SAP p2p End to End Processes

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3. End-to-End Processes

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& Best Practices3. End-to-End Processes

Definition of an End-to-End Process

An End-to-End process is a sequence of activities that:

is a logically connected series of tasks that serve a specific business need

covers process areas that have dependencies on other process areas

ensures consistency between process areas

reflects the key activities across different process areas

identifies business critical touch points and aligns Master Data elements

serves as a template for validation and integration of process areas

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A process is an organized activity that adds value. It is not a single activity but a connected series of activities which logically fit together. End-to-End processes group the related processes from different functional areas, such as Procure-to-Pay , into extended 'value chains' which start at one end of the business and finish at another end.

Process 1(eg. CreateContract)

Process 4(eg. PerformPayment of

Vendor Invoice)

Process 2(eg. Send

Call-off)

Process 3(eg. Enter Goods

Receipt)

Output from one process

Input for another process=

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This presentation will cover following End-to-End processes:

Purchasing of S&IM Subcontracting Vendor Managed Inventory (VMI) P-Card Management Vendor Life Cycle

3. End-to-End Processes

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Table of Contents1. Introduction

2. Definition

3. Benefits

4. Triggers

5. Business Rules

6. Assumptions

7. Key Decisions

8. Change Impacts

9. High Level Process Flow

10. Key Roles

11. Process Variants

12. Links to other End-to-End

P

R

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C

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S

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Introduction Definition Benefits Triggers Business Rules Assumptions Key Decisions Change Impacts High Level Process Flow Key Roles Process Variants Links to other End-to-End

OUTPUTS

Understand Business Benefits Understand Business Rules Understand Key Decisions

Detailed Route map& Best Practices

Purchasing S&IM

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Purchasing S&IM 1. Introduction

One of the challenges for Purchasing is to provide leadership and control in areas where it has not traditionally been involved. The area of Services and Indirect Materials (S&IM) will need clear directions in order to bring savings to the business.

Globe is providing standardization in these non-traditional areas, which will allow Purchasing to aggregate where appropriate and deliver further benefits.

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Purchasing S&IM 2. Definition

This End-to-End process ensures that all Nestlé procurement of non-production related goods or services is performed accurately in a speedy, simple and standard way.

This end-to-end process has two distinct but related parts:Strategic / Tactical Process

which determines the appropriate procurement strategy for aspend category and the selection of an appropriate

vendor(s).

Operational Process

which covers the steps from "need to procure" through to "payment for received non-production related goods

and services". (e.g. MRO, office supplies, promotional items, media).

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Purchasing S&IM 3. Benefits

A standardized process ensures that purchasing is done in a professional way throughout the company.

Proper co-ordination of purchasing activities (including rationalization of vendors, specifications & materials) will effectively leverage the purchasing power of Nestlé.

Clearly defined roles and responsibilities for cross-functional teams will result in optimized decision making.

Purchasing information will be more visible and transparent as a result of a standard common process and system. Specifically, spends across organizations will be visible for pre-defined categories for both materials and services.

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Purchasing S&IM 4. Triggers

The need to procure an item that is not directly production related.

Typically, this will be to meet a business requirement such as: Supply replenishment Breakage replacement Transportation of goods Maintenance New Capex Marketing and sales campaign Training need Outsourced service

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Purchasing S&IM 5. Business rules 1/2

The Key Business Rule is:

Use of a Nestlé procurement process to acquire Services & Indirect Materials is mandatory and all spending is categorized via use of the Generic Materials in the MDR or by characteristics applied to materials created in the material master.

Relevant KPIs

- Purchasing Organization scorecard

- Vendor scorecard

Heritage Systems

There are no interfaces to legacy systems in this End-to-End process.

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Purchasing S&IM 5. Business rules 2/2

Custom Developments

There is a custom development in Enterprise Buyer Professional (EBP) to permit use of P-Cards.

