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P2P Business Cycle

Procurement Overview

  • Procurement is the process of purchasing goods, materials, or services
  • It is typically done through a purchasing organization, department or individual via an agreement with a vendor or supplier
  • Terms are negotiated including price, payment terms, delivery time, and what penalties are built in should any of these be violated


Procure to Pay (P2P) Business Process Cycle

 Procure to Pay Cycle

  1. Purchase Requisition – employee has a need, completes purchase requisition, and submits to purchasing department.
  2. Request for Quotation – Purchasing department invites quotation from sourcing vendors listing terms, conditions, pricing, and delivery date
  3. Quotation – Sourcing vendor(s) submit quotation with their willingness and ability to meet said demand.
  4. Outline Agreement – Binding agreement that buying party is going to purchase specified
  5. Purchase Order – This is a legal contract between the buyer and the supplier.
  6. Goods Received – Supplier ships materials, goods or renders services.
  7. Invoice Verification – Invoice is measured against goods or services and matched to purchase order.
  8. Payment – Finally, the supplier is paid for the settlement of the contracted arrangement.
July 30, 2013
BY Bellwether
What Does the Digitization of Healthcare Mean for Purchasers?

Hospitals and doctor’s offices around the country are incorporating more and more technology into their practices from check-in procedures to the evaluation, diagnosis and treatment of patients. Many of the advanced you see and read about are front-end technologies, but what about the back-end things necessary to run the business side of healthcare? Are those advancing as well?

We laugh at the old super computers that filled rooms or houses, but only had a fraction of the computing power as a modern day laptop or in some cases tablets and smartphones.  But today there are new super computers being built capable of crunching massive amounts of data. Do you remember the supercomputer developed by IBM called “Watson” that beat Jeapordy champs Ken Jennings and Brad Rutter? Large-scale data analysis integrated into healthcare can help doctors track patient history, get real-time world-wide information on the latest treatments available for those conditions and the effectiveness of mediations.

It’s fairly common today to see a doctor walk into the room holding an iPad or other tablet from which to read patient charts and make notes, but the creation of apps has expanded the value of these devices in the room with patients. One example is an app that translates the spoken word. Doctors can ask patients about  life-threatening allergies and the app translates for the patient. This allows for better communication on the spot. It obviously won’t be as accurate as a native-language translator, but smaller offices may not have the budget to keep one on staff during all open hours or may not have a need until that person shows up for medical treatment who cannot speak any English. There are a whole host of apps available to aid the medical profession.

Connecting doctors with other doctors or their patients is another option technology opens the door to. is a social network exclusive to physicians allowing them to collaborate and assist one another in difficult cases. Ever watch the medical TV drama “House”? Dr. House always seems to find the exact solution to the most difficult cases, but if you don’t have a real-life Dr. House, if such a physician exists, then this online interface can help with those hard to diagnose cases. Technology has also allowed doctors to connect to patients through online consultations saving time and money from another trip to the ER.

This is all very exciting for the patients visiting the hospitals and doctor offices, but what about the people responsible for providing all this technology among the usual things such as office supplies, rubber gloves, needles for shots, q-tips, etc. The purchaser! Some are right in line with the latest advances, but others are put on the back burner and dare we say, relegated to paper-based purchasing? Or maybe you’ve advanced to purchasing software, but have not made the change to cloud-based purchasing? In today’s time with rising healthcare costs, an uncertain future with the Affordable Care Act, and so many other unknowns, you would be wise to consider your own internal purchasing system. Cloud-based software is not just good for the patient, but it is good for the business too.

July 25, 2013
BY Bellwether
Conversion to Cloud Procurement Still Slow to Come in Business World

Cloud-based services utilized by individuals around the world seem to be ramping up at an ever quickening pace. Services like Facebook, Google Plus, and Spotify and devices like tablets, smartphones, and other handheld devices combine for the rapid advancement. But what we’ve found is that in the business world, technology advancement in general, and conversion to cloud-based software in particular, has proceeded at a slower pace.

What does your procurement process look like? Is it out of date? Fragmented? Do you have a central point to filter all purchases through or does each department head approve purchases for that department only? If your business lacks communication in these areas do you see how this can impact your business or have you been blind to the effects? Research by the Aberdeen Group has shown that switching to e-procurement can generate savings of between 5 and 20 per cent.

Utilizing cloud-procurement can be a game-changer for your business. When you use cloud-based procurement you can automate some processes, pool orders between departments or different locations, map your spend, implement controls to monitor activity, and the list goes on.

If you are ready to make some changes contact us today and we can help evaluate and customize the best solution to your business’s needs.

One of the best things you can do for your business is to stay educated about changes in procurement and what you can do in your position. Last week we included some information on Purchasing, Supply & Risk Management conferences. So this week we wanted to highlight another for your consideration. Find one that’s close to you and make an effort to attend.

Check out “The Chief Procurement Officers Summit” A few of the detaisl are below. Registration is free so if you are near Bostom, MA this would be a great one to attend.

WHAT: The 9th Annual Chief Procurement Officer summit is the preeminent symposium for global procurement executives to learn, network, evaluate and develop a clear vision of procurement’s evolving role within the enterprise.

WHO: Procurement and supply management executives with responsibilities in e-sourcing, e-procurement, expense management, spend analysis, contingent labor management, strategic meetings management, technology management, and others.

