Hackett P2P Efficiency Metrics: From Requisition to Discounting and More

Yesterday, we covered a number of P2P efficiency metrics and benchmarks (PO automation, PO-based invoice approval, etc.) that Zycus’s Richard Waugh shared at Horizon (their company conference). Today we turn our attention to a couple of additional metrics on the efficiency side of the procurement and A/P equation, as well as provide a summary of Richard’s observations in this area:

  • Percentage of early pay discounts taken: World-class organizations achieve nearly 80% uptake for early payment discounts taken based on offers. This contrasts with approximately 70% for peer group organizations.
  • Percentage of spend with line item visibility: World-class organizations achieve just over 80% for this metric compared with less than 50% for peer organizations.

In summary, Richard observed that top performers average approximately “80% or more POs automated, early pay discounts taken and line level spend visibility,” compared with peer organizations. This number rises to 90%+ of POs “processed and invoices matched” on the first pass.

Similarly, top performing companies have transaction cycle times that are 40-80% faster than average performing organizations.

Hackett Group has built a reputation as the gold standard for procurement benchmarking. Theses metrics are really just a “teaser” and Spend Matters thinks that organizations serious about understanding and improving relative performance would be well served to better understand how getting involved in this Hackett program can help them.

With benchmarking, you get out what you put in!

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