tradeshift, hackett group & sharedserviceslink - p2p webinar
TRANSCRIPT
Presenting your speakers
Susie WestFounder and CEO
sharedserviceslink
Chris Jablonski
Director of Content & Communications
Tradeshift
Amy FongPurchase-To-Pay Program
Leader and Senior Procurement AdvisorThe Hackett Group
Questions
•Send me your question early
•Use this opportunity to get the answers/info you seek
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•Remember to stay on for Q&A in the last 10 minutes of the show
Agenda
•Context•Introduction to Tradeshift and The Hackett Group•Best practices and metrics for next generation P2P•Questions
Context
• The value of a high performing P2P department
• Lower barriers to entry are changing the use of P2P technology
• Understanding what top performance looks like
Poll question
• Do you invoice electronically?
- Yes we have e-invoicing and are happy with our program
- We have e-invoicing but are looking to improve or expand
- We are looking to roll out e-invoicing in the next 18 months
- We use scanning / OCR and email PDFs, but not e-invoicing
- We are highly manual
All Your Suppliers. All in One Place.Streamline your supplier interactions with a platform built for business-to-business collaboration.
Tradeshift is a supplier collaboration platform that connects buyers, suppliers, and all their processes in one global network.
We help businesses transform the way they work with suppliers today – and adapt to whatever the future brings.
All Your SuppliersOnboard fast & collaborate in
real time with your entire network.
Powerful PlatformRespond to your growing
business needs with apps on our flexible, open platform.
Direct + IndirectManage more of your spend
(including services) than ever before.
May 19th, 2015
Amy FongP2P Program Leader
Best practices and metrics for next generation P2P
Sponsored By
11© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Agenda
Hackett Group Introduction
Top Performance Defined
Key Capability Enablers
Summary
12© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The Hackett Group – IntroductionLifecycle support bringing intellectual capital and seasoned practitioners to yield sustainable benefits We are the global leader in operations
improvement strategies, implementation know-how, and G&A agility
We address both efficiency and effectiveness improvements to enable strategic business objectives
Our insights are fact based, from over 7,500 performance improvement consulting engagements
Our Best Practices Intelligence Center™ is a significant differentiator and enabler. It contains:– 20,000+ performance metrics updated annually– 1,500+ best practices across 95 business processes– 1,000+ best practice-based process maps,
requirements and configuration guides– 1,000+ case studies, implementation examples and
research
We deliver results through a global team of senior practitioners using a consistent methodology and best practice-based toolset
Hackett Value Grid™
We help companies establish and implement
business performance improvements.
13© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Enabling World-Class: Hackett’s Solution PortfolioBenchmarking, Advisory, Business Transformation
Membership AdvisoryInsight into World-Class Performance
BenchmarkingAssess World-Class Performance
Business Transformation ConsultingTransforms Performance
Deliverables Peer & world-class comparison
performance metrics Detailed analysis Stakeholder survey Executive presentation
Benefits Objective comparison to peer
group and world-class performers Quantify performance gaps Uncover hidden costs Prioritization of improvement
initiatives
Deliverables Strategic direction Detailed business case Initiative plans & detailed
designs Implementation of best practices
Benefits Reduced cost Working capital optimization Enhanced service delivery Business insight Sustainable benefits Speed of solution delivery Merger integration Risk mitigation
Deliverables Best practice research Advisor access Best Practice Intelligence Center Peer interaction World-Class Progress Report
Benefits Identify the strategies and
practices employed by Leaders Validation of current initiatives Determining what’s possible
(World-Class Performance Metrics)
Process implementation support Continuous best practice
adoption
14© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Agenda
Hackett Group Introduction
Top Performance Defined
Key Capability Enablers
