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Developing a successful roadmap towards achieving 100% AP invoice automation
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Transcript of Developing a successful roadmap towards achieving 100% AP invoice automation
Developing a successful Roadmap towards achieving
100% AP Automation
9th Annual Accounts Payable and Purchasing Process Summit
Singapore 2012
Purpose of this session
• Introduction to Kellogg and our European Finance Shared Service Centre
• Our roadmap towards achieving 100% AP invoice automation
• Key factors for successful implementation
• Accuracy, transparency and error reduction
• KPI’s of a fully automated AP function
Kellogg Company Overview• Global Company - Founded 1906
• Head Quarters is in Battle Creek, Chicago, USA
• UK HO is in Manchester and the European HO is in Dublin
• World's largest manufacturer of Ready to eat Cereals - Turnover $12 billion . PRINGLES!
• Employs 36,000 people worldwide
• 40 cereal brands, 160 countries, 19 manufacturing plants, operating on 6 continents
North AmericaFSC and COE
Mexico FSC
ManchesterFSC
Dublin COE
Finance within Kellogg’s Worldwide
3 Finance Shared Service Centres:• Manchester, UK – 120 finance employees• Battle Creek, USA – 150 finance employees• Queretaro, Mexico – 130 finance employees
2 Centres of Excellence:• Dublin, Ireland – 50 finance employees• Battle Creek, USA – 30 finance employees
Asia Pac:• Kuala Lumpur – 12 finance employees• Sydney – 30 finance employees
KL Finance Hub
Sydney Finance Hub
Russia
UKIreland
France
Benelux
Nordics
Spain
Italy
MED/ME
Germany
Greece
We deal with approx 20 EMEA markets, all with varying degrees of statutory complexity and fiscal requirements when considering e-billing arrangements
Including:• UK• Ireland• Denmark• Finland• Norway• Sweden• Russia• Germany• Austria• Switzerland• Belgium• France• Spain• Portugal• Greece• MED/ME• Italy• Poland
Split of Finance responsibilities - Europe
EFSC
• The Financial control centre for Europe handling all European Financial transactional activities
COE (MFG/MFP)
• Delivering reporting and data management; analysis and first line query resolution; this team bridges the gap between transactional process work and highly commercial business partnering
Local market
• Focused on highly commercial activity and tasks which require specific local knowledge
Manufacturing Plants
• Plant Controllers support the operational activity and budgeting of 5 European Plants. Giving value adding advice, supporting plant operations
Introducing the European Finance Shared Service Centre
Accounts Payable Accounts Receivable Costing
General Ledger Fixed Assets VAT
Intercompany
Control
Payroll Cash Statutory Reporting KLean
2006 - Time for Change
Our Approach to e-Invoicing roll out:
• Financial Business Case, improved control, reduction in error rates, cost benefit
• Engage Key Stakeholders for a successful implementation - Stakeholders included European VP of Finance, European Chief Procurement Officer & European Leadership Team
• Established dedicated Project Team - Procurement & Finance Alliance – focused on
value stream not functional silo’s
• Mapped Current PTP Process
• Standardise and simplified - Enforcement of 3 way match process
• Vendor Rationalisation - Vendor database cleansed - reduced suppliers by over 50%
• Identified Modes of Delivery
• Partner Selection
• Adherence to Fiscal requirements
• Pan – European solution
• Flexibility and scalability
The exchange of electronic data between 2 parties using globally recognised format1
2Dedicated e- Invoicing network used to pass invoice data. This solution is simple, secure and certified.
3Kelloggs creates a suppliers payment based on the goods receipting. Paper invoices eliminated
PCard – Procurement card used for low volume suppliers; full spend visibility, comparatively low purchaser administration
Mode of Delivery - Potential Solutions
Key Learning: One Size doesn’t fit all…yet
Key Factors for Successful Implementation
• Standardised processes
• Optimisation of SAP platform
• “Loud” communication to business and vendor base
• Tough “on-boarding” message. Mandated as a condition of supply
• ELT Sponsorship
• Dedicated resource for 18 months
• Vendor rationalisation
• Create momentum – rapid progress and quick wins
• Change Management
Readsoft
WebForm Supplier
• Confirmation/Rejection report
Integrated Supplier
E-Invoicing Process Flow
BTB EDI SUPPLIERS
• Validate• Translate
• Kazeon - Legal archive
SAP
OB10Archive
Virtual analyst
Touch less
WHAT ? HOW ?