High level business control

Control is provided within the procurement processes. All processes must be auditable.

Vendor Master Data

The creation of new vendors and the use of one-time vendors, together with the amendment of existing vendors, must be done according to guidelines developed by Data Management.

Separation of Duties

This End-to-End process is designed to ensure clear separation of duties via different roles e.g. order raiser, order approver, goods receiver, accounts payable clerk.

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Purchasing S&IM 6. Assumptions 1/2

That all Services & Indirect Materials expenditures will be made via this Globe E2E business model. (This expenditure will therefore include such items as MRO items, temporary labor, office supplies, media, promotional items and training).

That approval levels are pre-determined and embedded within the system. SAP EBP (Enterprise Buyer Professional) approvals will be consistent with those in SAP R/3.

That the relevant purchasing process will be carried out by those who have been assigned and trained in the relevant procurement role. (This does not imply that all purchasing will be done by the Purchasing department; rather that the relevant functional area will have staff trained in the appropriate procurement role.)

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Purchasing S&IM 6. Assumptions 2/2

That segregation of duties will be as extensive as is practicable, whilst recognizing employee trust and the relative importance of the spend category.

Requirements coming out of Plant Maintenance will be either directly via a Purchase Requisition for non-stock items or a Purchase Requisition created by an MRP run. The process entry point will be at the “Process PO/Release Order” point in the process.

That a business procedure and workflow will be developed by Data Management and will apply to all requests for:

- the creation of new vendors.- the use of one-time vendors.- the amendment of existing vendor details.

The owning process area is Purchasing.

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Purchasing S&IM 7. Key decisions

Use of the procurement process to acquire Services and Indirect Materials is mandatory.

All spending is categorized via the use of the Generic Materials in the MDR or Local Material Masters.

Purchase Orders and contracts will have either value or quantity/value limits.

All Purchase Orders and contracts will be required to have valid beginning and ending dates.

Where appropriate, full inventory management is now available for Indirect materials in V1.5.

Framework orders can be used for Services and Indirect materials for which a goods receipt is not required, such as utilities and taxes.

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Purchasing S&IM 8. Change impacts 1/2

Responsibilities / Accountabilities and Decision Making The Head of Purchasing is the owner of the entire Purchasing

process. This End-to-End procurement process (strategic, tactical &

operational framework) is applicable for purchases of all Services and Indirect Materials.

This process is to be followed wherever there is a purchasing activity. The Document Creator is responsible for accurate data entry and

handling all transaction exceptions. Vendor Relationship Management is the responsibility of the

Strategic Buyer.

Communication and Workload Shifts Communication of overall purchasing concept requires buy-in at a

high level, executive sponsorship and active change management in the markets.

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Purchasing S&IM 8. Change impacts 2/2

New Ways of Working This End-to-End follows a defined and structured process. All

employees assigned are trained in their respective procurement role.

Entry of purchasing transaction information and goods receipt into the system requires discipline, and must be timely and accurate to minimize follow-up administration.

Correction of transaction errors is performed by the Document Creator / User.

If Vendor issues arise, the Strategic Buyer is involved in the resolution.

A 'Service Receipt' is used to accept services and approve payments.

User empowerment within a predefined framework.

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Purchasing S&IM 9. High Level Process Flow 1/2 (Strategic)

5. Create Total Cost of

Ownership Model

9. Communicate &

Manage Procurement

Policy

2. Agree on Spend

Category

3. Collect & Analyze History Purchase Data

7. Consolidate Spend &

Market Analysis Data

8. Develop Procurement

Strategy

10. Process Request for Information

13. Negotiate with Selected

Vendor

1. Rationalize Materials

6. Conduct Supply Market

Research

Procure

to

Pay

15. Maintain Contracts

14. Maintain Schedule

Agreements

12. Process Request for Quotation

11. Process Request for

Proposal

4. Collect & Analyze Future

Operational Requirements

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Purchasing S&IM 9. High Level Process Flow 2/2 (Operational)

