It Pay$ - Amazon Web Services · Application Managed Services –Functional Application Support...

The Accounts Payable & Procure-To-Pay Conference & Expo is produced by:

Continuous Improvement

It Pay$

Penny Weller, PhD, CMA

The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 2 5/9/2016

Continuous Improvement – It Pays • Whether you are considering or already have a continuous

improvement

• program this session is for you. You will learn a variety of quick tips

to engage staff in submitting ideas, the power of measurement and

which tools are most commonly used and easiest to understand.

• Insights will also include the value of continuous improvement, how

to get started by measuring something, the secret to great

suggestions and even how to have a mustang attitude when it

comes to promoting your achievements.

The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 3

• The Hackett Group – advisory services

and research Global Business Services

and Shared Services

• 30 year Shared Services executive with

Pfizer (formerly Pharmacia)

• Director of Performance Management

• Six Sigma Motorola-certified Black Belt

• Global Director, Institute of Management

Accountants

Penny Weller, PhD, CMA

Global Business Services Advisory,

North America Operations Leader

[email protected]

Phone: 269.345.7240

www.thehackettgroup.com

mailto:[email protected]


http://www.thehackettgroup.com/

Contents

Hackett Overview

Why Continuous

Improvement Matters

How to Get Started and

Sustain a Program

Nuggets, nuggets, nuggets

Opportunity to Participate


86% of the

Fortune 100

93% of the Dow Jones

Global Titans

87% of the

DAX 30

52% of the

FTSE 100

48% of the

CAC 40

93% of the

Dow Jones

http://www.summtech.com/logo/bayer_logo_wf.gif

http://www.google.com/imgres?imgurl=http://theallseeingeye.tv/chevron_logo.jpg&imgrefurl=http://theallseeingeye.tv/Masonic_Symbolism_In_Corporate_Logos.html&h=368&w=342&sz=23&tbnid=vm-1L5PiIee4RM::&tbnh=122&tbnw=113&prev=/images?q=chevron+logo&usg=__T6vP1vNt9sRVLYiqOAbhLEsxOBs=&ei=SwO1SYa0H4-EtgfL75nqDA&sa=X&oi=image_result&resnum=3&ct=image&cd=1

http://www.google.com/imgres?imgurl=http://wwwp.medtronic.com/newsroom/content/1100120607874.low_resolution.jpg&imgrefurl=http://wwwp.medtronic.com/Newsroom/ImageLibraryDetails.do?itemId=1100120607874&lang=en_US&h=411&w=720&sz=75&tbnid=an_pG5KWeCJo0M::&tbnh=80&tbnw=140&prev=/images?q=medtronic+logo&hl=en&usg=__Ks7WPiZKxsbL6v4dX5DIX9BJ9rs=&ei=bQO1SdrtNs3dtgfnuv3qDA&sa=X&oi=image_result&resnum=4&ct=image&cd=1

http://www.google.com/imgres?imgurl=http://cooperfreight.com/vendors pics/Michelin Logo (2).gif&imgrefurl=http://cooperfreight.com/Customer Profile.htm&h=472&w=1299&sz=19&tbnid=ZRn_wANCkkgK0M::&tbnh=55&tbnw=150&prev=/images?q=michelin+logo&hl=en&usg=__yeoqQciEyS8Vi8GxB7MtP5QUZCg=&ei=qwO1Sb7PDoqhtwexq-DqDA&sa=X&oi=image_result&resnum=2&ct=image&cd=1

http://www.google.com/imgres?imgurl=http://www.stanford.edu/group/idk2ceo2007/images/ibm-logo.jpg&imgrefurl=http://www.stanford.edu/group/idk2ceo2007/sponsors.html&h=330&w=609&sz=62&tbnid=pQtsZ1HWHWuE0M::&tbnh=74&tbnw=136&prev=/images?q=IBM+logo&hl=en&usg=__ffJLXGA9ymPea9eb3xfBdgybWsQ=&ei=9QO1SfmcE-PetgfgwNDqDA&sa=X&oi=image_result&resnum=3&ct=image&cd=1


▪ Library of 2,500+ Best Practice Research Perspectives, Books of Numbers, and Hackett

Certified Best Practices through the Best Practice Intelligence Center

▪ Unlimited inquiry access for members to Hackett experts for transformation steering

▪ Peer-to-Leader 1-2-1 Best Practices sharing, and Best Practices networking events

▪ Enterprise, functional and process-based performance studies & value accelerators

▪ “Gold Standard” Benchmark – over 10,000 conducted, the empirical backbone for your

transformation at the SG&A Enterprise, Functional, and Process level.

