sam ahuja chief solutions architect optura sahuja@optura.net (480) 488-3040 x203 best practice...

Sam Ahuja

Chief Solutions Architect

OPTURA

sahuja@optura.net

(480) 488-3040 x203

Best Practice WorkflowBetween Procurement and A/P

Session Code: 4707

Chris Callahan, Procurement Sys Mgr

Tim Thomas, VP Purchasing

Jim Tunnell, CIO

PILGRIMS PRIDE

ccalahan@pilgrimspride.com

(972) 290-2651

Examples of Efficiency Gains from A/P Initiatives

ERS

EDI

P-Card Imaging

&

Workflow

Focus of This Presentation:

Best Practices in Imaging and

Workflow

• Best Practice Tenets:

• Centralizing Invoice Receipt

• Removing A/P from Manual Invoice Resolution / Follow-up

• Analyzing Process Data for Continuous Efficiency Gains

• Developing the Business Case for a Project

• Pilgrims Pride Case Study

Agenda

Centralizing Invoice Receipt

Vendor A Vendor B Vendor C

Requisitioner

Approvers

Project Manager

Receiver

Buyer

A/P

Vendor A Vendor B Vendor C

A/P

Workflow

Receiver Buyer

Approver

Vendors Send All Invoices Directly to A/P

Centralizing Invoice ReceiptCentralizing Invoice Receipt

PaperlessPaperless

ImagingImaging

FaxFax

OnlineOnline

Benefits

• Immediate visibility to total liabilities

• Improve internal efficiency

• Reduce duplicate payments by

• eliminating lost invoices

• eliminating receipt of same invoice multiple times

• automated duplicate checking

• Improve vendor service

• on-time payment

• quick status response

• Centralize control

Centralizing Invoice Receipt

Nearly 7% of large companies (5,000 employees) report

that more than 0.5% of invoices are paid twice.

Nearly 3% of firms with 500 – 5,000 employees “border on

the unacceptable” 0.5% of invoices paid twice.

Duplicate Payments

Source: IOMA’s A/P Department Benchmarks and Analysis 2003

Imaging

Automatic Duplicate

Check

AutomaticParking Approval

Workflow

“Intelligent”SAP Inbox

Pre-populatedSAP

Transaction

P.O. Box Setup

Doc. Prep.

Scan

In-house or Outsourced Scanning

Best Practice:

Early Imaging (“Early Archiving”)

SAP

OCR or Manual Indexing

Fax Invoice

“Intelligent” SAP Inbox

Step 4: Pre-populated Transaction

Transaction appears with indices pre-populated in red

Pre-populated SAP Transaction

• Best Practice Tenets:

• Centralizing Invoice Receipt

• Removing A/P from Manual Invoice Resolution / Follow-up

• Analyzing Process Data for Continuous Efficiency Gains

• Developing the Business Case for a Project

• Pilgrims Pride Case Study

Agenda

Removing A/P from ManualProblem Invoice Resolution / Follow-up

CreateSAP

Document(MIRO, FB60)

Imaging

Okay

Post

Invoice in SAP

Exception

Invoice Exception Invoice Exception WorkflowWorkflow

SUSPENDED

Invoice

PARKED

Invoice

BLOCKED

Invoice

Removing A/P from Manual Problem Invoice Resolution / Follow-up

Remove A/P from Manual Problem Invoice Resolution / Follow-upRemove A/P from Manual Problem Invoice Resolution / Follow-up

Identify All Exception ReasonsIdentify All Exception Reasons

Benefits

• Improve internal efficiency

• Focus A/P on more knowledge-based work such as analysis

• Capture early payment discounts

• Eliminate late payment charges

• Standardize business processes – build rules into the system

• e.g. let system verify signature authorities

• Negotiate better terms with vendors

Pre-define Process StepsPre-define Process Steps

Keep Workflow Inside SAPKeep Workflow Inside SAP

Automatically escalate inactionAutomatically escalate inaction

Moving from a low to a medium level of automation will cut

the cost to process a vendor payment by 30% - 60%.

