Demystifying the Procure-to-Pay Cycle: A Quick Guide
Demystifying the Procure-to-Pay Cycle: A Quick Guide
With the rise of digital technologies such as automation, and advanced analytics, procurement operations are undergoing a transformation. In fact, the global software market will be worth $9.5 billion by 2028(1).
A recent study(2) shows that almost half of all procurement activities can be automated using existing technologies. One such process that has the potential to greatly benefit from these advancements is the Procure-to-Pay (P2P) process.
But is the P2P process relevant for your company? If yes, how can it benefit you in the long run? Continue reading as we explore the procure-to-pay process in detail and answer your questions.
Decoding the Procure-to-Pay Process
Procure-to-Pay encompasses activities and tasks, such as sourcing, procurement, invoicing, and payment, which come together to form the P2P cycle.
The P2P process is typically managed by a procurement or purchasing department, designed to ensure that the organization purchases goods and services promptly and cost-effectively while maintaining control over spending.
It starts with the identification of a business need and ends when you make the payment to the supplier. Effective management of the P2P process helps ensure you pay the right amount for the right goods or services at the right time. This improves your relationship with your suppliers and overall financial visibility and control.
The process involves several steps that come together to form the P2P cycle, which we will explain in the next section.
Steps Involved in the Procure-to-Pay Cycle
The P2P cycle steps include requisition and approval, purchase order creation and confirmation, goods and invoice receipt, invoice approval, payment, and close-out. Let’s dive into these steps and see what they actually are.
Get the Go-Ahead
The P2P cycle begins when a need for goods or services is identified. The request for the product is usually identified using an enterprise resource planning (ERP) system or procurement management software. The request is then reviewed and approved by the management.
Seal the Deal
After approval, the procurement team identifies potential suppliers. It evaluates its capabilities based on product quality, delivery times, and prices.
At this stage, the most suitable supplier is selected based on price quotations and the required product specifications. The supplier is usually given confirmation via a confirmation email.
Then, a purchase order (PO) is created and sent to multiple suppliers via either procurement software or an ERP system. A PO is a legal contract between an organization and its supplier, and contains the details of the product required, the delivery date, and the expected price.
Time for Delivery
The goods or services are received from the supplier, and the receiving department confirms that the items match the specifications in the purchase order.
Double Check for Accuracy
The supplier invoices the organizations after the receipt of the goods, including details such as the amount owed and payment terms.
The finance department verifies the invoice against the purchase order and approves it for payment. They may use invoice management software or ERP to ensure the invoices match the PO. If not, the discrepancies are resolved at this stage.
Pay Like a Pro
Finally, the supplier is paid for the products via a payment management system or ERP. The payment process is usually transparent, secure, and compliant with the organization’s financial policies.
At this stage, the procurement team often follows up with the supplier to ensure all aspects of the transaction have been completed. Then the order is closed out.
As the organization’s size increases and the processes become more complex, companies use various tools and software like procurement management software, ERP systems, and invoice management software to automate and streamline the P2P cycle. This makes the P2P process much more efficient and reduces the risk of errors.
Benefits of the P2P Process
The purchase-to-pay process is not intended to speed up payments to vendors. Rather, its goal is to improve the efficiency and financial control of the company. Some benefits of a P2P process cycle are as follows:
- It streamlines the procurement process by connecting the different departments in a firm, making all points of information trackable.
- A P2P process, when implemented using a procurement solution, can help reduce invoice processing costs and improve efficiency.
- The process makes communication between vendors and companies transparent, improving their relationships.
- When suppliers know payment schedules and details, they will be more open to accepting terms that are more beneficial to buyers.
P2P is the Future of Procurement Solutions
The majority of procurement teams are feeling pressured to respond to challenges quickly and effectively. While the complexity of the process can be daunting, there are solutions available that can help organizations streamline and optimize their procurement processes. The P2P process is a critical function that requires careful management and attention to detail, particularly for large enterprises.
For example, the case study of one of India’s largest infra developers shows how a business can scale up its turnover growth by 2x in just a year by implementing an end-to-end P2P solution. By leveraging the right procurement tools and technologies, businesses can not only reduce costs and minimize risk but also achieve significant business outcomes.
So, whether you are using manual or semi-automated tools, it’s worth considering how a comprehensive P2P solution can improve your procurement process and boost your bottom line. Or, you can even partner with companies like Moglix, which specialize in providing end-to-end procurement solutions to businesses.
Additional resources:
Women on Boards: The Key to Unlocking Cultural Transformation in Organization
Women on Boards: The Key to Unlocking Cultural Transformation in Organization
With their unique perspectives, values, and leadership styles, women are shaking up the business world and instigating cultural change in organizations across industries.
