PROCURE-TO-PAY to...Page 1 of 9 K09194 ©2018 APQC. ALL RIGHTS RESERVED PROCURE-TO-PAY End-to-End...

of 9

K09194 ©2018 APQC. ALL RIGHTS RESERVED

PROCURE-TO-PAY

End-to-End Process Map and Measures

Delivering a product or service is a core competency for all organizations. However, organizations need to ensure they have sufficient and cost-

effective inputs to deliver the products and services their customers demand. Hence, the procure-to-pay process—the end-to-end process

focused on obtaining materials and services necessary to manufacture a product or supply a service—should allow the organization to efficiently

and effectively execute its core offering to its customers, as well as manage its cash flow and the bottom line effectively.

Procure-to-Pay: High-Level, End-to-End Process

Figure 1

of 9


A common struggle for any end-to-end process management is

identifying the right measures that encapsulate the value of the

process. These key performance indicators (KPIs) allow the

organization to focus all participants in the end-to-end process,

Procure-to-Pay, on a shared goal that aligns with the strategic

purpose of the process.

Common End-to-End Process KPIs:

On time delivery On time payment

The following table (Figure 3) provides the median values of the

end-to-end process KPIs. In addition to KPIs that measure the

overall value created by the end-to-end process, organizations will

also monitor its performance through common productivity

measures such as cycle time. These measures allow the

organization to identify improvement opportunities and drill into

root causes for performance dips in the above KPIs.

Procure-to-Pay: Detailed Process Click Here to Enlarge

Figure 2

of 9


Procure-to-Pay Benchmarks: Select KPIs

Measure ID Measure Name Median Sample Size

102139 Percentage of invoice line items paid on time by the business entity 88.0% 1762

102648 Percentage of supplier orders received by original request date (on time) 81.0% 2122

103094 Procure-to-pay cycle time in days 25.0 1622

105456 Average procure-to-pay cycle time in days for goods 32.9 604

105457 Average procure-to-pay cycle time in days for services 30.0 570

Figure 3, Source: Open Standards Benchmarking Portal

PHASE DEFINITIONS AND MEASURES This section of the article dives into each phase of the Procure-to-Pay process and includes definitions, phase-specific KPIs, and available measures

for the relevant KPIs.

https://www.apqc.org/benchmarking-portal

of 9


PROCURE GOODS AND SERVICES

Definition—the procure goods and services process covers how an organization sources the raw materials and services it needs. This includes

ordering and managing the purchase orders for the materials and services as per sourcing requirements and strategy.

Procure Goods and Services Process

Figure 4

Phase-Specific KPIs:

Amount of maverick purchasing

Spend by buying channel

Average value of purchase orders

Performance measures for the phase: cost, cycle time, through put, and number of FTEs

The following table (Figure 5) provides median values for select KPIs for the procure phase.

of 9


Procure Goods and Services Benchmarks: Select KPIs


102822 Percentage of total purchases procured via maverick buying 1.0% 2063

101768 Percentage of total value of goods and services purchased from top ten suppliers 60.0% 1339

102422 Percentage of purchase order line items transacted using e-procurement enabled catalogue

suppliers 30.0% 1971

102424 Percentage of purchase order line items transacted via a portal 0.0% 112

100385 Transaction amount per purchase order $7778.69 1811

100639 Cycle time in hours to place a purchase order 14.0 2263

103997 Total cost to perform the process group "procure materials and services" per $1,000 revenue $6.84 2374

104129 Number of purchase orders processed per FTE that performs the process group "procure

materials and services" 552.5 1617

104251 Number of FTEs that perform the process group "procure materials and services" per $1 billion

revenue 28.3 1826



of 9


RECEIVE GOODS AND SERVICES

Definition—the receive goods and services process includes planning, coordination, and processing of inbound materials, products, and services.

Receive Goods and Services Process

Figure 6


On-time delivery

Orders received complete and damage free

Quality of goods and services received

Performance measures for the phase: cycle time

The following table (Figure 6) provides median values for select KPIs of the receive phase.

of 9


Receive Goods and Services Benchmarks: Select KPIs


102648 Percentage of supplier orders received by original request date (on time) 81.0% 2122

102430 Percentage of purchase orders received damage free 95.0% 1775

102428 Percentage of purchase orders received complete 90.0% 2123

102705 Percentage of total number of items purchased and received failing inspection (incoming material

quality) 0.91% 274

100322 Average supplier lead time in days on purchased materials 10.0 2098



of 9


MANAGE INVOICES

Definition—the pay process includes processing payments of operating expenses and other supplier charges. This includes the development of

policies and procedures around processing of accounts payable and all operations.

Manage Invoices Process

Figure 7


First time right payments

Ratio of suppliers to invoices

Touchless invoices

Payment spread by payment channel (e.g., wire, ETF, check)

Performance measures for the phase: cost, cycle-time, through put, and number of FTEs

The following table (Figure 8) provides median values for select KPIs of the pay phase.

of 9


Manage Invoices Benchmarks: Select KPIs


100642 Days payable 30.0 3268

101944 Percentage of disbursements that are first time error free 94.9% 1602

104604 Percentage of disbursements submitted electronically 82.0% 1247

100575 Cycle time in days from receipt of invoice until payment is transmitted 15.0 1588

100632 Cycle time in days to resolve an invoice error 4.0 1665

103831 Total cost to perform the process "process accounts payable (AP)" per $1,000 revenue $0.68 1640

101290 Number of invoices processed per FTE that performs the process "process accounts payable (AP)" 9,463.6 2064

101108 Number of FTEs that perform the process "process accounts payable (AP)" per $1 billion revenue 6.9 3101


ABOUT APQC

APQC helps organizations work smarter, faster, and with greater confidence. It is the world’s foremost authority in benchmarking, best practices, process and performance improvement, and knowledge management. APQC’s unique structure as a member-based nonprofit makes it a differentiator in the marketplace. APQC partners with more than 500 member organizations worldwide in all industries. With more than 40 years of experience, APQC remains the world’s leader in transforming organizations. Visit us at www.apqc.org, and learn how you can make best practices your practices.

https://www.apqc.org/benchmarking-portalhttps://www.apqc.org/

Large Chart - 1: Small Chart - 1: Small Chart - 2: Big Chart - 2: Small Chart - 3: Big Chart - 3: Close Button - 4: Close Button - 3: Close Button - 2:

PROCURE-TO-PAY to...Page 1 of 9 K09194 ©2018 APQC. ALL RIGHTS RESERVED PROCURE-TO-PAY End-to-End...

Documents

Transcript of PROCURE-TO-PAY to...Page 1 of 9 K09194 ©2018 APQC. ALL RIGHTS RESERVED PROCURE-TO-PAY End-to-End...