deloitte shared services, gbs & bpo...
TRANSCRIPT
14-15 September 2016
Lisbon, Portugal
#DeloitteSharedServices
Deloitte Shared Services, GBS & BPO Conference
Breakout 8: J&J Continuous improvement within P2P: How J&J used continuous improvement in the P2P process to improve effectiveness and grow the organisation
David Mansfield, Johnson & Johnson
Agenda
Introduction to Johnson & Johnson
Procure to Pay status in J&J
A P2P Powerhouse?
• P2P design objectives
• EMEA specific challenges
Automation of the core AP process
E-Invoicing
• Why? What? How? Status? Future?
Closing remarks
Our Company
Caring for the world, one person at a time ... inspires and unites the people of Johnson & Johnson.
We embrace research and science - bringing innovative ideas, products and services to advance the health and well-being of people.
Employees of the Johnson & Johnson Family of Companies work with partners in health care to touch the lives of over a billion people every day, throughout the world.
Our Family of Companies comprises:
The world’s premier consumer health company
The world’s largest and most diverse medical devices and diagnostics company
The world’s fourth-largest biologics company
And the world’s eighth-largest pharmaceuticals company
We have more than 250 operating companies in 60 countries employing approximately 129,000 people
Worldwide headquarters: New Brunswick, New Jersey, USA
Financial results – 2015
Sales: $70 bn (Medical Devices 36%, Pharm 44%, Consumer 20%)
Visit the company website: for further information www.jnj.com
Johnson & Johnson Background
EMEA Deployment of Standard P2P Platform
Note: North America P2P Invoices are processed by GFS EMEA AP Team
ORIGINAL SCOPE:
11 countries – 89 entities – 3 currencies - 7 languages
CURRENTLY LIVE:
35 countries – 147 MRCs – paid documents in 42 currencies to 138 countries
worldwide – provide service in 16 languages
Country Pharm Cons MD&D
Ori
gin
al Scope
Austria
Belgium
France
Germany
Ireland
Italy
Netherlands
Portugal
Spain
Switzerland
UK
Exte
nded S
cope
Nordics
Baltics
CZ, SK
Poland
Russia
UAE/ME
Saudi Arabia
Greece
Turkey
Hungary
Romania
Bulgaria
Slovenia
Croatia
Making P2P a Powerhouse
Not seeing it as “a transactional factory” but as a service adding value to the corporation
1. Bring value to EVERY party involved in P2P
2. Increase automation levels to drive further cost reduction
3. Drive further Cash Discounts benefits
4. Expand services to upstream process steps & services
Critical to Quality – Know what each party wants
Stakeholder Outcome KPI
Business SpeedSimplicityValue
On time deliveryEase of use / user satisfactionRight price
Supplier SpeedSimplicity
Paid On TimeEase of doing business with J&J / satisfaction
Procurement ComplianceValue generation
Compliance to contractsLeveraging Preferred SuppliersSavings
Finance Accurate Books Correct GL AccountCorrect VAT treatmentTimely receipting of goods/services
Shared Services •Service Delivery•Cost to Serve
Cycle times within SLAPaid On TimeProductivity increaseCost per transaction
Treasury •Cash Mgt …
Driving Automation: Make it Part of the Design
P2P Process Design Objectives for EMEA
Automated data input (scanning, e-invoicing)
Automated 3-way match (PO, GR, Invoice)
Automated workflow for exception handling
Supplier & employee self-service capabilities
Automated electronic payment processing
TOUCHLESSINVOICE
PROCESSING& PAYMENT
Core AP Process
Upload to SAPMatching Process/
Tolerances/Duplicate
Return Process/ Credit Note
Mismatch(blocked invoice)
Payment
Receiving
PO Change/ Cancel
Invoice Log (on AP Web Portals)
Or
Or
Or
Data Validation & Missing PO
Or
After the Fact/Non-
Compliant POs
Affiliate (Ariba/ Proc. systems)
JnJ GBS (SAP)
eInvoice
Paper invoice
Focus
Exception Multiple bank accounts
Exception PO Closed
Exception others
Exception Credit Notes
Validation of the Invoicex% of paper and y% of electronic pass
automatically
Matching Invoice to PO Linesa% of paper and b% of electronic pass automatically
Touchless processing = N%
e-Invoicing Approach
OB10 [now Tungsten] selected as key partner back in 2006
Current e-Invoicing Solutions offered:
1. Fully integrated solution [OB10]
Supplier provides invoice data and submits these as a file to OB10, who processes-signs-delivers to J&J
Preferred method for suppliers with HIGH volumes of invoices
2. J&J Supplier Portal
Supplier enters J&J PO number and this gets “converted / mirrored” into a draft invoice
Supplier completes missing data and submits invoice
Preferred method for suppliers with SMALL / MEDIUM invoice volumes
What have we achieved so far?
2008-2009: focus on high volume suppliers
• Using OB10’s fully integrated solution
2010-2011: focus on deployment of e-Invoicing
• Continue with high-volume suppliers
• Interoperability – where useful
• Rejecting paper invoices from suppliers live on e-Invoicing
2012-13: focus on J&J portal
• Free of charge solution reduces resistance from suppliers
• Dynamic Discounting Phase 1
2014:
• Enhance J&J portal: allow attachments, Invoice line description, PO Line split
2015-16 Focus Areas
• Enable Dynamic Discounting for countries where Credit Note is required
• Age invoices based on Date of Receipt where “e” is allowed
Many new affiliates joining the P2P platform
AP productivity Gains
From the 2006 go-live, the productivity increased by +270%:
- 40% due to people efficiency - 230% due to increased automation
Productivity increases beyond 2011 are due
- 90% to increasing automation [mostly driven by e-Invoicing]- 10% to people efficiency
Key Success Factors
Ensure regulatory compliance of your solution and deployment approach
Mandate where possible and desired
‒ Applied “negative confirmation”
‒ “Invited” critical suppliers to use e-Invoicing
Proper Change Management
‒ Properly inform all parties involved and provide guidance
Governance
‒ Accountability at right place
‒ Target setting create internal competition
Persistence – it’s a journey not a project
Increasing Cash Discounts
Cash Discounts upfront agreed in Payment Terms
• E-invoicing drove further automation, which resulted in more Cash Discounts taken
[+45% over 3 years]
Dynamic Discounting
• In house solution
• Very successful in US
• Modest uptake in EMEA
Initial offering limited to 7 countries – no campaign
Not a part of the business culture [yet]
• Complexity in EMEA where is most countries in this case a Credit Note is required to adjust the taxable basis and VAT
Payback of development cost <1 year
Expand the Service Portfolio Upstream
Tactical Buying
Analytics & Reporting
Tail Spend Management
Contracting Center of Excellence
Move into the Procurement space servicing the integrated end-to-end Source to Settle process
−R2P
−Sourcing
−Contracting
Making P2P a Powerhouse - Conclusions
Make P2P a service adding value to the corporation
1.Increase automation levels to drive further cost reduction
• Extend Automation routines hand-in-hand with e-Invoicing focus
2.Bring value to EVERY party involved in Req2Pay
• Understand their CTQs and deliver against them
• Invest in Self Service tools
3.Drive further Cash Discounts benefits
• Capture upfront agreed Cash Discounts in Payment Terms
• Additionally with Dynamic Discounting
4.Expand services to upstream process steps & services
• Integrated Source to Settle service
QUESTIONS
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