Summary
15© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
The Purchase to Pay Process is often under appreciated as a source of business value by both Finance and Procurement
Hackett Purchase to Pay Value Grid™Example of Effectiveness Drivers First Pass Match Rate On Time Payment Rate Level of Spend Visibility Streamlined Transaction
Strategy Level of Centralization Training Investment Compliance to Preferred
Suppliers Guided Buying Effectiveness Supply Base Consolidation
Example of Efficiency Drivers Cost per Transaction Transactions per FTE Span of Control Order Cycle Time Invoice Processing Cycle
Time Percent of Electronic
Transactions Level of Automation
SupplierMaster Mgmt
Verificationand Approval
InvoicePre-Processing
InvoiceProcessing
Discrepancy Resolution
SupplierPayment
Customer Inquiry and Response
File, Store, & Retrieve
Reconciliation, Accrual and Compliance
Purchasing OperationsAccounts Payable
End-to-End Purchase to Pay Process
Requisition & PO Processing
Supplier Scheduling
ReceiptProcessing
Item Master/ Content Mgmt Catalog Mgmt Contract
Master Mgmt
Pcard Management
16© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
AP Top Performers have 62% lower costs per invoice, and are significantly more productive in processing invoices
$3.85
$1.46
$1.20
$0.35
$0.49
$0.24
Total Cost ($) per Invoice
OtherTechnologyProcess Costs*
$ 5.54
$ 2.06
Peer Top Performer
*Process Costs include Labor and Outsourcing Costs
Cycle time for PO Invoices(from receipt to approval)
7
5
Peer Top Performer
*Cycle time for Non-PO invoices is 10 days for Peers and 7 days for Top Performers
Source: Hackett P2P Study
17© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Invoice pre-processing
Verification and approval
Invoice processing
Discrepancy resolution
Supplier payment
File, store & retrieve
Customerinquiry &response
Automaticallysort paperdocuments,eliminatingthe need forbatchingof invoices
AutomateApproval steps and accountingcode verification
Auto-matchingof PO-basedinvoices and“touch-less”processing ofnon-PO invoices
Increase first-pass match rates; reduce need fordiscrepancyresolution viaInvoice validationagainst PO and MDM system
Greater visibility intoinvoice statushelps prioritizepayments tocapitalize onearly payment discounts
Reducephysicalshipping andstorage costswith digitalInvoicing
Self-serviceallowssuppliers andinternal partiesto look upstatus quickly
Source: The Hackett Group
Technology is a key differentiator: AP automation opportunities
Characteristics of a highly automated AP organization include Receive at least 60% of invoice line items electronically. Invoice approval is tracked through an automated system with automatic follow-up on
outstanding verifications and approvals. Exceptions that occur between invoices, purchase orders and receiving information are reconciled within the tool.
Documents imaged through optical character recognition (OCR) are imported to enable online approval/verification through workflow management, not just imaged later in the process for retention and storage purposes.
Employee and supplier inquiries are responded to primarily via an automated self-service solution.
AP managers access business intelligence and analytics tools to view metrics on invoice capture and AP automation in near real-time.
18© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Technology Drives Efficiency: Among organizations with the highest level of AP technology implementation, transaction costs are lower and cycle times are faster
AP Automation Users Non-Automated AP Organizations
$4.95
$8.12
Cost per Invoice by Level of AP Automation
PO InvoicesNon-PO Invoices
9.9 11.2
12.5 13.3
Invoice Cycle Time from Invoice Receipt Through Approval for Payment
(Average Business Days)
AP Automation UsersNon-Automated AP Organizations
- 40%
Source: Hackett P2P Study
19© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Value drivers for Purchase-to-Pay
Drive greater adoption to preferred supplier contracts Reduce supplier non-compliance process errors Improve focus on demand management Improve strategic sourcing effectiveness through greater spend visibility Support working capital objectives through DPO optimization Achieve greater early payment discounts Drive greater rebates from purchasing card usage Improve P2P process efficiency
20© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Which capabilities
differentiate Top Performers?