▪ World-Class, Peer, and Custom Peer comparative metrics and best practices

▪ Ability to provide multiyear World-Class Program view of performance over time

▪ Hackett Performance Exchange (automatic accumulation of performance data from Oracle or SAP)

Finance

Human Resources

Information Technology

Procurement

Supply Chain and Operations

Membership Advisory & Research

(Provides insights into World-Class Performance)

Benchmarking (Defines World-Class

Performance) Hackett Perspective on World-Class Finance – Accelerating GBS | 9

Peer Group World Class

The World-Class Advantage – FinanceWorld-Class organizations always find a way to get there

IT Cost (per end user Equivalent)

Procurement Cost (% of spend)


23%

$1.7K$2.2K

HR Cost (per employee)


19%

0.59%0.73%$6.0K

22%

2014 Cost of Finance by Process Category (as a % of revenue)

Finance Cost (% of revenue)


1.12% 46%

-59%-46%

-23%

0.60%$7.7K

0.39%

0.21% 0.23%

0.16%0.11%

0.17%

Transacting Control & Risk Planning & Strategy

Practice or

Outcome

Process

Taxonomy

Vision

Dimension

SDM

Component

Capability /

Enabler 1 - Lagging 2 - Achieving 3 - Exceeding 4 - Leading

Current

State

Assessment

PriorityFuture State

TargetAverage Gap

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Degree to which a

sourcing strategy

exists

Sourcing strategy is ad hoc or

nonexistent.

Sourcing strategies reflect and are

aligned with overall business

strategy and objectives, including

high level risk requirements.

Historical spend analyses are

regularly and routinely conducted

by market and across markets -

i.e. by specific commodity, service,

location and business.

Commodity management and

sourcing strategies define

appropriate purchasing and

payment processes and tools.

Contract terms, lengths, and

conditions are defined to drive

optimal benefits to the enterprise;

in terms of total life-cycle cost,

service, and quality.

Sourcing strategy is reviewed and

updated annually (or more

frequently) to reflect direct linkage

to the company's strategic growth

plans, market changes and

product innovations, production

plans and business

M&A/ventures.

2 - Achieving 2 - Medium 3 - Exceeding 1.00

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Breadth of supplier

universe

Supplier selection is based on

historical or personal

relationships; suppliers often

selected prior to Procurement’s

involvement in a project.

Projects are initiated to limit the

total number of suppliers and

bundle the spend volume.

Procurement is involved in the

supplier selection process.

Suppliers are often considered on

a regional or compartmentalized

basis.

Supplier universe is considered

by major commodity or service

area rather than in aggregate.

Suppliers are considered for

bundled and/or extended services

that may extend to multiple areas

of competency.

Supply universe is global and not

limited to traditional commodity

suppliers.

1 - Lagging 2 - Medium 2 - Achieving 1.00

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Degree to which

supplier risk is

measured and

managed within the

sourcing process

Risk not considered as part of

sourcing decisions or supplier

management.

Supply risk is considered as part

of category-specific sourcing

efforts and supplier performance

management processes.

Supply base risk is explicitly

factored into broader business

continuity objectives. Supplier

risk is considered beyond the

specific good or service being

sourced.

Procurement works with other risk

management staff, ensuring

alignment between internal

risk/return preferences, business

objectives, and both general and

specific supply market risks.

3 - Exceeding 3 - High 4 - Leading 0.90

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Degree of

contingency

planning performed

to assure supply

No supply contingency planning

exists.

Contingency plan exists in case of

supply shortage; alternate

suppliers and alternate locations

identified.

Alternative supply sources are

developed in conjunction with

current suppliers for key

purchases.

Back-up suppliers are required for

critical or strategic categories and

items, including formalized

contingency plans to ensure

seamless supplier transition and

application of penalties and

liabilities with supplier(s) at fault.