Research has shown that organizations with 25% women in decision-making positions had a 4% better average return on investment. Why is this so?
- Women are increasingly becoming power spenders: According to a Nielsen study, by 2028, it is projected that women will account for a whopping 75% of purchases worldwide, meaning companies are overlooking tremendous growth potential if they are not considering women when developing their products.
- Firms win when women lead
Manufacturing Success: Why Women Workplace Safety is Non-Negotiable
Manufacturing Success: Why Women Workplace Safety is Non-Negotiable
As we celebrate National Safety Week (from 4th to 10th March) & International Women’s Day (on March 8th), it is time to reflect on the challenges women face in the workplace with something as rudimentary yet non negotiable as workplace safety. Women have traditionally been confined to conventional roles, which has prevented them from realizing their full potential. However, there has been a shift towards more women joining the workforce, and they will play a critical role in India’s growth story. According to a study by McKinsey, advancing women’s equality in India could increase GDP by $770 billion by 2025.
Despite the increasing number of women in the workforce, women’s participation in the male-dominated manufacturing sector remains low. In 2019-20, of the 8 million workers employed in India’s formal manufacturing industries, only 1.6 million (19.7%) were women(2). This highlights the need to encourage more women to consider manufacturing a viable career option. The manufacturing sector has the potential to empower women economically and socially, but this can only happen if they are safe at work.
Unsafe and Unheard: Women’s Struggle for Safety in Manufacturing Facilities
Despite making strides in breaking gender barriers, women in the manufacturing sector face significant challenges. Safety is a primary concern for women working in these facilities. Unfortunately, they are often subject to sexual harassment, discrimination, and violence. In many cases, these facilities may not have sufficient training programs, safety equipment, or procedures to ensure women can operate safely. This can lead to severe injuries and create a sense of insecurity among women.
The effects of these challenges extend beyond physical safety, impacting women’s mental health and overall well-being. It is crucial to prioritize safety measures and address these issues to create a safer and more inclusive work environment for women in manufacturing.
Breaking Barriers: India’s Fight for Gender Equality in Manufacturing
Recognizing the challenges faced by women in manufacturing, the Indian government has implemented measures to ensure their safety. For example, the Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) mandates the creation of committees to investigate complaints of sexual harassment and requires companies to provide a safe working environment for women. Alongside this, the Ministry of Women and Child Development has launched initiatives promoting gender equality in the workplace.
But it’s more than just the government taking action. Private sector companies are also implementing measures to ensure women’s safety. Gender-sensitive policies such as sensitization workshops and mandatory employee training have been established alongside committees to address complaints of sexual harassment. These efforts have made manufacturing facilities safer and more welcoming for women, empowering them to pursue their careers confidently.
Manufacturing a Better World: Women’s Empowerment through Safety
Women are crucial to the growth of India’s manufacturing sector, and their safety is vital to their success. While there have been significant challenges, positive steps have been taken to ensure their safety. However, we must continue to work towards creating a safe and inclusive workplace for women in manufacturing facilities. At Moglix, we are committed to the cause of women’s safety in the workplace and offer comprehensive safety solutions (products & services) specifically crafted for women at workplace. Contact us today and partner with us to build a safer environment for women.
From Fatalities to Foresight: How India is Tackling Workplace Hazards Head-On
From Fatalities to Foresight: How India is Tackling Workplace Hazards Head-On
The significance of ensuring workplace safety cannot be overstated, as it not only enhances the prosperity of businesses but also promotes the well-being of employees. In India, a nation with a burgeoning economy and an enormous workforce, industrial safety holds a particularly critical position.
The problem of industrial safety is evident from the numbers. According to data from the Directorate General Factory Advice Service & Labour Institutes (DGFASLI)(1), there were 1,050 fatal workplace injuries in the year 2020, which translates to an average of nearly 3 deaths per day.
Despite laws aimed at safeguarding workers and promoting occupational safety, their effectiveness is often limited by a prevailing cultural attitude towards workplace safety that hinders proper implementation. Thus, there is a need to adopt a multifaceted solution that considers regulatory compliance and improves safety culture, including the attitudes, beliefs, and values that shape workplace behavior.
From Crisis to Consciousness: How India is Ushering in a New Era of Industrial Safety
It was only after independence that India got the opportunity to take measures to improve industrial safety. The Factories Act of 1948 was India’s first major legislation on industrial safety. It aimed to ensure factory workers’ safety, health, and welfare. Subsequently, several amendments were made to make it more comprehensive and practical.