Guiding Requisitioners Process Automation Spend Visibility Supplier Information
Management
Guiding
Requisitioners
22© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Buy-channel design emphasizes guiding the requisitioner to use the correct channel upfront
P2P key process steps
Guided buying
Buying approach Buying channels
Requisitioning & PO requirements drive
buy-channel selection
Requisition Ordercreation
Transmitorder Receive Invoice Pay
Requisition approval
Trusted source review
Invoice approvals
Self-managed buyingP-card E-shopping cart
Manual request Pull from supply
Procurement-assisted buying Tactical Strategic
Requests for goods or services managed by requisitioner through predefined set of buying channels
Procurement intervenes based on buying rules or requisitioner’s need for assistance
23© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
High adaptors of order automation drive greater activity through electronic catalogues and achieve lower processing costs as a result
Automated Orders: Orders that require no (or minimal) intervention from a buyer (e.g. system generated, e-catalog)
Process Cost = Requisitioning & PO Processing (Labor + Outsourcing)
Source: Hackett P2P Study
24© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Leveraging order automation also drives higher levels of spend visibility, first-pass yield, and contract compliance
57%
Automated Orders: Orders that require no (or minimal) intervention from a buyer (e.g. system generated, e-catalog)
Source: Hackett P2P Study and 2014 Procurement Benchmark
25© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Increased catalog use depends heavily on interface
Develop Easy to Use Interface– Use friendly means easy to create and submit requisitions in just a few clicks
Self-guiding search offers targeted results for self-service users– Advanced search for attribute specific criteria– Control catalogue access to users based on needs and usage
Enable productivity enhancement tools to minimize data entry– Shopping lists (Favorite and Public)– Saved shopping carts
Vendor-agnostic search– Free text searches that cross multiple vendor catalogs are easiest for users
26© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Top Performers establish a Source to Settle Channel Strategy then take action to guide requisitioners to preferred suppliers
Non Top performer
Top Performer
28% 8% 56%
67%
8%
33%
No standard buy/pay channels established Not Effective Mostly Effective with gaps Very Effective
How effective are you at driving requisitioners to preferred buy/pay channels with the right supplier/right price/right buy method?
Source: Hackett P2P Study
27© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Four required capabilities for enabling guided buying
Source: The Hackett Group
1. Enable self-service buying Predefined channels that put buying in the hands of the requisitioner Comprehensive company “marketplace” to guide the buying experience Procurement-enabled buying capabilities
2. Deploy easy-to-use tools Single point of entry to initiate self-managed requisitioning Standard, common “shopping cart” experience that streamlines and automates buying Decision support tools that guide buying requirements by spend type
3. Build a base of approved, trusted suppliers Predefined trusted suppliers for recurring purchases of goods and services Automated selection of the right supplier Compliant buying enabled and negotiated savings realized
4. Provide professional buyer help when needed Easy link to professional buyer via company buying desk Automated assistance based on system-managed buying rules Automated compliance triggers to help buyer make the correct choice
Invoice Automation
29© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Poll: What are your primary methods of receiving invoices from suppliers? (select all used regularly)
Paper Fax Email (ex. PDF attachment) EDI (Electronic Data Interchange) through a VAN (Value Added
Network) Direct connect through internet: Supplier upload to a company portal Third party network through internet (EIPP)
30© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Invoice Automation
Advanced Invoice Processing
Electronic Invoicing
Supplier Portal
Third-Party Network
EDI (via VAN)
File Upload / Self Entry
PO Flip
Invoice Capture
Scan-based
Fax-based
Email-based
Invoice Elimination
Evaluated Receipt Settlement (ERS)
Purchasing Card(P-card)
"Invoice automation" can refer to any solution that is designed to mitigate the inefficiency of traditional paper invoice processing.
Invoice is received in an electronic format from the supplier enabling automated data entry
Invoice is not received from the supplier
Invoice is received in a non-electronic
format and/or requires manual intervention
for data entry
In practice, nearly 60% of all invoice line-items are still received on paper
The latest generation of imaging technology is sometimes referred to as intelligent data capture (IDC), advanced recognition (AR) or intelligent document recognition (IDR) in Hackett research and elsewhere.
Invoice capture includes imaging of a physical document (transmitted via mail, fax, email), enhanced recognition of the image, extraction and validation of digital information, and workflow connectivity with downstream systems
31© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Direct connect through Internet (supplier portal solution)
Email-based solution
Value Added Network through non-Internet (EDI through VAN)
Third-Party Network through Internet (EIPP)
Fax-based solution
Primarily paper based - No electronic strategy exists
27%
50%
44%
33%
23%
25%
70%
60%
60%
40%
30%
20%
Top Performer Peer
EDI is no longer the dominant connectivity strategy, Top Performers are leading the transition to web-based solutions
Primary Vendor Connectivity Strategies(Percent of all Participants)
Source: Hackett P2P Study
?
32© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Organizations benefit significantly from e-Invoicing - in efficiency and effectiveness
Invoice per Accounts Payable FTE
1 Based on organizations with high percentage of transactions through dominate strategy
E-invoicing Invoice Capture and Imaging & Workflow
Paper
20,314
9,484
7,459
Difficulty of Enablement
Source: Hackett P2P Study
33© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Top Performers leverage electronic transactions for invoicing and payment far more than Peers
Percent of Electronic Invoices and Invoice-less Transactions*
25%
64%
Peer Top Performer
*Invoiceless transactions includes Evaluated Receipt SettlementSource: Hackett P2P Study
Spend Visibility
35© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Poll: For what percent of spend do you have complete visibility to supplier, spend category and line item level detail
0-20% 21-40% 41-60% 61-80% 81-100%
36© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Top Performers have higher levels of visibility to spend at the line item level, a key contributing factor to spend management effectiveness
Percent of Spend Visibility with Supplier, Category and Line Item Level
54%
64%
Peer Top Performer
37© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Fully automating spend analysis has major benefits
Today, only 19% of companies describe their spend analysis process as fully automated.
33% report having a completely manual spend analysis process.
Companies who have highly (versus partially) automated spend analysis solutions experience: • 258% greater improvements in the time it takes to complete analysis.• 155% greater increase in the amount of spend being analyzed• 109% greater improvement in spend reporting accuracy.
Spend analysis is the process of aggregating, cleansing, and analyzing corporate spending data for the purposes of reducing costs and improving operational performance.
Spend analysis can be an important competitive advantage for companies that use it, especially in highly competitive industries. It enables companies to out-think and out-execute their competitors by helping them lower costs and leverage supplier relationships.
Spend analysis (and the visibility it enables) provides the necessary foundation for procurement organizations to make better, more informed sourcing decisions.
Definition
38© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Requisition1
Order2
Receive3
Complete purchase order form (either paper or electronic) based on approved Requisition
Route PO to appropriate management authority for approval (Requestor should be different from individual ordering)
Route order to supplier (either electronically via EDI or via fax)
Confirm receipt of PO with supplier
Process received goods or acknowledge completion of services
Communicate receipt of goods or services to AP for processing
Complete requisition form (either paper or electronic)
Route requisition form to appropriate management level for approval
Route requisition to Procurement for processing
Pay
4
Receive invoice from supplier
Check invoice for accuracy
Perform match (either two-way or three-way)
Take discount Send payment to
suppliers either electronically or via paper check
Manage
5
Conduct spend analysis to check contract compliance and continuous sourcing
Review supplier performance
Manage discounts and rebates
Assess overall contract compliance
Spend Visibility Benefits to the Procure to Pay Process
Effective spend analysis creates improvements at almost every stage of the procure-to-pay process:
Introduction
Results in list of approved vendors which streamlines requisition process
Identify and reduce non-compliant or “maverick” spend
Reduces financial savings leakage by driving compliance to negotiated contracts
Increased visibility into enterprise-wide spend and improvements in reporting capabilities
Visibility into spend enables the management of expenditures and ongoing spend efficiencies
Benefits of spend analysis
39© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Benefits achieved through automated spend visibility are significant
Benefit Type Actually Achieved
Reduced the amount of time required to complete spend analysis by: 33.33%
Increased the % of total spend being analyzed and reported on by: 33.67%
Increased the accuracy of spend reporting by: 38.33%
Identified and reduced non-compliant or “maverick” spend by: 18.17%
Identified cost savings opportunities leading to additional strategic sourcing savings of (on average): 15.17%
Identified opportunities and was able to consolidate the supply base by: 8.00%
Source: The Hackett Group’s Spend Analysis Poll, February 2015
40© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Outsourcing spend analysis also drives greater benefits
40
% reduction in the time required to complete analysis
% increase in the total spend being analyzed % increase in spend reporting accuracy0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
35%31%
36%
44% 43% 44%
88%
53%
73%
The Benefits of Implementing a Spend Analysis Tool
Only internal staff are used Partially outsourced Completely outsourced
Key takeaways
Companies who completely outsource data collection (versus use internal staff) experience:• 151% greater improvements in the
time it takes to complete analysis.• 71% greater increase in the
amount of spend being analyzed• 103% greater improvement in
spend reporting accuracy.
