As the NFL lockout continues and the hoopla of the NFL Draft has died down, there's not much football left to talk about except memories. Surprisingly, the misaligned relationship between purchasing and accounts payable takes me back to the glory days of the Dallas Cowboys.
I couldn't help but think of a legendary football story after reading one of Spend Matters' concluding recommendations in their most recent Compass Research report "A Foundational Look at P2P Technologies." It says that companies pursuing a P2P system should "make collaborative decisions with finance (including accounts payable) to address both the up and downstream components of the P2P lifecycle." Following the unceremonious firing of Dallas Cowboys coach and football legend Tom Landry, new owner Jerry Jones hired University of Arkansas head coach Jimmy Johnson. Many doubted that the pair (both notorious control freaks with fiery demeanors) could work together to turn around the tarnished silver and blue.
Yet the Texas mavericks proved everyone wrong by transforming a 1-15 laughingstock team into two-time Super Bowl champs in less than five years. It was one of the greatest worst-to-first stories in modern sports history. Jerry Jones and Jimmy Johnson were hailed as modern-day heroes for bringing back the luster to "America's Team." Although their working relationship was never ideal and the two weren't bosom buddies, they both understood the need to put their differences aside and make compromises if they wanted to win championships.
When I look at purchasing and accounts payable, I see a lot of the same dynamics. The two departments have traditionally never been the best of friends. Unfortunately there are still policy, process and organizational issues keeping the two from working in harmony in many organizations. These two departments often report to different division managers, are geographically dispersed, and have different mindsets when it comes to vendor relationships.
The Great Recession has forced many organizations to place more scrutiny on the purchase-to-pay cycle. In the review process, they're uncovering issues that those in purchasing and AP have known about for years, including:
- Late payments by AP result in missed discounts that purchasing negotiated
- Incorrect invoice information causes AP extra work
- Purchasing lacks visibility into purchases that bypass them
- Overlap in purchasing & AP roles causes conflicts
- Inconsistent vendor set-up procedures
- Ad hoc and piecemeal communication around issue resolution
Like Jimmy and Jerry coming together for two NFL Championships, getting AP and purchasing in sync has its own rewards. When the two departments work together, opportunities for hard-dollar and soft-dollar savings can add up to 5% or more of spending! That's an incredible amount of savings in today's belt-tightening climate.
To help you get started, we've put together an exclusive game plan for Spend Matters readers. Here are 20 Ideas for Getting Purchasing & AP in Sync from "best practice" organizations with strong, productive purchasing and AP relationships. We've split it into three categories of ideas: policy, process and organizational -- and think it just may be a great baseline to help form your ongoing strategy.
Now if only we could get the owners and players to work together and end this lockout. For me, I win either way -- I'm a Cleveland Browns fan.
- Mark Schaffner, VP of Marketing, Verian Technologies