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A_Retail_P2P_Transformation_Guide.pdf

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A RETAIL P2P TRANSFORMATION GUIDE
Thinking Outside the Big Box
CONTENTS
01
03
04
08
10
11
Introduction
How to visualize your P2P transformation
Retail Procure-To-Pay Areas That Need Automation
The Essential Aisle - Pre-Transformation Action Items
Key Metrics to track your Procure-to-Pay performance
Conclusion
The Procure-to-pay (P2P) process involves obtaining materials and services
required for an organization
and compensating suppliers for the same. The P2P process is one of the core
business activities needed to
efficiently manage vendors, optimize cash flows, and avoid complicated process
flows.
In a retail organization, a P2P system that has been fully integrated can do a
lot more than obtaining goods
and tracking payments. Therefore, Procure-to-Pay needs to be considered an
effective and efficient solution
that can seamlessly facilitate automation, improve visibility across multiple
business units and functions,
reduce costs, and help manage and mitigate risk, ultimately improving the
organization's bottom line.
The advent of e-commerce has not wholly diminished the importance of
brick-and-mortar retail. Studies
show that even in 2023, e-commerce will only account for approximately 1/5th of
retail sales and just 1/20th of
grocery sales. There is an opportunity for a procurement transformation to
solidify organizations as
omnichannel leaders.
Retail procurement is a unique beast - GFR and GNFR are two inter-linked yet two
different challenges. Since
the business relies on suppliers and is spread across thousands of SKUs, there
is considerable risk and
complexity.
Having a perfect supplier base is a lofty goal, but pursuing and making progress
can pay significant
dividends.
These factors put the onus on retail organizations to implement a comprehensive
P2P solution. One that can
help retail organizations achieve personalization with agile procurement.
They also suggest that effective personalization can increase store revenues by
20 to 30 percent.
Therefore, this is the right time to assess whether your organization can reap
the strategic benefits of
automating its Procure-to-Pay function.
INTRODUCTION
01
As per McKinsey’s research, 83
percent of customers say they
want their shopping experience
personalized.
02
Current scenarios of organizations and their Procure-to-Pay system
Scenarios 1 – Traditional email based
approach
h AP and procurement working in silos
h Lags and delays due to bureaucratic
processes
h Approvals become very complex
h Organization susceptible to maverick
spending and fraud
h No strategic foresight or insight available
h Limited visibility on organizational spend
h Delays due to lack of a uniform platform
for P2P cycle
h Capture of discounts not possible
h One single platform for P2P cycle,
enabling all departments to collaborate
h Better process control: streamlining and
optimizing workflow
h Early payment discounts captured
h Fully visibility into spend and compliance
with guidelines
h No inter-departmental harmony
h No defined process or workflow
h Non-compliance to spend guidelines
h High susceptibility to duplicate
transactions
CHARACTERISTICS CHARACTERISTICS
Scenario 2- In-House ERP based systems
Scenario 4- Fully automated Procure-to-pay
cycle
CHARACTERISTICSCHARACTERISTICS
Scenarios 3 – One off automated solution but
segregated AP and procurement
HOW TO VISUALIZE YOUR P2P TRANSFORMATION
03
Re-thinking your existing P2P process is necessary to move away from the
traditional silo-ed protocols of
business functions. Large retail organizations have several business units
spread across multiple
geographies. The purchase and procurement decisions are either left to
regional/local departments, in
which case there are issues with accountability and visibility of data, or are
taken at a central command
center, in which case the organization misses out on specific regional nuances
to make purchase decisions.
While it may seem like there is always something to lose by making these
trade-offs, the impact of the
implementation of an AI-led procurement solution is often underestimated and
wrongly so.
The strategic shift to the next transformation phase will help organizations
identify inefficient spending
practices, mitigate risks, predict payment life cycles, and help maintain
accurate data systems.
h Unintuitive user experience and lack of training
hinder adoption.
h Immature and silo-ed analytics offer little value
and restrict procurement's ability to identify
bottlenecks.
h Disconnected or partly integrated modules result
CURRENT STATE
FUTURE STATE
h Streamlined user experience and personalized
functional training promote greater adoption,
resulting in higher value realization.
h Embedded analytics links strategic goals to
operational metrics, supporting continuous
improvement and providing marginal
competitive advantages.
What CHANGES? MIGRATION PLAN
h Data-intensive, manual forms to virtual
assistants and zero-touch Uis.
h Basic rear-view reporting to complex, real-
time, and predictive insights.
h Store-level decision-making to a global view
& integration and, eventually, automation.
h Define how P2P success is measured today
and in the future.
h IT, procurement and finance can then
collectively develop a P2P technology
roadmap that best aligns the goals of the
business.
h Assess whether the current P2P solution at
your company can meet the future needs. If
not, begin evaluating alternatives.
in inefficient processing and higher operating
costs. Data inaccuracy arising from the
complexity of GNFRs and GFRs contributes to
inefficiency and unwarranted spending.
h Underdeveloped partner ecosystem and
inflexible architectures limit P2P’s ability to scale.
h Tighter end-to-end integration enables fully
automated processes and lower operating
costs.
h Mesh and service architectures allow deeper
functionality and vertical-and work-stream-
specific support.
RETAIL PROCURE-TO-PAY AREAS THAT NEED
AUTOMATION
04
Many facets of the conventional retail Procure-to-Pay cycle are plagued with
bottlenecks such as complex
workflows, manual operations, and delays. Organizations must build and implement
efficient process flows
for these reasons.
Here are some areas of your retail organization that can benefit from a P2P
transformation
Purchases: Requisitions and PO approvals
In a retail organization, purchase requisitions and purchase orders are frequent
and repetitive.
Automating the purchase requisitions and PO approvals processes saves time for
strategic and
development activities. An AI-led purchase automation solution could drastically
reduce turnaround time
(TAT) for approvals and facilitate automatic repurchasing.
Before beginning the automation process, all the appropriate data needs to be
identified, analyzed,
cleaned, and put through the necessary protocols to develop and streamline an
efficient workflow.
i More than most others, a retail organization suffers from the problems of
duplicate orders, going over
budget, and accidental orders. These problems can also have a more significant
impact on the
organization if they are omnichannel, i.e., if they have both brick-and-mortar
locations and e-
commerce platforms. In addition, these problems have a considerable effect on
the cost to the
organization, considering processing, transport, and storage costs.
i A retail organization handles a significant load of information, especially
regarding inventory
management. Therefore, there is a need to have constant visibility of all
pertinent information.
Unfortunately, a manual and digital system of keeping records will drive a wedge
between the record
information and the actual, real-time information.
i After consultation with the management, a policy or workflow can be designed
whereby approvals
can be automated, helping the procurement team concentrate on more strategic
matters.
Automating this part of the process will have a huge compounding effect as it is
implemented across
functions, departments, geographies, and business units, leading to a marked
increase in efficiency.









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