Implementing a Purchase to Pay System, Part Two
By Daniel Ball, Wax Digital
Automating the transaction process electronically with suppliers can take different forms, but web portals are becoming increasingly commonplace due to their sophistication in communicating and trading with the long tail of suppliers. Making a supplier portal the hub for all your interactions with the supplier community creates a process where previously there may not have been one, and underpins the fundamental message of process change to suppliers.
Mandating suppliers to use the web interface encourages self service and creates first-hand familiarity with your procurement processes, accelerating adoption. However, not all supplier portals are the same and three core principles should be sought. These are ‘Ease of use’, critically linked to successful adoption, ‘Awareness’ whereby the portal provider helps to sell to suppliers to secure their buy-in, and ‘Assistance’ whether in the form of helpdesks or online guides to ensure users are supported through every step.
Awareness raising is likely to be most demanding aspect of your supplier adoption in time and effort and should not be overlooked in your plans.
Demonstrating the advantages to the supplier of increased transparency and visibility of demand, performance and transaction status amongst a long list of other benefits is critical to ensuring smooth onboarding and minimizing resistance.
If you have chosen to apply charging structures and policies, explaining them must be done clearly and carefully. If there is no onboarding charge for suppliers, this is a key differential that should be shouted about.
Should you lack the resource and time internally to commit to a comprehensive onboarding exercise, seek to negotiate the support of your P2P supplier in undertaking some of this activity on your behalf.
3. Exception Handling
It’s important to stay realistic and understand that whatever shape your P2P implementation and supplier adoption takes, some suppliers cannot, or will not, comply. This will include tier 1 suppliers dictating their own approach, but more relevant are the large volume of smaller suppliers which lack the technical capabilities to comply or simply cannot be influenced to trade electronically. There must be a clear process for dealing with these situations as well as the ability to police simple non-compliance from registered suppliers within the P2P solution itself.
Despite knowing that supplier engagement is a critical success factor of a procurement change process it’s easy to become too single minded about the needs of internal buyers. Placing too little emphasis on suppliers will significantly reduce the eventual financial returns that a new P2P system can deliver. Change works best when all stakeholders are encouraged in every way possible before, during and after the change process which means ensuring your suppliers don’t get left out in the cold.
EU and US agree end to Airbus-Boeing supply chain tariffs
The EU and US have agreed to resolve a 17-year dispute over aircraft subsidies, suspending tariffs on billions of dollars' worth of goods that have plagued procurement leaders on both sides of the Atlantic.
Under an agreement reached by European Commission Executive Vice-President Valdis Dombrovskis and US Trade Representative Katherine Tai on Tuesday, the tariffs will be halted for a period of at least five years.
It will bring an end to punitive and disruptive levies on supply chains that have little to do with the argument, which became embroiled in the trade battle. Businesses on both sides of the dispute have been hit with more than $3.3bn in duties since they were first imposed by the US in October 2019, according the EC.
The US imposed charges on goods upto $7.5bn in response to a World Trade Organisation ruling that judged the EU’s support of Airbus, its biggest aircraft manufacturer, unlawful. A year later in November 2020, the EU hit back. The WTO found the US had violated trade rules in its favourable treatment of Boeing, and was hit with EU duties worth $4bn.
In all the tariffs affected $11.5bn worth of goods, including French cheese, Scotch whisky, aircraft and machinery in Europe, and sugarcane products, handbags and tobacco in America. Procurement leaders on both sides of the fence were forced to wrestle with tariffs of 15% on aircraft and components, and 25% on non-aircraft related products.
Boeing-Airbus dispute by the numbers
- The dispute began in 2004
- Tariffs suspended for 5 years
- $11.5bn worth of goods affected by tariffs
- $3.3bn in duties paid by businesses to date
- 15% levy on aircraft and 25% on non-aircraft goods suspended
Both sides welcome end to tariffs
European Commission President Ursula von der Leyen branded the truce a “major step” in ending what is the longest running dispute in WTO history. It began in 2004.
“I am happy to see that after intensive work between the European Commission and the US administration, our transatlantic partnership is on its way to reaching cruising speed. This shows the new spirit of cooperation between the EU and the US and that we can solve the other issues to our mutual benefit,” she added.
Both aircraft manufacturers have welcomed the news. Airbus said in a statement that it will hopefully bring to an end the “lose-lose tariffs” that are affecting industries already facing “many challenges”. Boeing added that it will “fully support the U.S. Government’s efforts to ensure that the principles in this understanding are respected”.
The US aerospace firm added: "The understanding reached today commits the EU to addressing launch aid, and leaves in place the necessary rules to ensure that the EU and United States live up to that commitment, without requiring further WTO action."
This week’s decision expands upon a short-term tariff truce announced in March this year. The EC says it will work closely with the US to try and further resolve the dispute, establishing a Working Group on Large Civil Aircraft led by each side’s trade minister.
Airbus last month signalled to suppliers that post-pandemic recovery was on the horizon, telling them to scale up to meet a return to pre-COVID manufacturing levels. “The aviation sector is beginning to recover from the COVID-19 crisis,” said Airbus chief executive Guillaume Faury, adding that suppliers should prepare for a period of intensive production “when market conditions call for it.”