3 - Exceeding 2 - Medium 3 - Exceeding -0.55

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Degree of supplier

qualification in

place

No formal supplier qualification

process.

Simple processes in place to

register suppliers and inspect

supplier qualifications at time of

registration or category review.

Established supplier training

program on enablement

strategies and buyer’s

technologies. Formal program

exists to identify key qualification

metrics with stratification based

on category criticality and supply

alternatives.

Annual review of at risk suppliers

and suppliers of key categories.2 - Achieving 2 - Medium 2 - Achieving 0.37

Practice

Sourcing and

Supply Base

Strategy

Supply

Assurance

Process

Design

Degree of

effectiveness and

efficiency of price

refresh process

Quoting and price refresh process

is undefined and performed

manually and on an ad hoc basis.

Quoting and price refresh process

is defined and audited manually.

Quoting and price refresh

processes are structured to

minimize enterprise financial

impact to all parties.

Quoting and price refresh

processes are automated, nearly

error-proof,, with appropriate

controls in place..

2 - Achieving 2 - Medium 2 - Achieving 0.46

Practice

Sourcing and

Supply Base

Strategy

Purchased

Cost

Reduction

Process

Design

Level of

rationalization of

supply base size

Large number of suppliers due to

short-term, “one-off” relationships.

Organization has identified the

need to rationalize the number of

suppliers in order to create

leverage.

Supply base rationalization is

complete. Few new suppliers are

needed and an added supplier

typically results in a removed

supplier (equilibrium). Strong

relationships developed with

current suppliers focusing on JPI

in critical or large dollar spend

areas.

Structured process is in place that

benchmarks the marketplace and

ensures continual supply base

assessment.


Practice

Sourcing and

Supply Base

Strategy

Purchased

Cost

Reduction

Process

Design

Maturity of use of

supply market

intelligence

Supply market knowledge is ad

hoc and incomplete.

Process, tools, and sources

established to gather and

organize data on most categories.

Supply market intelligence /

knowledge captured to identify

when a supply strategy needs to

be re-visited.

Supply market intelligence /

knowledge captured, modeled,

and utilized for pro-forma

simulations done during strategic

planning, design, sales, etc.


Strategy & Business

Transformation (Transforms Performance

into World-Class)

Service

Delivery

Components

Information

Service

Placement /

Scope

Process

Sourcing /

Location

Strategy

Process

Design

Enabling

Technology

Skills &

Talent

Governance

&Organization

Enterprise Performance Management

Shared Services, Global Business Services & Outsourcing

Merger Integration

Working Capital Management

Oracle EPM (Platinum Partner)

SAP ERP (Gold Partner)

Hyperion

Kronos

Workforce Management

Application Managed Services

– Functional Application Support

– Technical Application Support

– Cloud and Hosting

– Remote Development

Best Practice Technology Enablement

(Implements Technology to enable World-Class)

In

-h

ou

se

Co

mp

le

te

O

utso

urc

in

g

Colo

catio

n

CustomerResponsibility

ProviderResponsibility

Sa

aS

A

pp

lic

atio

ns


• 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 10,000 performance improvement benchmark 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.


Hackett Purchase to Pay Value Grid™

Effectiveness Drivers

• First Pass Match Rate

• On Time Payment Rate

• Level of Spend Visibility

• Streamlined Transaction Strategy

• Level of GBS/Shared Services

• Training Investment

• Compliance to Preferred Suppliers

• Guided Buying Effectiveness

• Supply Base Consolidation

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

What are you measuring? How do you compare? What do you want to improve?

The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 9 Source: 2016 Hackett Study


What’s important to

your key

stakeholders?

How and what to improve?

How do you know

you are doing a

good job?


Step

change…

BIG

Continuous

improvement

… SMALL BUT…CHANGE THE

CULTURE


Foundation of Continuous improvement – Measurement and Encouragement


Senior business leaders Key stakeholders Operations

Your customers will impact what you improve… What do you already know you want to improve? Who are your key audiences? What is important to them? Are there some Quick wins?


• Start small; ‘what’s stopping you from being effective?’

• What’s irritating to your customers and to you?

• You probably have more control than you think!

• Start tall; ‘external benchmark’ -- Pharmacia Example

Automate… Something Something …Eliminate


$5 million savings opportunity in transaction processing!