Materials Handling /Finance &Control

11. Invoice queries directed through invoice

workflow

3.Contract transmitted to

Vendor

4. Create Requisition

6. Requisition assigned onto a

PO

5. Requisition released

2.Contract authorised

through workflow

8. PO transmitted to

Vendor

9. Post Goods Receipt

1. Create Contract

7.PO authorised

through workflow

10. Invoice received and

posted

Procure

to

Pay

Vendor

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Purchasing S&IM 10. Key Roles

P2POperational Buyer

P2PStrategic Buyer

P2PPurchase Requester

MHStock Goods Issue

& Receipts

F&CAccounts

Payable Clerk

P2PPurchase Approver

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Purchasing S&IM 11. Process variants

MRO Items Procurement spare parts and services (stocked and non-

stocked)

Temporary Labor Procurement of services (fixed price, estimated quantity)

Media Procurement of services (variable price, variable quantity)

Telephone Procurement of telephone services (variable price, variable

quantity)

Capex Procurement of assets

Promotional Items Procurement of expensed items

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Purchasing S&IM 12. Links to other End-to-End

Event Planning & Management - Consumer Marketing Event Planning & Management - Advertising Planning to Pay (HR) Asset Maintenance Management

The Purchasing (Services & Indirect Materials) end-to-end process is, itself, part of four other End-to-End processes. These are shown as variants below:

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2. Definition

3. Business Objectives & Benefits

4. Triggers

5. Assumptions

6. Key Decisions

7. Change Impacts


9. Key Roles


11. KPIs


P R O C E S S

Introduction Definition Business Obj. & Benefits Triggers Assumptions Key Decisions Change Impacts High Level Process Flow Key Roles Process Variants KPIs Links to other End-to-End

OUTPUTS

Understand business objectives Understand business benefits Understand Key decision


Subcontracting

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Subcontracting1. Introduction

A key strategy in sourcing products and services is subcontracting. Purchasing will need to work in a crossfunctional environment to determine whether to manufacture or outsource materials in order to maximise the business benefits for Nestlé.

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Subcontracting2. Definition 1/2

The contracting out, to a third party, of all or part of the production or packing process for the processing of raw materials, semi-finished or finished products, when Nestlé is involved in the provision and/or management of one or more components supplied to the Subcontractor.

Typical examples of subcontracting can be:Finished products.Semi-finished products, which will be further processed

before being sold.Seasonal packed products i.e. Easter Eggs.Promotional packs. (free products, gifts, samples, etc.)Etc.

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Subcontracting2. Definition 2/2

Subcontracting includesCo-manufacturing: i.e. the production of a base product

by a vendor, which may also complete the process of packing the finished product.

Co-packing: i.e. the packing of a semi-finished product by a vendor or re-packing of an existing product into a different packaging format.

It will not include:Purchase of temporary personnel services for the

production of a product at a Nestlé site. This will be managed by creating a service purchase order.

Purchase of a finished product for which all materials (raw, packaging, semi-finished) are procured by the Vendor itself. This is managed by placing a purchase order for a finished product as for any other material.

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Subcontracting3. Business Objectives & Benefits

The objective is to provide a cost effective alternative source of supply to:

solve internal capacity issues. reduce assets. avoid or defer major capital investments. increase operational cost efficiency due to

inadequate internal capacity or unsatisfactory in-house cost structure.

manufacture products requiring a technology not available at Nestlé or not owned by Nestlé.

secure short term capacity from subcontractors for seasonal or promotional products, whilst respecting Nestlé quality, safety and traceability standards.

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Subcontracting4. Triggers

At a strategic level, the process will be triggered by the sourcing strategy definition agreed on by the cross-functional team.

The sourcing strategy relies on : Insourcing/outsourcing analysis.

Cost-effective manufacturing alternative. Capacity evaluation. Technology and Quality requirements.