In 1984, the Bhopal gas tragedy killed thousands, highlighting the need for more robust safety measures in industries. This led to the Environment (Protection) Act 1986, which aimed to protect and improve the environment and prevent hazards to human beings, other living creatures, plants, and property.
The National Safety Council (NSC), established in 1966 by the Ministry of Labour and Employment, has actively guided and provided services to promote safety awareness and safe work practices. In recent years, there have been focused efforts by organizing safety campaigns to address the root cause of workplace hazards, which often lies in a lack of awareness and education.
The NSC’s National Safety Week campaign is a crucial contributor to creating safety awareness and establishing safety standards across all sectors. The week-long campaign commences on March 4th of every year. It encourages employers to involve their employees in Safety, Health, and Environment (SHE) activities, thereby promoting workplace behavior and hazard prevention improvements by both employers and workers.
Beyond Compliance: How Technology and Specialized Services are Shaping Industrial Safety Culture in India
Besides legislative and institutional measures, technological advancements have also significantly enhanced industrial safety in India. For instance, the emergence of Industry 4.0, focusing on automation, machine learning, and the Internet of Things, has led to the development of more innovative and safer industrial systems.
Furthermore, various private and public organizations have emerged in recent years to provide specialized services in industrial safety. These organizations offer training, certification, and consulting services to businesses and individuals on various aspects of workplace safety, such as hazard identification, risk assessment, and emergency response.
Ensuring Workplace Safety: The Key to Sustainable and Inclusive Growth in India
Industrial safety is and will have to be a critical aspect of India’s growth story, and efforts to improve it should be a priority for all stakeholders. Moreover, the COVID-19 pandemic has brought to the fore the need for a more comprehensive approach to workplace safety that includes not just physical hazards but also biological ones.
As India continues to pursue its path of economic growth, it is essential to ensure that this growth is sustainable and inclusive and that workplace safety is an integral part of it. At Moglix, we recognize the need for a safety-conscious workforce and offer comprehensive safety solutions to create a safer work environment. Contact us today and partner with us to build a safer and more sustainable India.
Uncovering the Advantages and Challenges of Quiet Hiring in Today`s Job Market
Uncovering the Advantages and Challenges of Quiet Hiring in Today`s Job Market
Experts at Gartner recently listed quiet hiring as one of the top workforce trends for 2023. According to Emily Rose McRae, Sr. Director of Research at Gartner, “Quiet hiring is when an organization acquires new skills without actually hiring new full-time employees.”
The rise of quiet hiring is not just a response to the pandemic. It is part of a broader trend toward more personalized and targeted hiring. Employers are increasingly using data analytics, social media, and other tools to identify and attract the right candidates for their specific needs, rather than relying on generic job postings or mass hiring campaigns.
Saving the Planet One Weld at a Time: How Sustainable Welding can Make a Difference
Saving the Planet One Weld at a Time: How Sustainable Welding can Make a Difference
Welding is a critical process in various industries, with millions of welders working around the globe. But did you know that inefficient welding practices and equipment can significantly impact the environment?
According to the International Energy Agency, the industrial sector, which includes welding, is responsible for a quarter of global emissions. In particular, the steel industry, which heavily relies on welding, is one of the world’s largest emitters of carbon dioxide, accounting for about 7% of global emissions.
As more and more investors and consumers prioritize Environmental, Social, and Governance (ESG) considerations when making an investment or purchasing decision, companies must reduce their environmental impact and adopt sustainable practices, including the welding industry.
How Could Your Welding Habits be Killing the Planet and Harming Workers?
The welding process generates a lot of heat and produces fumes and gasses that harm the environment. These fumes and gasses contain toxic compounds like carbon monoxide, nitrogen oxides, and ozone, which can contribute to air pollution and climate change. Using poor welding equipment can have severe consequences for the health and safety of workers too. Exposure to toxic fumes and gasses can cause respiratory problems, while accidents and injuries can lead to burns, electrocution, and eye damage.
Welding for the environment
Socially-conscious organizations are already taking steps to contribute to saving the planet by adopting environment-friendly welding processes. Some tips to consider are:
Use Energy-Efficient Welding Machines
One way to reduce energy consumption during the welding process is to use energy-efficient welding machines. These machines use less electricity, resulting in fewer emissions, making them a more sustainable choice.
Choose the Right Welding Process
Different welding processes have varying environmental impacts. Welders should choose the process that produces the least emissions for their specific job. For instance, gas metal arc welding generates fewer emissions than shielded metal arc welding.
