Pandemic Spurs P2P Improvements For Greater Efficiency and Effectiveness

A global Cruise Line company with multiple brands faced with limited resources post-pandemic was looking to improve the efficiency and effectiveness of their P2P processes in preparation for a full return to service.   They hired OnDemand Professional Network member Alvin Wong to help them with two challenges:  1) to analyze, assess root-causes, and help address a backlog of unpaid supplier invoices, and 2) to develop a P2P roadmap to improve the process. SITUATION OVERVIEW During the pandemic, an unintentional backlog of past-due invoices, changes in leadership, and the reduction of resources resulted in an urgent need for help to address issues and establish a “roadmap” to improve the organization’s P2P processes. Although the predominant number of invoices were paid on time, there were hundreds of invoices past due over 60 days, with many over 120 days, the company was at risk of being cut-off by suppliers.  The invoices were not past-due for a lack of company funds, but rather for validation and confirmation by purchasers before payment.  Something was failing in their P2P process and any findings were to be incorporated into a “roadmap” for a recommended P2P modernization plan. APPROACH Working with Finance, Sourcing, Technical Operations, and Supply Chain Procurement, we conducted a series of past-due invoice reviews, stakeholder interviews, and process and system mappings.  Using the findings, we analyzed root-causes of the past-due invoice problems, implemented changes, and identified various opportunities to incorporate into a “roadmap” to improve P2P processes and systems. CRITICAL SUCCESS FACTORS Fact-Based Data-Driven Analysis and Findings:  Commit the time to smartly collect and analyze data first to avoid wasted efforts solutioning the wrong...

Procurement Organization Redesign – Setting Up For Strategic Cost Savings Drive

A major industrial gas company’s North American Procurement Organization transformation journey highlights the importance of proper alignment to achieve significant and sustainable results. A major industrial gas company’s North American business aimed to significantly increase savings from their strategic procurement activities.  The company understood that in order to achieve their goals, they needed to re-align and optimize the Procurement Organization to fully harness its capabilities.  They hired a small team of consultants led by OnDemand Professional Network member Steve Strickman to significantly upgrade the function. Situation Overview: The company had a centralized transactional procurement team but lacked spend transparency and strategic sourcing skills.   Procurement was not seen as a value-added leader that could bring critical Sourcing and Cost Management expertise, which caused fragmented and localized execution of procurement activities across the company.  Driven by the new cost reduction mandate Senior Management’s goal was to upgrade Strategic Procurement across-the-board by building out a new organizational structure and strengthening its capabilities.  Approach: The Consulting Team first performed an assessment of the Procurement function, and the company graded poorly along seven high-level Procurement “success dimensions”:  Change readiness/willingnessStaff motivation and empowermentStructural alignmentSpend transparencyMeasurement and reportingBusiness process managementProcurement data capture and tools Understanding the current state was important in the successful re-design of the organization.  Among other things, the Team uncovered significant “Shadow Procurement” activity – procurement being executed by non-Procurement staff – that was causing significant downgrade in opportunity to save money and increased cost by excessive use of personnel resources (several dozen FTEs). The approach followed a proven concept – Current State Analysis/Gap Analysis/Future State Design across People, Process and Technology in...

Building Strategic Procurement Function – National Sporting Goods Retailer

SITUATION OVERVIEW National Sporting Goods Retailer desired to build a highly functioning Strategic Procurement organization. They hired Kas Chupa, a member of the OnDemand Professional Network as the new Chief Procurement Officer to drive this effort. Kas was tasked to build a procurement organization with the capability of sourcing $550M of Indirect Goods & Services, Capital Equipment and some Direct Goods for resale and implement year over year savings programs. DISCOVERY & EVALUATION As the new CPO, Kas interviewed all business unit leaders to introduce himself and to get their perspective on what they expected from Strategic Procurement, to understand their business goals and objectives for the coming year(s) and discover how their respective procurement activities were being executed currently. Part of the evaluation phase was to uncover quick win opportunities, prepare the business for the upcoming organizational changes and the timeline for those changes, as well as the Mission and Vision for Procurement within the company. The interviews and data collection revealed the following: All buying was being executed within the various business units by non-procurement individuals.All contracts we being negotiated and signed by the business units with limited to no legal review.There were multiple payment channels, and close to 100 different payment terms. EXECUTION & BENEFITS The CPO quickly engaged external consulting support while he was building internal procurement capabilities. The key focus of the consultants was to work with the business and build strawman sourcing plans and pipeline of quick wins. While focusing on quick wins to demonstrate the value of strategic sourcing and procurement, the CPO built the procurement team with internal resources, with a...