Section 1
While every department brings important support for company goals, the procurement department—and, in particular, the procure-to-pay process (also known as the P2P process)—is an especially powerful source of potential cost savings and value. But in order to achieve maximum return on investment (ROI) for your purchasing dollar, it’s crucial to track certain key performance indicators, or KPIs.
Choosing which procurement KPIs will help your procurement department optimize its procure-to-pay cycle might seem daunting. But in truth, many businesses, regardless of size or industry, can benefit by starting their quest for the best possible procurement ROI with a few essential procure-to-pay KPIs that provide the most insight on the procure-to-pay process.
The Value of Measuring Procure-to-Pay KPIs
Because it sits at the heart of procurement and includes everything from purchasing raw materials for production to obtaining the goods and services such as utilities, office supplies, and custodial services, the procure-to-pay cycle is an especially important target for continuous improvement and optimization.
With insight into the efficiency and efficacy of your procurement processes, you can improve your decision making to achieve even greater cost savings and vale. But without tracking key metrics, you’re sacrificing valuable intelligence, missing out on opportunities to reduce total cost of ownership (TCO) to improve procurement ROI, and bleeding money through suboptimal workflows.
By tracking procure-to-pay KPIs, you can achieve both cost savings and efficiency improvements in both procurement and accounts payable (AP) to (for example): shorten your purchase order cycle; reduce or even eliminate maverick spend; provide real-time data insights that improve forecasting, reporting, and cash flow; and speed invoice processing times. These benefits support greater efficiency for the entire procurement process and, by extension, contribute directly to a healthier bottom line for your company.
