Pete Loughlin recently penned a great post over on the Purchasing Insight blog that asked Is This the Most Challenging Environment for Purchase to Pay where he discussed whether or not the entertainment industry (and movie making in particular) was the toughest environment for Purchase to Pay there is.
As per Loughlin’s post, where he quoted Bogdan Tomassini-Büchner from digitalpurchaseorder.com, on a movie set it’s complete chaos. You’re hiring lots of people for a short time at short notice, there’s no time, there’s no money — even for multi-million dollar projects — buying stuff is a nightmare. There’s no time for a requisition approval process — the stand-ins, the set, the food is needed now. But with the right system, all purchases can be put through (approved) and all spend can be tracked.
Regardless of whether or not cost is critical, or incidental (because the biggest profit potential is in increased revenue and not cost reduction), cost still needs to be tracked, understood, and opportunities for significant savings identified. For example, even in entertainment, if, at the end of the year, the same provider is providing a significant amount of product across multiple sets or budgets, the parent company can negotiate an across-the-board discount off of the standard rate sheet for the following year (and all purchase orders to the vendor can automatically use that rate).
The same situation exists in the hospitality — or tour — industry, especially when products or services have to be acquired, or re-acquired (because the restaurant was closed for a health violation, the bus broke down, etc.) at the last minute. But all costs needs to be tabulated, tracked, reported, and when possible, appropriate taxes reclaimed.
However, the biggest challenge is in an old-school manufacturing or logistics company where everything is paper and fax and e-mail based, the process has to be “done this way”, and no Procurement system meets the need. If a vendor is trying to go into one of these environments without a highly configurable, adaptable, customizeable workflow — they will be as challenged as a first generation procurement system in the high-speed hospitality and entertainment industries.
However, as Pete has pointed out, there is no environmnt too complex for a highly configurable, adaptable, customizeable workflow. So if you don’t have a good P2P system, there is no excuse not to get one.