Mitigation of investment risk for new products. Reduction of manufacturing assets.

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Subcontracting5. Assumptions

Strategic decision to outsource the manufacture and/or packaging of our products to a third party subcontractor.

Subcontractors are selected and approved, fullfilling Nestlé requirements i.e. Nestlé Quality System.

Subcontractors comply with Nestlé Subcontracting Agreement (Contract Terms and Conditions).

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Subcontracting6. Key Decisions

Contracts are created using the standard subcontracting system functionalities.

Purchase Orders are created with reference to contracts above.

A Subcontracting Agreement (SCA) will be created defining service levels and operational requirements.

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Subcontracting7. Change impacts

Subcontracting is a complete End-to-End process which is managed by procurement.

Cross-functional team approves the strategical decision of subcontracting, selects and monitors the Subcontractor.

A Subcontracting Agreement is issued. The control of co-manufacturing/subcontracting contracts,

purchase orders and stocks are supported by a Globe template functionality.

Best practice is to create an accurate Bill of Material (BOM) for each subcontracted product.

All master data records (e.g. subcontractor as a vendor, account assignments, material numbers etc.) must be accurate and established before transactions with subcontractors are executed.

The Subcontractor's performance is monitored regularly against the subcontracting agreement, using tools such as the Material Variance Report and the Vendor Evaluation.

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Procure to Pay

Materials Handling / QualityManagement

2. Run MRPon Components /

Explode BOMs

1. Calculate Requirements

for Subcontracted finished product

3. Purchase Requisitionsfor Subcontracting

product

8. Release Purchase Order / Stock

Transport Order

7. Convert PurchaseRequisition to

PO / STO

4. Convert PurchaseRequisition to

Subcontract PO

6. PurchaseRequisitions

for components

14. Invoice handling

10. Goods Issue of Components

5. Release Subcontract

Purchase Order

11 12

9. Create Outbound delivery

13. QualityInspection

11. Receipt of components

in Subcontractor premises

12. Receipt of Subcontracting Goods

Consumption of Components

Demand

and

Supply Planning

Strategic

Planning

QM Audit of Subcontractor &

Approval by all partiesSupply Strategy

Subcontracting8. High Level Process Flow

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Many roles are involved in Cross Functional Teams in SubcontractingDSP

•Demand Planner•MRP Planner

P2PStrategic Buyer


MHStock Goods Issue

& Receipts

QMQM Material Batch

Maintenance

F&CAccounts

Payable Clerk

CSOrder Processing

Clerk

To DC or

Customer Sales

Strategic Sourcing

Technical & Production

Quality Mgt. & Material Handling

Finance & Control

Cross FunctionalTeams

Subcontracting9. Key Roles

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Subcontracting10. Process variants

The Subcontractor can be modelled as a Vendor or a Plant, depending on the level of tracability required at the subcontractor:

Vendor - The subcontractor is set up as a vendor when:

the subcontractor's finished product is to be received back to the main Nestlé plant. It is not required to manage the finished products independently.

Plant - The subcontractor is set up as a plant when:

full transparency of finshed good stocks at the subcontractor's site is required.

planning is to take place at the subcontractor's plant.

finished goods are to be sold directly from the subcontractor's plant to the customer.

Note: In each case the standard SAP subcontracting solution is used.

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Subcontracting 11. KPIs

On Time & In Full delivery (OTIF) Automatic scores generated within the system based on

the purchase order quantity and delivery date.Quality scores

When a usage decision is taken for an inspection lot created for goods receipt, the quality score must also be determined for the lot. A quality score is a statistical value that describes the quality of an inspection lot.

Vendor confidence Based on the Vendor's track record, a confidence level is

assigned to the Vendor. The three confidence levels used are: high, medium and low.

Service Manual scores can be added to reflect the Vendor's

performance. These are also aggregated by plant within a BW report.

