies like AI, machine learning (ML) and RPA. It is also a key component of the new term, Hyperautomation, number 1 on Gartner’s list of technology trends for 2020. However, process mining doesn’t only function as a gateway, it’s also extremely valuable during RPA implementation and post-RPA implementation.

Essentially, process mining allows you to scientifically discover and prioritize your automation ideas.

  1. Gain a comprehensive view of your company’s processes
  2. Uncover the best workflows to automate
  3. Align process goals with strategic goals
  4. Continuously monitor and improve your processes

Know your P2P process inside out

Let’s look at a P2P process graph.

process-graph-p2p

The above shows what a procure-to-pay process looks after it has been process mined, using five core activities. Using event log data in enterprise software such as SAP, process mining turns raw data into a clean and simple process graph. You can also dive deeper into the process to see all possible pathways.

Read more about how process mining works.

Going deeper, the process graph covers all added rules, exceptions and flexibility desired by the business. Often extending beyond what the business thinks the process looks like.

detailed-process-graph

In an intuitive, interactive visualization, process mining tells you everything you need to know about the process. It eliminates any process ambiguity, giving everyone a consolidated overview of the process.

Where previously you would need to spend time figuring out how the process runs, process mining does this in an instant using actual data from ERP or CRM systems.

So, what can you do with these data-driven insights?

Identify parts of the procure to pay process that are best suited for automation

working-together

You can determine the processes that are automation ready and the processes that aren’t.

Some processes are simply not ready for automation, and process mining gives you those insights.

Once you have this differentiation, it’s easier to plan your automation strategy. Start with automating the right processes and take alternative actions to optimize processes that aren’t yet ready for automation. For instance, if incorrect master data results in extra manual work, update all master data, or if one supplier consistently delivers late, show them their OTIF results to drive delivery improvements.

Now that you know your P2P process, you can start systematically planning your automations.

Using data driven facts about the process, you can identify the areas that have the biggest RPA potential.

These activities depend on the business, but some examples include:

  1. Scanning a mailbox for orders and entering them in SAP
  2. Matching the purchase order with the invoice
  3. Generating purchase order after purchase requisition approval

Another key advantage of process mining is that it allows you to estimate the ROI from your RPA projects. This way you know the value of the project in relation to the entire business. Executive backing is key to ensuring the success of a long-term RPA journey, strong ROI estimations will bring decision makers on board.

Align your RPA goals with wider strategic goals

Remember the strategic goals we mentioned earlier?

  1. Customer satisfaction
  2. Supplier relationships
  3. Employee job satisfaction
  4. Interdepartmental collaboration
  5. Productivity

Using process mining, you can link your strategic goals to specific KPI’s and tags.

For example:

If one of your strategic goals is improving supplier relationships, then you could set a KPI for timely delivery of goods and on-time invoice payments.

This way you ensure your processes are expertly optimized to contribute to your wider business goals. As priorities change the KPI’s and tags can be adjusted. This is yet another key factor in ensuring your long-term business goals are tightly aligned with your individual process outcomes.

Continuous monitoring and improvement of P2P

pieces-of-a-puzzle

But process mining doesn’t stop there. Once RPA has been implemented, you still need to check whether the RPA is progressing as expected.

Here, you can utilize ongoing process monitoring to enhance your workflows.

Tracking your process gives you a ‘before and after’ RPA comparison. You can see how your automations are running and where they are going off course.

ProcessGold process mining provides a governed self service approach to ensure all business users work with a single source of truth. Once process insights are democratized, the entire end-to-end process is made clear to all stakeholders.

In turn, this makes your process transparent, as it’s based on the actual data in your back-end systems. It’s hard to argue with facts. Transparent processes are key to achieving the wider business goals outlined previously.

Make your process transparent

You eliminate siloed thinking between departments. Now that stakeholders know the entire process, everybody can take a holistic, rather than fragmented approach when undertaking their process improvement initiatives.

It gives the C-level suite the opportunity to analyze the process as a whole, identifying bottlenecks and inefficiencies. People performing the activities in the process also gain insight into their part of the process and how it affects the rest of the process.

In the P2P process, stakeholders can also be external to the organization. A clear example of how the process can be improved holistically, is using the process graphs to talk to suppliers. Rather than discussing whose version of events is correct, you can quickly come to an understanding of the truth and spend more fruitful discussion on how to move forward and improve delivery times.

Conclusion

Internal and external cooperation is key to achieving a smooth procure to pay process. Process mining provides a foundation for company-wide cooperation, to plan successful automations. Not only is process mining essential for identifying the processes best suited for automation, it is also exceptionally valuable pre and post RPA implementation.

It is no longer adequate to apply automation to an individual activity; a more holistic approach is necessary if organizations want to see significant impact from their automation initiatives.

tjeerd-stapTjeerd Stap, Consultant @ProcessGold