Accounts payable

How smart is your procurement process?

Integrating public sector procurement policy mandates into intelligent spend management software can increase compliance, enable automation, and improve user experience.

Public sector procurement has always raised expectations of transparency and compliance. But how can public servants have more influence over the ethical distribution of taxpayer funds and increase the efficiency of the procurement process?

The answer lies in cloud-based expense management software that enables smart and efficient procurement processes.

With SAP Ariba solutions, purchasing can be done with responsibility, sustainability and equal opportunity.

Andrew Hunt, Head of SAP Business Network, APJ, explains that sustainable, social and SME partners can also be identified early in digital transformation programs, leading to optimal use of taxpayer funds.

“Our solution allows departments to direct their spend to goal-oriented vendors or communities,” he says. “For example, if they want to unlock spend-first for Aboriginal and Torres Strait Island vendors as part of their digital transformation, they can build that into their enablement plan.”

Policy-driven purchases

Procurement technologies such as SAP Ariba solutions enable public sector employees to make data-driven decisions about spending. This can improve risk management and the sustainability of supply chains.

A recent case study of a transport company shows how effectively this can be achieved.

The company was looking to remove complexity from its procurement systems by implementing a single source for purchasing activity. She moved from a supplier relationship management (SRM) system to cloud-based procurement solutions SAP Ariba and SAP Business Network. It went live in just seven months and exceeded the estimated return on investment.

SAP Ariba solutions have improved risk management and supply chain visibility. The company’s purchasing department secured a global network of potential suppliers through SAP Business Network and used SAP Ariba’s guided purchasing capability to drive efficient and cost-effective purchasing throughout its international procurement process.

Guided buying allowed users to effortlessly follow sourcing guidelines and best practices. It can be flexibly configured to align forms, permissions, and system behavior for each user, presenting them with tiles and custom categories to streamline shopping.

In the first year of implementing SAP Ariba solutions, the transportation company converted 500,000 invoices and purchase orders into contactless electronic invoices and incorporated the company’s three-pillar strategy of stability economic, employee satisfaction and ecological sustainability, in the procurement process.

As the company’s purchasing director puts it, “SAP Ariba solutions can help us achieve our procurement goals, especially when it comes to managing risk and sustainability in the supply chain.

Manage purchases with ease

Recent research from SAP, in collaboration with Oxford Economics, shows that there is still room for improvement in terms of digital transformation and collaboration with suppliers in public sector procurement processes.

Nearly half of public sector survey respondents said most or all of their procurement processes are manual, which can present significant barriers to improving operational efficiency and organizational agility .

Nearly 40% had experienced supplier performance issues and 31% had experienced reconciliation issues and exceptions. The same number cited overcharges and duplicate payments when managing procurement, and only 47% of executives said their procurement technologies enabled them to make data-driven decisions about spend across their organization. the organization.

While invoice automation can reduce processing costs and speed up payment times, SAP Ariba further improves efficiency with smart invoicing. Network rules alert suppliers to errors and prevent incorrect invoices from entering the payment system.

The recent deployment of SAP Business Network in a power generation company led to supplier transformation and stronger supplier relationships.

SAP Ariba has been fully integrated with its existing SAP solutions, focused on finance, HR and master data governance. The integration allowed users to track invoices and orders online and eliminate errors and exceptions from manual processing.

By automating the invoicing and purchase order process and providing a supplier portal for self-service invoicing and payment status, SAP Business Network has also facilitated business relationships between suppliers and the business. It also reduced invoicing errors and accounts payable costs, while ensuring compliance with internal and external business rules.

“Suppliers can log into the portal and not only submit their invoices, but they can also see if they’ve been rejected or are in someone’s inbox,” Hunt explains. “Instead of having to track accounts payable, they can immediately see the status of their invoice. This removes the ambiguity of when a supplier will be paid, so they can plan and manage their cash flow. »

With 80% of the utility’s bills managed through SAP Business Network, on-time supplier payment has increased to 93% and $1 million is saved annually in accounts payable fees. By implementing the discount management capability in SAP Ariba Payables to introduce prepayment offers, the company has also given suppliers better control over their own cash flow.

Its e-commerce manager notes that it is now also much easier for suppliers to do business with the ministry.

“Suppliers can track invoice status and payment schedules online, reducing the volume of help desk calls. Additionally, many take advantage of prepayment offers to improve their cash flow.

Shared value with the ‘House In The Cloud’ model

A number of state government departments seek to share a “best practice” approach, replicate elements of solution designs, and build on a foundation of similar processes.

Hunt explains that a concept called “House in the Cloud” has given different departments a common landscape or “building blocks” through which they can pick up and replicate design, implementation elements (with minor tweaks ), common business partners (via the SAP Business Network), and training content.

“It provides a framework and a level of confidence that each department is part of a larger transformation,” says Hunt. “It saves time and also gives more confidence to transform digitally, while allowing the transversality of skills between departments via the common community. Departments may purchase different products and services, but the processes are largely the same. »

The House In The Cloud concept also allows business partners who deal with multiple departments to interact through a common platform. This reduces complexity within the community and encourages more sustainable practices.

By embedding SAP solutions into public sector policy mandates, government employees can improve collaboration and communication with suppliers, which can increase efficiency throughout the supply chain. It can also increase compliance, improve productivity, and improve user experience while bringing greater accountability and sustainability to the procurement process.

Contact SAP to learn more about how our SAP Ariba solutions can improve public sector procurement.