1 Confirms who the supplier is SAP Vendor number & VAT Reg
2 Verifies who they are invoicing Matches the PO entity, Kellogg VAT reg and the entity identification number
3 Checks the financial calculations Performs same fiscal checks as OB10
4 Checks the PO valid for this supplier PO line open & in correct entity?
5 Compares the invoice data to the PO data
Matches invoice to the PO line
6 Notifies supplier via email if the invoice is being rejected
Happens automatically / manually
7 Checks credit notes are valid Quoting a PO? Quoting an invoice?
8 Checks Duplication Status Document already in SAP?
9 Creates invoice image from the invoice data – visible in SAP
Attaches to the SAP document
move to next check
rejects wrong data
move to next check
rejects wrong data
move to next check
rejects wrong data
move to next check
rejects wrong data
posts to Sap
rejects or stops
supplier to resend
Always stops for EFSC review
yes? reject
no? post to SAP
requisitioners, receiptors
can view
Resulting Action
Our Virtual Analyst
Direct via EDI1
Via OB102
Self-Billing (ERS)3
400 suppliers use ERS
(5.5% of all suppliers)
SAP
25 suppliers
2500 Suppliers (through
web portal and
integrated connection)
Supplier
35%
41 %
11 %
87 %
% InvoiceVolume
ePTP Automation Profile
Our roadmap to achieving 100% AP Automation
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
FTE’s
87% Auto
0% Auto
Invoice Volume 130000 132000 173000 177000 187,000
47 47 47 47 49
11000 7000 4700 5000 4900
£7.02 £6.77 £6.02 £4.80 £4.43
Company Codes
Vendors
CPT
40% Auto
80% Auto
82% Auto
Tim
e f
or
Ch
an
ge
40% reduction
37% reduction
55% reduction
69% increase
4% increase
CPT Target for 2012 - £3.75
Where are we now?... Pure E- Invoicing
Key drivers of the GAP • Tax code assignment -
57%• Credit note - 21%• PO/invoice setup - 9%• Service Entry - 7%
2011
Electronic 87%
Touchless 78%
Gap 9%
Invoice ProcessNumber of invoices
Number of Suppliers
EDI 66,000 26
OB10 76,000 2545
Self Bill 22,000 394
Paper 23,000 2005
Total 187,000 4970
Benefits and Achievements
Benefits:
• Cost reduction/Resource re-allocation
• Inefficiencies addressed
• Standardised process
• Business re-education
• Value add activities- Projects, Financial visibility reporting, Cash flow forecasting, variance analysis, driving compliance
We have achieved:
• Streamlined invoice process - 87% electronic and 78% touchless
• An increase in invoice volume by 44%
• A reduction/reallocation of headcount by 40%
• CPT reduced by 37%
We use LEAN tools SIPOC and VSM to work out what metrics we should be using
KPI’s in a fully automated PTP process
Talent Management
Continuous Improvement
Quality and Control
Customer Service
• Staff capability Matrix
• Staff turnover rates
• Staff Quarterly Survey
• Backfill ready for Key roles
• Recognition and Reward
• Automation KPI’s
– Invoices/STP/per FTE
–Invoice Cycle Times
– Payments
– Cash Matching
– Special/Manual payments
– Master data set up
• Cost per transaction
• Cost vs NSV
• Call/E-mail volumes and response times
• Pagares suppliers
• Same day payments
• Vendors and vendor set up
• Items in cockpit
• OB10 rejection
• Error rates :
– VAT coding
– Payments
– Reversals
• GRIR
– Control
– Missed CWC
– 3 way match adherence
– % invoices paid to terms
– Aged ledger items
–Debit balances
• Outstanding Rec review points
• DPO and Cashflow KPI’s
• Rep Letter points
• Service Level scores
• Outstanding customer actions
Our lean Information Centre
• Continue “onboarding” suppliers
• Look for solutions to tail– Currently 23,000 paper invoices from 2005 suppliers
• Use Lean methodologies to– Drive Down ‘ Gap Blocks’– Further Streamline process especially upstream– Enhance Control
• Even more rigorous KPI management
• Continually review market for cheaper offerings and innovation– OB10– Social Networking– EDI usage– PO Flip– Portal– P-Card – Indirect spend catalogue
Next Steps on our Journey to 100% Automation
Any questions