Source: The Hackett Group’s Spend Analysis Poll, February 2015
Supplier Information Management
42© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Poll: Which of the following supplier facing activities does your current technology infrastructure support?
Setup of supplier payment data Setup of supplier terms and conditions Supplier financial screenings Tracking of supply chain locations Automated checks against third party databases (ex. FCPA, OFAC) Pre-qualification of new suppliers Performance management Risk management
43© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Supplier master data is directly tied to sourcing and supplier management; procurement must be involved to establish data structure
Sourcing & Supply Base Analysis
Invoice & Payment
ProcessingPO and Requisition Processing
Supplier Scheduling
Supply Data Management
Receipt Processing Accounts Payable
Sourcing Execution Supplier Management & Development
Customer / Demand Management(e.g., NPDI)
ProcurementFunction
Management
Compliance & Risk Mgmt
P2P(Purchase-to-Pay)
Pay (Finance)Purchase
Source Manage
Plan, Support, Transform
Protect
Discovery
Spend / Performance
Evaluation
Onb
oard
ing
Self-service
Qualification
VM
F S
etup
Certify / AuditSimplify
Source: The Hackett Group Procurement Process Taxonomy
44© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Leaders are Evolving their SIM Capabilities
Vendor Master File
Focused primarily on ERP/e-Procurement fields needed to place POs, pay invoices, and analyze spend
Supplier Information Management (SIM)
Organizing and managing all key supplier information more efficiently and effectively.
Supplier Lifecycle Management (SIM
2.0)
Tying information into knowledge, intelligence, and analytics
AP and Purchasing Ops biased
Data governance (who can do what to which fields)
Data integration (e.g., across multiple VMFs)
Data quality for spend analysis
“Virtual Supplier Master” Starts earlier in lifecycle
(e.g., pre-registration via supplier portal)
Focus on hosted supplier self-service
Inclusion of document-based and/or external content
SIM application vendors: “SIM Platform”
Increasing level of bi-directional MDM integration
Workflows driven by custom supplier attributes and other rules (process, regulatory) to support: Supplier Performance
Measurement Regulatory Compliance Supply Risk Management
Intelligence from “Supplier Network”
Integrating supplier data to analytics (e.g., supply base segmentation analysis)
45© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Supply Information Mgmt is foundational to Supply Analytics & Intelligence, a core Procurement capability
46© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Agenda
Hackett Group Introduction
Top Performance Defined
Key Capability Enablers
Summary
47© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Summary of Leading P2P Capabilities
Master Data Management
P2P process captures a level of spend visibility useful for spend analytics and compliance Supplier validation and onboarding process is formalized and standardized Formal supplier master file maintenance program with well defined accountability One time suppliers are set up using one-time vendor functionality within the ERP
Governance and Talent Single End-to-end P2P process accountability at an enterprise level Skill levels of resources are consistently high Resources and budget more focused on planning and strategy than transaction processing
Service Delivery Strategy Activity is centralized across the enterprise Appropriate use of Center of Excellence and Shared Service models Processes have been segmented, transformed, and appropriately outsourced and offshored
Enabling Technology Easy to use, cross searchable catalogs for goods and services Automated invoice routing and approval workflow Self-service solutions for supplier data updates, inquiries, and dynamic discounting Imaging technology for storage and retrieval of invoices and related documents
Process Design Invoice receipt is centralized Optimized supplier payment strategy Refined P2P Chanel Strategy supported by clear requisitioner guidance Channel strategy leverages 2 way match where feasible Utilize automated solutions to settle payments with third party suppliers.
48© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
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Contact information
Amy M. Fong
P2P Advisory Program Leader
+408 887 7335| m
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