p2p maturity

8/9/2019 P2P Maturity

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P2P Maturity

Principles and FrameworksDr. Kevin McCormack

July, 2007


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Business Process Maturity: !usiness process is a set o" lo#ically related tasks per"ormed to ac$ieve a

de"ined !usiness outcome t$at $ave customers and t$at cross or#ani%ational

&and o"ten company' !oundaries. ($e concept o" !usiness process maturity

proposes t$at a process $as a li"ecycle t$at is assessed !y t$e e)tent to

w$ic$ t$e process is e)plicitly de"ined, mana#ed, measured, and controlled.

This is the highway for the practices.

Practice Maturity: practice is #enerally de"ined as a procedure or a set o" speci"ic steps "oraccomplis$in# a desired outcome. Practice maturity re"lects t$e e)tent to

w$ic$ t$e practice is e)plicitly de"ined, mana#ed, measured, and controlled.

*t also re"lects t$e level o" sop$istication &dept$ and !readt$' in t$e

deployment o" t$e practice. Practices are the vehicles you use and how

you drive the highway.

Enablers:n ena!ler is de"ined as an in"rastructure element, eit$er tec$nolo#y or

or#ani%ation, t$at ena!les process or practice per"ormance. +na!ler

maturity re"lects t$e increasin# capa!ility o""ered !y t$e ena!ler and t$e

!readt$ o" its o""erin# &inter "unctional, cross "unctional, cross company'.


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($e company, its vendors and suppliers, take cooperation to t$e process level. r#ani%ational

structures and -o!s are !ased on process, and traditional "unctions, as t$ey relate to t$e supply c$ain,

!e#in to disappear alto#et$er. Process measures and mana#ement systems are deeply im!edded in

t$e or#ani%ation. dvanced process mana#ement practices take s$ape.

Ad Hoc

Defined

Managed

Leveraged

Optimized

Process

Ma

tur

ity

Processes are unstructured and illde"ined. Process measures are not in place and t$e -o!s and

or#ani%ational structures are !ased upon t$e traditional "unctions, not $ori%ontal processes.

*ndividual $eroics and /workin# around t$e system are w$at makes t$in#s $appen.

1asic processes are de"ined and documented. C$an#es to t$ese processes must now #o t$rou#$ a "ormal

procedure. Jo!s and or#ani%ational structures include a process aspect, !ut remain !asically traditional.

epresentatives "rom "unctions meet re#ularly to coordinate wit$ eac$ ot$er concernin# process activities,

!ut only as representatives o" t$eir traditional "unctions.

($e !reakt$rou#$ level. Mana#ers employ process mana#ement wit$ strate#ic intent. 1road

process -o!s and structures are put in place outside o" traditional "unctions. Cooperation !etween

intracompany "unctions, vendors and customers takes t$e "orm o" teams t$at s$are common

process measures and #oals.

Competition is !ased upon multi"irm networks. Colla!oration !etween le#al entities is routine to

t$e point w$ere advanced process practices t$at allow trans"er o" responsi!ility wit$out le#alowners$ip are in place. (rust and mutual dependency are t$e #lue $oldin# t$e e)tended

network to#et$er. $ori%ontal, customer"ocused, colla!orative culture is "irmly in place.

($e 3upply C$ain Maturity Model41est Processes, Practices, 5 +na!lers


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3CM Maturityelations$ips

SCMM

aturity

High

High

Low

Low

SCMMaturity

Accuracy/

Control

Stability

Predictability/

Certainty

Efficiency

Effectiveness

Capability

BusinessPerformance

EspritdCorps

SCMF

ocus

Internal - withinfunctions

Inter-functional

Inter- company


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Maturity

Capa!ility

Cons

istency

2ic$ness

Level 1

Level 2

Level 3

Level 4

Level 5

Optii!ed6 Capa!ility and Per"ormance

continuously improves in evel 8

r#ani%ations &90:;0'.

