How to Use Analytics to Transform Procure to Pay

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Editor Coda
Jan 27, 2015

A lot of the talk about analytics or big data often sounds amazing, but how can you actually make data really work for you? How can you get meaningful insight out of data to transform your services?

Two of the most knowledgeable people on analytics I’ve ever spoken to, Vince Sparrow of EXL and David Silko of Blue Lynx Media, recently presented with us on a webinar, The 7 Rules of Analytics. One of the key takeaways from this webinar, is that instead of thinking about ‘big data’, focus on ‘little data’ data that you already have at your fingertips.  

In this webinar we explored how shared services are using analytics in P2P, R2R and OTC. Here are some of the key learnings on how to use analytics to improve Procure-to-Pay KPIs.

Listen to the full and informative session now and download the infographic report below for more insight into this whole report.

In a survey we conducted with Shared Services professionals, we asked where in the Procure to Pay process do you see the most potential impact of using analytics.

Spend analysis can have a huge impact. Your existing data can help you better understand where you are spending money, how many vendors you are using, your levels of maverick spend etc. It’s both one of the biggest projects you can do with some of the biggest rewards.

You can use ‘little data’ to improve payment processes.

When it comes to payables processing and efficiency, and improving first pass rates in processing POs or invoices related to purchases,  analysing your existing data can start revealing insight into key trends in your purchasing process and your vendors. You can dig into data to identify are there certain types underlying procurement processes and our vendors to see are procurement and your vendors complying with PO requirements? And are you issuing requirements on a regular basis?

One client Vince Sparrow worked with said that while they claimed 100% PO processing, so all invoices had a purchase order, but in reality most of the Purchase Orders were issued after they received the invoice, which explained why they were still experiencing slow invoice processing. You don’t need big data to find these problems, you can use ‘little data’.

You might be missing out on ways to optimize discounts

While in our survey, the percentage of respondents who thought analytics could have a big impact on discount optimisation is low, this is an area where analytics can actually have a big impact. As David Silko explained on the webinar, “Generally people tend to look at, when I have a cash discount, do I take it? That is certainly a very important metric to understand but one of the things when you start engaging with the procurement team and engaging across the function, is to look at where do we have discounts available and where do we not have discounts available, and really understand why that is. What are the types of suppliers who allow discounts, what are the types of suppliers that don’t, and why is that. And also when working with them, look at cash discount rate and the finance aspect of that and make sure it is of value for the organization.”

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