Buyer specifies Xnumber of days towait for Goods or

P.O.D.note: input # of daysand validate againstnumber range - not a

drop down

Invoice'Q'

Blocked

ProcessSelectionScreen

Post GoodsReceipt

Reverse Receipt

Refer to Buyerwith Comments

ProcessSelectionScreen

Refer toRequisitioner

Change PO

Notify ReceiverGoods are Coming

Notify ReceiverProof Of Deliver isComing

Refer to Receiverwith Comments

Authorize A/P toCancel Invoice

Authorize A/P toPay As-Is

Executeinstructionfrom Buyer

Return toBuyer

Header-levelDashboard

Line-item

Line-item

Header

Delay

D

E

B

To Page 2

To Page 2

GRExists?

GR exists forthis PO line

NO GR

A

B

Page 1

Note: Line-itemAuthorizations from variousindividuals are consolidatedback to A/P at the header-level

Page 1

A

To Page 2

C

Send E-Mailto

Vendor E-MailAddress

Cancelled Invoice

suggested fromVendor Master

orinput

Pilgrim’s PridePilgrim’s Pride““We’re Passionate About Our We’re Passionate About Our

Food.”Food.”

About Pilgrim’s Pride

• Pilgrim's Pride is the second-largest poultry company in the United States.

• We process approximately 55 million pounds of chicken and 8.5 million pounds of turkey per week.

• Vertically integrated, Pilgrim’s controls every phase of the production of our products by operating feed mills, hatcheries, grow-out facilities, processing plants and distribution centers.

Accounts Payable

• Centralized Operation – Corporate Office

• Internal Customer Base:

Three Divisions in Two Countries

• Annual Accounts Payable Process Volume:

• 200,000 Purchase Orders Invoices (90%)

• 25,000 Non Purchase Order Invoices (10%)

Purchasing

• Centralized Purchasing Department– Central, East, & Mexico Divisions

• Internal Customer Base– Three Divisions in Two Countries

• Annual Purchasing Volume:– $1 Billion

Process Support Team

• Buy-IT Process Team– Chaired by VP of Purchasing

– Representatives from Purchasing, Accounts Payable, and Information Technology

– Brings together the Purchase-to-Pay Process for Tighter Coordination

– Sets Priorities for Both Process & Technology Issues

Why SAP AP Workflow?

• Manual Invoice Exception Processing– Time Consuming

– Lost Invoices / Duplicate Invoices

– Impossible to Track

– Flexibility for Expansion

• Vendor Relationships– Lost Discounts / Late Payments

AP Workflow Project was Initiated!

AP Workflow Project Goals

• Headcount Reduction– 10 Positions Between AP and Purchasing

• Obtain More Vendor Discounts• Invoice Exception Turnaround

– Average of 30 days to 10 days

• Elimination of Duplicate Invoices– Average of 1200 a month to zero

• Reduce Vendor Hotline Traffic

AP Workflow Solution Evaluation

• Build vs. Buy Workflow – Build: low cost, more time, reduced functionality– Buy: less time, high level of functionality

• SAP vs. Non-SAP Workflow– SAP: central platform, no interfaces, familiar GUI– Non-SAP: more platforms, new GUI, high complexity

• Pre-Packaged vs. Custom Workflow– Pre-Packaged: less time, best practices, supported– Custom: more time, pitfalls, support, scope creep

Selected Pre-packaged SAP Workflow-based solution from Optura

Optura Solution

• Technology Landscape – Single Instance, SAP 4.5b– IXOS Imaging– Optura “Inside-SAP” Workflow Solution

• Solution Scope– Quantity & Price Blocking– Suspension Reasons (tax, freight, matching, vendor

maintenance, etc...)– Non-PO Invoice Approval– AFE Invoice Approval– Duplicate Invoice Processing

ScannerScanner AP ProcessorAP Processor

Issues With Old Process:• Time Consuming / Manual Process

Lost discounts • Poor vendor relations• Late payments

• No Reporting / Tracking • Lost invoices• Uncoordinated appearance

AP Problem AP Problem SolverSolver

Receiver

Buyers, Receivers

Accounting Managers,

Project Managers

Old Manual Process

Buyer specifies Xnumber of days towait for Goods or

P.O.D.note: input # of daysand validate againstnumber range - not a

drop down

Invoice'Q'

Blocked

ProcessSelectionScreen

Post GoodsReceipt

Reverse Receipt

Refer to Buyerwith Comments

ProcessSelectionScreen

Refer toRequisitioner

Change PO

Notify ReceiverGoods are Coming

Notify ReceiverProof Of Deliver isComing

Refer to Receiverwith Comments

Authorize A/P toCancel Invoice

Authorize A/P toPay As-Is

Executeinstructionfrom Buyer

Return toBuyer

Header-levelDashboard

Line-item

Line-item

Header

Delay

D

E

B

To Page 2

To Page 2

GRExists?

GR exists forthis PO line

NO GR

A

B

Page 1

Note: Line-itemAuthorizations from variousindividuals are consolidatedback to A/P at the header-level

Page 1

A

To Page 2

C

Send E-Mailto

Vendor E-MailAddress

Cancelled Invoice

suggested fromVendor Master

orinput

ScannerScanner BuyerBuyer

ReceiverReceiver

Project Project ManagerManager

Accounting Accounting ManagerManager

AP Except AP Except HandlerHandlerIndexerIndexer

New Process:

• No More Cloud Diagram

• Right Person / Right Time

• Entire Process is Monitored

• Reporting is available

• Duplicate Invoice Monitored

AP ProcessorAP Processor

New Workflow Process

Anticipated Benefits

• Headcount Reduction • Increased Efficiency of AP Processing• Happier Vendors

– Less Vendor Hotline Traffic– Better Negotiation Position on Future Contracts– More Discounts Realized

• Tighter Controls– AFE Invoices– Non-PO Invoices

Next Steps

• APFlow Phase II – Supplier Portal – Extend Invoice Exception Workflow to Vendors

– Online Vendor Invoice Status Checking

– Direct Invoice Entry by Vendors

• Timeline: 4th Quarter 2003