Supplier Enablement and P2P Roadblocks — Compliance

This is a post of within a broader series looking at supplier enablement and P2P roadblocks. The material is based in part on our recent research paper: A Foundational Look at P2P Technologies. The paper can be downloaded for free via the above link.

Despite the promise of the first generation of P2P tools to reduce spending and thwart maverick buying, one of the quiet secrets of many deployments is that many systems did little to assure buyer and supplier compliance outside of a handful of select categories (and even within such categories, compliance levels often left much to be desired). Consider on the buy-side, for example, how many first generation P2P systems saw only a fraction of total indirect suppliers enabled (as well as a lack of controls for supplier pricing and related bundles such as extended warranty, onsite set-up, etc. for those suppliers that made it into a catalog or became punch-out enabled).

Hurdles such as this served to limit overall compliance, while on the supply side, many initial systems did not provide adequate safeguards against matching workarounds, price/SKU changes, additional services/products being sold as part of a bundle, etc. Fortunately, however, P2P compliance approaches and offerings have recently taken major strides forward. Today, with the right configurations and systems, it's possible to insure that requistioners are only able to buy from approved suppliers at approved pricing. The combination of real-time contract and price look-ups, proactive auditing and internal approvals and controls (including the ability to fine-tune acceptable pricing and tolerance thresholds) is key to getting over the internal buyer and supplier compliance hurdle.

Of course it goes without saying that suppliers not enabled via a P2P solution are likely to fall out of compliance as well (that is, unless a user leverages a system like Coupa and "shops" on an external website where information is then brought back into an internal shopping cart and approvals process). Yet the future of P2P compliance is not about extending the punch-out paradigm to the entire web. It's about fine-tuning buying behavior. In certain systems today, you can even set tolerances for approved SKU pricing based on contracted levels (e.g., approved to buy if pricing is 5% or less above the approved contract level for a period of 12 months). The ability to upload contract information into a P2P system and set tolerances for approvals is but one important means of assuring both buyer and supplier compliance today. Matching (3, 4, or 5-way -- take your pick) is another. As are numerous other capabilities and approaches that extend beyond the basic levels of off-the-shelf eProcurement systems.

Jason Busch

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