October 29-30th
Seaport Hotel, Boston MA

July 23, 2013
BY Bellwether
Random Thoughts for Purchasing Managers from Across the Internet

Researching for today’s blog post led to several different topics and themes. Instead of narrowing the focus to a single topic we wanted to look at an assortment of different thoughts and topics that may appeal to purchasing managers at different stages of their career. So let’s jump right in!

Purchasing Supports Local Economy

Collectively, purchasing managers from small businesses can make a huge impact on a local economy. The same is true in many cases of large businesses by themselves. Outsourcing overseas may be the best option, but at what cost do those savings comes? This doesn’t mean outsourcing is bad, please don’t misunderstand. Just wanted to challenge you to maybe look at things differently. Locally owned restaurants often tout locally grown produce on their menu or seaside town boast about having the freshest seafood brought in off the boat that very day. Whatever industry you are in, is there a way to source some things locally? Local pride? You not only support the area where your business resides, but  you can benefit by building greater customer loyalty as well.

Purchasing News

Where do you go to keep abreast of changes in your industry? Do you have a favorite magazine subscription? Favorite blog besides ours? Favorite online news source? Here are a couple for you to explore. It’s good to see what is happening in our industry to make new discoveries, be better prepared, and be more knowledgeable in discussions with  company executives and suppliers/vendors.

News about National Association of Purchasing Management, including commentary and archival articles published in The New York Times.

News about Purchasing Managers published on Bloomberg online.

Purchasing and Supply Management Conferences

Continuing Education may not be a requirement for your job, but continued education and personal development is always a good idea for any career. If purchasing is your chosen career consider attending some conferences to develop and expand your knowledge. Your business may be willing to pay for you to attend, or you could take the initiative and go yourself, even taking personal vacation days. In the long run, by becoming more valuable to your company, you will be rewarded financially, if not immediately at some point in your career.

Here are some conferences listed on the Institute for Supply Management site:

Jobs Around the World

We’ve discussed in some recent posts about the willingness to relocate for job advancement. We won’t go into that again here, but check out this site with listings for jobs all around the world. Maybe your dream job is here.

July 18, 2013
BY Bellwether
Supply Chain Diversification: Walking the Tight Rope

Supply chain efficiency is an intricate part of almost every business. You have probably seen or heard of a company that ran into financial problems due to supply chain disruptions. Or maybe your business has experienced these issues yourself. Whether you are facings those problems right now or researching to create a plan of prevention, it is important to exercise judicial prudence in the examination of this issue. You cannot blindly start beating the drum of diversification without careful consideration.

For some companies it is not unusual to find that 75% or more of their supplies come from a single supplier. For many, this is due to low volume orders that don’t provide room to order from multiple suppliers. Others have a highly specialized item and with very few vendors to select from, they have made the choice to align themselves closely with a single supplier to provide the most optimal sourcing and pricing for what they need.

There are a myriad of issues facing every supply chain. We’ve touched on natural disasters in the past, but there are other issues in this global economy that can come to bare. Water and land infrastructure, political climates and turmoil, natural resource accessibility, and the financial health of the companies providing you with what you need.

On the surface, it appears that diversity in your supply chain would be a desirable objective to achieve.  And it is, but you have weight the costs and various considerations before moving forward.

  • Do you have sufficient inventory to handle extended supply disruptions?
  • Do you have enough volume to divide between 2 or more suppliers?
  • How will you manage your relationship to existing supplier(s) during the transition into multiple suppliers?
  • Are there new supplier implementation costs and can you afford them?

When looking at implementing your plan of diversification it’s important to also note that diversification does not mean overproduction. If you don’t have sufficient volume to work with multiple suppliers, ordering excess inventory under the guise of diversifying is a waste of time and money.

Look for opportunities to diversify, run a thorough cost analysis, and proceed with caution.

July 16, 2013
BY Bellwether
Transferrable Skills in Purchasing

In a previous article we discussed the level of interest in changing locations for job advancement and asked the question – how far are you willing to go to advance your purchasing career? We looked at different priorities and possibilities of relocating as far away as different parts of the world. Today, we wanted to take another look at the job changes for purchasing managers, but from a slightly different angle; instead of looking at geographic moves there is also the option of changing industries. What about taking the skills you have developed as a purchaser for one industry and transferring those into a new purchasing job for another industry?

There seems to be a disconnect between what hiring managers are looking for in a skill set and what employees believe they can deliver. A recent survey by JAM Recruitment found that 93 per cent felt they would be able to take their skill set and transfer them into a purchasing position in a new sector. Hiring managers, on the other hand, are looking for a very specific group with the necessary education, training and also experience in their sector.

Frustrations are felt from both sides. Employers have a very limited supply pool from which to hire staff, partly because of the shortage in this industry and partly because of the self-imposed limitations restricting that further to only those with experience in their sector. This problem runs deeper still because there are limited entry level positions and few internships making it extremely difficult for new college graduates to get themselves established in the purchasing industry in the sector of their choice. They may be required to take a job in one sector to gain experience and begin their life in the workforce only to find themselves pigeonholed into that sector.

So what can be done? Do you have the skills necessary to keep for jobs within the purchasing industry, but outside of your sector? It may become important to address these concerns at the very beginning of any interview process. In your cover letter and again during the interview you need to make the case of how you have been able to apply your skills in different situations in your current and how you will be more than capable of doing that again in their sector. Do your due diligence and give examples. Don’t speak out of ignorance trying to make it sound like you know something you don’t, but at the same time, you want to show how you can quickly learn and apply new things. Take the time to do your homework and comment below with what worked and what didn’t work.

July 2, 2013
BY Bellwether

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