Expert Insight: P2P Joined-up thinking
In this expert insight, COINS P2P expert David Bullock explores the Procure to Pay inefficiencies that often exist inside construction businesses and the benefits of applying a joined-up approach supported by construction software.
Benefits of a joined-up approach to Procure to Pay for construction include increased visibility of construction data and insights leading to more informed decisions that reduce risk; reduce time and costs due to efficiency savings; provide suppliers with key information deep from the heart of their own systems; cut down on wasted calls and improving supplier relationships.
If we consider the traditional Procure to Pay activities, as well as the underlying management of the supply chain, and include the subcontractor application and certification process for good measure, we often find inefficient islands of information, cast adrift, losing touch with each other at an exponential rate. As a result, knee jerk, duplicate processes, are often created to make up for shortcomings, work arounds are prevalent, and central reporting nigh-on impossible. Unfortunately, these then become "business as usual" processes. Morale is low because everyone can see that the information exists but never when and where it is needed.
Let’s consider the requisition process as our starting point. We have a new starter on site and need to get them kitted out with all the right gear, in line with health and safety requirements, for the site and their role. The usual items are high-vis clothing, boots, gloves, hard hat, etc. If you are lucky, there is a standard form to fill out; for others it may be a hastily scribbled list.
This requisition arrives with the buyers in the office, who now have a job on their hands to decipher and interpret what is needed and adjust as necessary. The worker on site may want fur lined boots, but they must have company standard issue, and ones which comply with the current company Health & Safety policy. Entering the requisition on the system, allocating it to the right contract, checking it has been budgeted for, contacting suppliers for pricing (if necessary), seeking approval in some cases depending upon the contract, the site, the requirements, the value. You name it, there are so many checks, balances and hurdles to overcome in this initial process. You then factor this by the amount of actual gear that is needed, on a daily and weekly basis, across all of the construction project sites, from PPE equipment to timber; concrete to fixings; office consumables to electrical components. There is a whole heap of requirements and requests that can tie your staff up with onerous administration and tiresome chasing for days and days. It’s mundane and often tries their sanity!
In the meantime, the workers out on site just want their equipment and are left in the dark as to where it is, whether it has even been ordered or when will it be delivered. Countless telephone chases to the office put everyone in a bad mood! Unfortunately, this is just how it’s often done to a greater or lesser degree across the industry.
OK, so let’s now assume that all the chasing has happened, the approval sought and agreed. The completed, updated, and approved requisition turned into a purchase order with the correct supplier. This is emailed to the supplier, who then has their own processes to contend with. Products to match, queries to raise, systems to adhere to and eventually enters it, manually, into their own back-office systems. At last the items get delivered and then the fun starts again! Invoices get raised, matching to delivery notes, invoice approvals and payment requests, constant chasing for payment by the suppliers, who have no visibility of their invoice and do not know where their invoice sits in the queue! So much duplication, so many manual processes, so much paperwork, too much admin. HELP!
In this simple act of requisition, approval, order, invoice and finally payment we can identify time inefficiencies, process inefficiencies and of course the ability for costs to increase due to rogue spend, uncoordinated spend, missed rebate targets etc. and the need for a construction technology driven solution to streamline this process.
David Bullock, COINS P2P expert
What if there was a better way?
In future expert insights I will be looking at how, applying a joined-up approach to the construction Procure to Pay process, and utilizing construction software will save your business valuable time, reduce costs and manage your exposure to risk.
I will explore how COINS construction technology can innovate your P2P processes. Such as new eProcurement tools that revolutionize how construction businesses requisition and order; Supply Chain Management construction solutions which monitor and manage performance, adhere to compliance and governance, and create a more collaborative supply chain; and an Electronic Trading platform which becomes embedded into your "business as usual" approach and provides immediate value to you and all of your supply chain partners by providing clarity and visibility for all concerned.
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