Key Financial Processes Total Cost Cost per

Billion Quartile

1st Quartile

Cost/Billion

$ Savings

Opportunity

Transaction Processing $12,955 $ 4,093 3rd $2,431 $ 5,262

Control & Risk Mgt. 5,523 1,745 3rd 959 2,488

Decision Support 3,793 1,198 3rd 607 1,871

Finance Management 1,772 560 3rd 408 481

Systems 7,660 2,420 2nd 1,760 2,090

Overhead 6,561 2,072 2nd 1,275 2,523

Total Finance $38,264 $12,088 3rd $7,440 $14,715


• Quality

• Cost

• Delivery

• Customers / Employees

• Best Practices

• Value

• Defect-free processing

• First-pass yield;% errors

• Process cost

• Transactions per FTE

• Cycle time (days to close)

• % automated transactions

• Customer satisfaction

• Employee engagement

• % suggestions

• Process steps – add value

• Organizational alignment

• % of G&A in Shared Services

• Speed to add new product or

acquisition


Start Measuring…Start Comparing


Effective Continuous Improvement

Executive Sponsorship

Change Management

Effective Methodology

Communication Plan

Training & Empowered Employees

Measurement


Resource Constraints

Company Culture

Non Standard Processes

Top Leadership

Support

74%

59%

52%

41%


Lean – eliminates waste

6 sigma – eliminates variation

Service Design – Customer view


Final Close

Preliminary

Close

Prepare

Special Ledger

Adjusting

Entries

Financial Close Process

Run

Assessment

Process

Entry into

Hyperion

Run

Consolidation

jobs

Reverse

Assessment

Process

Run Final

Assessment

Process

#1 CI Tool over

90%

Process Mapping


Rule #1: If you submit an idea you don’t have to fully develop it…. Voice of the Customer


Pareto Analysis


Why? Why? Why? Why? Why?

4 The 5 Whys…


Kaizen Events are easy to run since the whole point is to plan, start and end within a limited time frame, such as a few dedicated days of work. Suggestion: Set a goal for each department that requires 100% of employees to participate in at least one event per year, including all new hires. Brainstorm ideas to pick the best projects.

Examples of successful events • Workspace improvements like organizing the mail, fax, scan or office supply areas • Employee-related, such as safety, new hire orientation • Specific business processes or procedures

• Manual billings • Procurement card • Journal entries • Aged invoices • Unclaimed property • Traveler central billing • Cell phone billing

5 Kaizen Events


The Land of Month End…


PUSH


The patient

is waiting...


Mom says, “if no one’s in charge….you are!”

Payment terms

$326,000 savings


Having a Mustang Attitude… We don’t know how to market ourselves


Continuous Improvement can

reap huge benefits


Source: www.istockphoto.com_Stock Photo #12357951


Source: www.istockphoto.com_Stock Photo # 753654


Source: www.istockphoto.com_Stock Photo # 9506988


Hackett Performance Studies define and capture how World-class performing organizations are organized, governed, and their savings potential compared to their Peers. The study covers key concepts including service management, governance, performance achievements, technology, and KPIs to assess your performance objectives. Participants in these studies will: • Learn how your organization compares with World-class or Top

Performers • Receive a report with key research findings and an assessment of

your performance • Have a one-on-one session with a Hackett Advisor to review your

performance

• Participate by joining the Hackett Research Community

• http://www.thehackettgroup.com/research/studies/

• www.thehackettgroup.com or contact [email protected]

Free

Studies

http://www.thehackettgroup.com/research/studies/

http://www.thehackettgroup.com/research/studies/

http://www.thehackettgroup.com/hpn



Statement of Confidentiality and Usage Restrictions

This document contains trade secrets and other information that is company sensitive, proprietary, and confidential, the disclosure of which would provide a competitive advantage to others. As a result, the reproduction, copying, or redistribution of this document or the contents contained herein, in whole or in part, for any purpose is strictly prohibited without the prior

written consent of The Hackett Group.

www.thehackettgroup.com

It Pay$ - Amazon Web Services · Application Managed Services –Functional Application Support...

Documents

Transcript of It Pay$ - Amazon Web Services · Application Managed Services –Functional Application Support...