"eliable # $apable 1ased on


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Procure to PayAeneric Bi#$ evel Process Map

Forecast

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Coordinate

eed

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eceive

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3tart +nd

Pro-ects Maint perations

+na!lers4 Finance, e#al, B, *(


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Procure to Pay &P2P' Process Description4 Maturity &evel ' ()eneral*

&evel ': +d ,oc. ($e supply c$ain its practices are unstructured and ill

de"ined. Process measures are not in place. Jo!s and or#ani%ational

structures are not !ased upon $ori%ontal supply c$ain processes.Process per"ormance is unpredicta!le. (ar#ets, i" de"ined, are o"ten

missed. 3CM costs are $i#$. Customer satis"action is low. Functional

cooperation is also low.

Processes are unde"ined, undocumented and not understood.

Process owners are not identi"ied.

1asic process measures are unidenti"ied.

Process teams do not e)ist. *ndividuals reside totally wit$in "unctions.

ll investments are allocated !y "unctions or !usiness units.


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Procure to Pay &P2P' Process Description4 Maturity &evel ' (-etail*

P2P is a very manual, unpredicta!le, time consumin# process t$at is lar#ely

unde"ined.

o "orecastin# or plannin# takes place.

3peci"ications are done eac$ time in response to a re


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Procure to Pay &P2P' Process4 Maturity evel ; d Boc

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Procure to Pay &P2P' Process Description4 Maturity &evel ()eneral*

&evel : -efined. 1asic 3CM processes are de"ined and documented. Jo!s

and or#ani%ational !asically remain traditional. Process per"ormance is morepredicta!le. (ar#ets are de"ined !ut still missed more o"ten t$an not. vercomin#

t$e "unctional silos takes considera!le e""ort due to !oundary concerns

and competin# #oals. 3CM costs remain $i#$. Customer satis"action $as improved,

!ut is still low. (o move to t$e ne)t level t$e "ollowin# must !e in place4

Processes are de"ined, documented and understood.

Process owners are clearly identi"ied.

1asic process measures are identi"ied and in use.

Process teams are de"ined !ut still secondary to "unctions.

3ome investments are allocated !y process not "unctions or !usiness units.


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Procure to Pay &P2P' Process Description4 Maturity &evel (-etail*

P2P is de"ined wit$ some automation !ut still unpredicta!le wit$ G80H o" t$e

purc$ases in a time consumin# process t$at is lar#ely uncontrolled.

1asic "orecastin# and plannin# takes place !ut !y t$e P2P people wit$out customer

or supplier input. =0H accuracy is typical.

3peci"ications are mostly done eac$ time in response to a re


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Procure to Pay &P2P' Process4 Maturity evel 2 De"ined

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Procure to Pay &P2P' Process Description4 Maturity &evel / ()eneral*

&evel /: &in0ed (Managed* ($is represents t$e !reakt$rou#$ level. Mana#ers employ

3CM wit$ strate#ic intent and results. 1road 3CM -o!s and structures are put in place outside

and on top o" traditional "unctions. Cooperation !etween intracompany "unctions, vendors and

customers takes t$e "orm o" teams t$at s$are common 3CM measures and #oals t$at reac$$ori%ontally across t$e supply c$ain. Process per"ormance !ecomes more predicta!le and

tar#ets are o"ten ac$ieved. Continuous improvement e""orts take s$ape "ocused on root

cause elimination and per"ormance improvements. 3CM costs !e#in decreasin# and "eelin#s

o" esprit de corps take t$e place o" "rustration. Customers are included in process improvement

e""orts and customer satis"action !e#ins to s$ow marked improvement. (o move to t$e ne)t level

t$e "ollowin# must !e in place4

Process measure are clearly related to -o! responsi!ilities.

Process per"ormance #oals are de"ined and pro#ress is tracked.

Process per"ormance is predicta!le &varia!ility reduced'.

Process measures are clearly linked to strate#y

($e per"ormance mana#ement process is documented &written description, "low c$art' and

understood !y t$e or#ani%ation.

"ormal process per"ormance review process takes place on a re#ular !asis.

($e owner o" t$e per"ormance mana#ement process is clearly identi"ied.

Process teams are clearly identi"ied and are e


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Procure to Pay &P2P' Process Description4 Maturity &evel / (-etail*

P2P is de"ined, measured and mostly under control. Most &G>0H' process steps areautomated and predicta!le !ut t$e system is mec$anistic and sometimes una!le torespond to c$an#es and uni0H o" t$e materialsand services. 3trate#ic &consolidated' suppliers $andle most &>0H' o" t$e purc$ases.