Moving from a medium to a high level of automation will

cut this cost by another 20% - 35%. Also, it will enable an

A/P department to more than double the number of PO

invoice payments made per A/P staffer.

Increasing A/P Efficiency

Source: IOMA’s A/P Department Benchmarks and Analysis 2003

Removing A/P from ManualProblem Invoice Resolution / Follow-up

CreateSAP

Document(MIRO, FB60)

Imaging

Okay

Post

Invoice in SAP

Exception

Invoice Exception Invoice Exception WorkflowWorkflow

SUSPENDED

Invoice

PARKED

Invoice

BLOCKED

Invoice

Removing A/P from ManualProblem Invoice Resolution / Follow-up

Defined

BLOCKED Invoices

• Sufficient information IS available to post invoice

• Invoice is posted

• SAP Blocks invoice automatically based on pre-configured tolerance(‘R’ block)

Scenarios

• Price Variance

• Quantity Variance

• P.O. Exceeds

• Partial Receipt

• No G/R

• Date Variance

• Price-Quantity Variance

PO G/R Inv.

Q

P

4 42

$2,000 $2,000-

Blocked Invoice

Blocked Invoice Scenario

A/PExceptionHandler

Buyer

Receiver

A/P Processor

Example Blocked Invoice Process Flow

See the demonstration during the ASUG presentation, or

contact sahuja@optura.net to receive a copy of the files

containing the demonstration via e-mail. Thanks.

Best Practice Workflow Demonstration

1. No nuisance workflow is started if vendor sends invoice early

2. Dashboards allow for a quick, accurate decision

• Provide snapshot of problem

• SAP Documents + Invoice Image readily accessible

• Available options are based on the user’s role

• Actions are performed on behalf of user

• Comments can be entered

• History log of this workflow is accessible

3. Allow for ad-hoc capabilities within a structured process.

4. Background simulation of 3-way match

• Ensures corrective actions have taken place

Workflow Best Practices

5. Unit of work: Line item to header-level consolidation

• Header-level dashboard for A/P

6. Clean up inbox automatically

• Correcting PO, GR, or Invoice from outside workflow automatically clears inbox items

7. Controlled override of next “agent”

8. Parking Reasons: Flexible routing by parking reason

e.g. Non-PO Invoice Approvals

• Auto-park invoices for approval

• Auto-post in background or route to A/P for QA

• Auto detect posting period change

• Controlled routing of errors such as blocked vendor

Workflow Best Practices

Removing A/P from ManualProblem Invoice Resolution / Follow-up

CreateSAP

Document(MIRO, FB60)

Imaging

Okay

Post

Invoice in SAP

Exception

Invoice Exception Invoice Exception WorkflowWorkflow

SUSPENDED

Invoice

PARKED

Invoice

BLOCKED

Invoice

Removing A/P from ManualProblem Invoice Resolution / Follow-up

Defined

PARKED InvoicesScenarios

• Sufficient information is NOT available to post invoice

• Invoice is manually or automatically Parked

• “Parking Reason” is selected

• Non-PO Invoice Approval Required

• Service Approval Required

• Unable to Match PO Lines

• PO is Closed or Not Released

• Freight Charge Analysis

• Special Tax Treatment (Wrong tax code from PO)

• Unit of Measure mismatch

• Invoice and P.O. currency are different

• Invoice and P.O. vendor name or # are different

• Vendor Master Maintenance

• Request more information from Vendor

Parked Invoice

Parked Invoice Scenario“Unable to Match PO Lines”

Example:

PO contains only one line-item for $2000

Invoice arrives with one line-item for $2000,

but also a second line item for $1500.

Example Parked Invoice Process Flow

A/PExceptionHandler

External Vendor

Buyer

A/P Processor

See the demonstration during the ASUG presentation, or

contact sahuja@optura.net to receive a copy of the files

containing the demonstration via e-mail. Thanks.