Best Practices for Sustainable Welding
To promote sustainable metal-working practices, organizations should recycle metal scraps instead of throwing them away, which reduces the need for new metal production and minimizes the environmental impact. Welders should also prioritize proper disposal procedures for contaminated materials like welding rods and electrodes to prevent hazardous substances from harming the environment and human health.
Welding can have a significant impact on the environment, but there are products & practices you can adopt to minimize your carbon footprint. At Moglix, you will have access to the most comprehensive range of welding supplies from best in class brands, allowing you to balance budget, timelines and sustainability goals. Get in touch with us today.
Curious case of skilled welder shortage
Curious case of skilled welder shortage
India is facing a shortage of skilled welders, and it’s hindering the country’s progress towards a more sustainable future. Welding skills are crucial in a range of industries, including construction, manufacturing, and infrastructure development. However, the shortage of skilled welders is making it difficult for India to meet its ambitious sustainable development goals. According to the Indian Institute of Welding (IIW) in 2020, there was a shortfall of 1.2 million welding professionals, which was expected to increase to 1.35 million in the next three years.
There are several reasons behind the shortage of skilled welders in India. One of the main factors is the lack of vocational training programs. Many young people in India are not aware of the potential opportunities and benefits of pursuing careers in welding. The low status of skilled trades is also a contributing factor. Welding is often seen as a dirty and dangerous job, which has discouraged many young people from pursuing it as a career.
To address this shortage, India needs to invest in creating more training programs for aspiring welders. These programs need to be accessible and affordable to ensure that everyone who wants to pursue a career in welding has the opportunity to do so. Additionally, the government and private sector need to work together to promote the benefits of welding as a career, such as the potential for job security, high earning potential, and opportunities for career advancement.
Another potential solution is to incentivize young people to pursue careers in welding. This could involve offering scholarships, apprenticeships, or other forms of financial support to students who are interested in welding. By providing financial incentives, India can encourage more young people to pursue welding as a career, which can help to address the shortage of skilled welders.
Promoting the benefits of sustainable welding practices is also important. Sustainable welding practices can help to reduce waste, improve energy efficiency, and contribute to a more sustainable future. By promoting sustainable welding practices, India can create more interest in welding as a career, and attract more young people to the industry.
There are several successful initiatives that have been implemented in other countries to address similar skilled labor shortages. For example, in the United States, the National Center for Welding Education and Training (NCWEAT) has been working to promote welding as a career, and to provide training and education to aspiring welders. NCWEAT offers a range of programs, from short-term training courses to degree programs, to ensure that aspiring welders have access to the training and education they need to succeed in the industry.
In conclusion, India needs to take action to address its shortage of skilled welders. By investing in vocational training programs, promoting the benefits of welding as a career, incentivizing young people to pursue welding, and promoting sustainable welding practices, India can overcome its skilled welder shortage and build a more sustainable future. Welding skills are crucial to the success of a range of industries, and addressing the shortage of skilled welders is essential if India is to meet its ambitious sustainable development goals.
The Convergence of AI/ML and Manufacturing Industry 4.0: A New Era of Innovation
The Convergence of AI/ML and Manufacturing Industry 4.0: A New Era of Innovation
Manufacturing 4.0 is the dawn of machines that can think, learn and make decisions on their own. The idea isn’t strange to us because we’ve seen similar machines in movies. We have seen the T-800 in Terminator 2 and the NARS and CASE machines in Interstellar. These machines reflected human emotions, including the need for authority and even humour. These machines filled us with a mix of delight, thrill and curiosity.
What new could be possible with this generation of machines? Fast forward to 2023 and the real world. The machines of the future are here!
Transforming Manufacturing Supply Chain: A Conversation with Rahul Garg
Transforming Manufacturing Supply Chain: A Conversation with Rahul Garg
Rahul Garg founded Moglix in 2015 with the idea of transforming industrial distribution with a technology first approach. Rahul adds Moglix was conceived to bring the ease, convenience, and speed of e-commerce to B2B transactions to revamp the industrial supply chain and utilize technology to reimagine the B2B commerce and supply chain landscape.
Unveiling the Truth Behind Talent Market Chaos: Exclusive Interview with Saumya Khare
Unveiling the Truth Behind Talent Market Chaos: Exclusive Interview with Saumya Khare
In an exclusive interview with HR.com, Saumya Khare, Senior Director of Human Capital at Moglix, discusses the significant challenges of talent management in the future and how employers can pave the way for better talent retention.
She emphasizes that the talent market is constantly evolving, and HR teams must remain vigilant. Additionally, Saumya provides insights into the challenges that talent management will encounter in the future.
Back