Most suppliers are involved in t$e development o" speci"ications.

3ourcin# decisions are strate#ic and done in advance o" re


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Procure to Pay &P2P' Process Description4 Maturity &evel 1 ()eneral*

&evel 1: 2ntegrated (&everaged*. ($e company, its vendors and suppliers, take cooperation to

t$e process level. r#ani%ational structures and -o!s are !ased on 3CM procedures, and traditional

"unctions, as t$ey relate to t$e supply c$ain, !e#in to disappear alto#et$er. 3CM measures and

mana#ement systems are deeply im!edded in t$e or#ani%ation. dvanced 3CM practices, suc$

as colla!orative "orecastin# and plannin# wit$ customers and suppliers, take s$ape. Process

per"ormance !ecomes very predicta!le and tar#ets are relia!ly ac$ieved. Process improvement

#oals are set !y t$e teams and ac$ieved wit$ con"idence. 3CM costs are dramatically reduced

and customer satis"action and esprit de corps !ecome a competitive advanta#e. (o move to t$e

ne)t level t$e "ollowin# must !e in place4

3upplier per"ormance measures and #oals are clearly identi"ied and inte#rated into t$e

per"ormance measurement system.

cross "unctional and cross company per"ormance mana#ement team is identi"ied and operatin#.

esponsi!ility "or process measures and #oals are team !ased &includin# suppliers'

People in di""erent "unctions and companies cooperate to improve process per"ormance.

Customer driven per"ormance measures are identi"ied and dominate t$e per"ormancemana#ement system.

3uppliers routinely colla!orate wit$ t$e process teams to improve per"ormance.

Customers are asked to !e involved wit$ improvin# process per"ormance.

3uppliers re#ularly sel" report per"ormance.

Process #oals are routinely met or e)ceeded.

*( systems connect wit$ suppliers and customers systems "or data #at$erin# and reportin#.


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Procure to Pay &P2P' Process Description4 Maturity &evel 1 (-etail*

P2P responsi!ility and aut$orin# is s$i"ted "rom procurement to customers and suppliers. Most

purc$ase are totally automated and monitored t$rou#$ spot c$ecks and measurement systems.

Multiple c$annels can respond to uni


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Procure to Pay &P2P' Process4 Maturity evel = evera#ed

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Procure to Pay &P2P' Process Description4 Maturity &evel 3 ()eneral*

&evel 3: E4tended (optii!ed*. Competition is !ased upon multi"irm supply c$ains.

Colla!oration !etween le#al entities is routine to t$e point w$ere advanced 3CM

practices t$at allow trans"er o" responsi!ility wit$out le#al owners$ip are in place.Multi"irm 3CM teams wit$ common processes, #oals and !road aut$ority take s$ape.

(rust, mutual dependency and esprit de corps are t$e #lue $oldin# t$e e)tended supply

c$ain to#et$er. $ori%ontal, customer"ocused, colla!orative culture is "irmly in place.

Process per"ormance and relia!ility o" t$e e)tended system are measured and -oint

investments in improvin# t$e system are s$ared, as are t$e returns.

3uppliers are active and "ormal mem!ers o" t$e process teams.

3uppliers s$are responsi!ility "or per"ormance improvement.

3uppliers s$are in t$e rewards o" per"ormance improvements.

Customers s$are responsi!ility "or per"ormance improvement.

Customers s$are in t$e rewards o" per"ormance improvements.3uppliers and customer *( systems are deeply connected &two way interaction' wit$

your *( systems.

3uppliers, customers and t$e process team mem!ers "eel like t$ey are /all in t$is

to#et$er in re#ards to process per"ormance and improvement.

Process mana#ement and optimi%ation across t$e network is a ma-or "ocus.


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Procure to Pay &P2P' Process Description4 Maturity &evel 3 (-etail*

multicompany procurement mana#ement team is "ormed to mana#e t$e process.

99H o" purc$ases are totally automated and monitored t$rou#$ spot c$ecks and

measurement systems. Multiple c$annels automatically respond to uni


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Procure to Pay &P2P' Process4 Maturity evel 8 ptimi%ed

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