Best Practice Workflow Demonstration

1. Keep the A/P Processors’ Inbox clean – touch each invoice only once

2. Parking Reasons: Flexible routing by parking reason

3. e.g. Non-PO Invoice Approvals

• Have vendor specify routing info

• Auto-park invoices for approval

• Allow for separate coding (account assignment) step

• Allow for ad-hoc approval routing

• Allow for parallel approvals by multiple cost centers

• Auto-post in background or route to A/P for QA

• Auto detect posting period change

• Controlled routing of errors such as blocked vendor

Workflow Best Practices

Removing A/P from ManualProblem Invoice Resolution / Follow-up

CreateSAP

Document(MIRO, FB60)

Imaging

Okay

Post

Invoice in SAP

Exception

Invoice Exception Invoice Exception WorkflowWorkflow

SUSPENDED

Invoice

PARKED

Invoice

BLOCKED

Invoice

Removing A/P from ManualProblem Invoice Resolution / Follow-up

Defined

SUSPENDED InvoicesScenarios

• Unable to even park an invoice

• No SAP document is created

• “Suspension Reason” is selected

• Image is routed for resolution

• New Vendor Master Required

• Service Entry Required

• Rescan Required

• Contact Vendor

• Unable to Match PO Lines

• Currency Mismatch

• Special Tax Treatment Required

• Freight Mismatch

• Unit of Measure mismatch

• Vendor Master Maintenance Required

See the demonstration during the ASUG presentation, or

contact sahuja@optura.net to receive a copy of the files

containing the demonstration via e-mail. Thanks.

Best Practice Workflow Demonstration

• Best Practices:

• Centralizing Invoice Receipt

• Removing A/P from Manual Invoice Resolution / Follow-up

• Analyzing Process Data for Continuous Efficiency Gains

• Developing the Business Case for a Project

• Pilgrims Pride Case Study

Agenda

Analyzing Process Data for Continuous Efficiency Gains

Analyze Process Data for Continuous Efficiency Gains Analyze Process Data for Continuous Efficiency Gains

Eliminate BottlenecksEliminate Bottlenecks

Benefits

• Identify common exception reasons, and problem vendors

• Analyze process cycle time to identify process bottlenecks. Which regions / roles / individuals take the longest time to process?

• Share metrics with internal stakeholders and perform root cause analysis

• Analyze trends over time – problem occurrences and the $ value of those occurrences.

Use Online Audit TrailUse Online Audit Trail

Use actual workflow data from SAP

Use actual workflow data from SAP

See the demonstration during the ASUG presentation, or

contact sahuja@optura.net to receive a copy of the files

containing the demonstration via e-mail. Thanks.

Best Practice Workflow Reporting Demonstration

• Best Practices:

• Centralizing Invoice Receipt

• Removing A/P from Manual Invoice Resolution / Follow-up

• Analyzing Process Data for Continuous Efficiency Gains

• Developing the Business Case for a Project

• Pilgrims Pride Case Study

Agenda

Developing the Business Case for a Project

Hard Savings

1. Reduce/redeploy A/P resources

2. Reduce duplicate payment

3. Reduce Late payments

4. Capture more early payment discounts

Soft Savings

1. Improved productivity for Buyers, Requisitioners, Receivers…

2. Visibility to total liabilities

3. Improved customer service

4. A/P focuses on more knowledge work rather than chasing problems

5. Online audit-trail

6. Eliminate papere-mail sahuja@optura.net

for ROI spreadsheet

• Best Practices:

• Centralizing Invoice Receipt

• Removing A/P from Manual Invoice Resolution / Follow-up

• Analyzing Process Data for Continuous Efficiency Gains

• Developing the Business Case for a Project

• Pilgrims Pride Case Study

Agenda

PILGRIMS PRIDE Case Study

Click on the presentation above

Sam Ahuja

Chief Solutions Architect

OPTURA

sahuja@optura.net

(480) 488-3040 x203

Best Practice WorkflowBetween Procurement and A/P

Session Code: 4707

Chris Callahan, Procurement Sys Mgr

Tim Thomas, VP Purchasing

Jim Tunnell, CIO

PILGRIMS PRIDE

ccalahan@pilgrimspride.com

(972) 290-2651