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Subcontracting12. Links to other End-to-End

Planning to ProduceCollaborative Replenishment PlanningOrder to CashConcept to ConsumptionBusiness PlanningCosting Integration Scenario

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2. Definition

3. Benefits

4. Business Requirements & Constraints

5. Business Rules

6. Assumptions

7. Key Decisions

8. Change Impacts


10. Marketplace Messages

11. MP Message Rules

12. Key Roles

13. Process Variant

P

R

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S

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Introduction Definition Benefits Business Requirements & Constraints Business Rules Assumptions Key Decisions Change Impacts High Level Process Flow Marketplace Messages MP Message Rules Key Roles Process Variant

OUTPUTS



Vendor Managed Inventory

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Vendor Managed Inventory1. Introduction

In a stable vendor environment Nestlé may want to consider the introduction of Vendor Managed Inventory (VMI) with key vendors, moving from a traditional order methodology to VMI and streamline the process which will bring business benefits to both Nestlé and the Vendor.

Vendor Nestlé

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Vendor Managed Inventory2. Definition 1/2

In a Vendor Managed Inventory scenario (VMI): The Vendor monitors the stock levels of Nestlé and initiates

stock replenishment when necessary, without the need to receive any purchase orders from Nestlé.

Purchase Orders will be generated directly in the Nestlé system by the Vendor through a portal or Marketplace.

This process enables the Vendor to: monitor requirements. monitor stock levels and planned consumption. generate Purchase Orders, Advanced Shipping Notification

(Marketplace only) and Invoices in the Nestlé system. receive Goods Receipts Confirmation, Selfbill Invoices and

Remittance Advices (Marketplace only).

Vendor Managed Inventory scenario includes only: Raw and Packaging materials.

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Vendor Managed Inventory2. Definition 2/2

Option 1: Marketplace (MP) A Marketplace allows an automatic exchange of

information between Nestlé system and Vendor system.

The MP solution is best suited to large capacity and technology advanced vendors.

Option 2: Supplier Workplace (SWP) Supplier Workplace (SWP) is a web-based tool

accessed by vendors via the Internet where: vendors have only access to their own data. vendors need to be authorised by Nestlé to use SWP.

The SWP solution is best suited to medium capacity or less technology advanced vendors.

Opportunity for a greater number of vendors of different sizes and capabilities to enter a VMI agreement is provided through 2 access methods:

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Vendor Managed Inventory 3. Benefits 1/4

Total cost reduction of materials. The single sourcing allows cost reduction since the Vendor shares

benefits resulting from optimized production capacity and operational processes.

Working capital reduction. Raw/Pack materials and Finished Goods inventories reduction.

Improved Payment Terms compliance. Introduces collaborative planning concepts and thereby

minimizes potential material shortages. Avoid stops in Manufacturing due to materials shortage. Increase product availability and customer service level.

The VMI process is a common initiative with vendors for processes optimization aiming to gaining mutual benefits, such as:

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Vendor Managed Inventory 3. Benefits 2/4

Reduction of operating costs (Admin/Headcount) Systems integration between Nestlé and vendors

ensuring best information quality (material availability, delivery dates, etc.) i.e.

Vendors ability to view information without having to contact Nestlé.

Improved data accuracy implying lower failure cost. Increased use of automatic creation of purchase

orders with reduction in cycle time, errors and the Total Cost of Ownership.

Reduction of administrational workload. Reduced number of manual invoices and time spent on resolving queries

and issues.

Lower number of rejections of deliveries due to all sort of discrepancies (i.e. quantities, commercial conditions, etc.)

Inbound Freight costs reduction. Volume and regularity of single sourcing allows transport optimization.

Minimum stock counts and warehousing complexity.

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Vendor Managed Inventory3. Benefits 3/4

Benefits for Vendors (Marketplace):Vendor is allowed to monitor

Nestlé requirements coming from Material Requirement Planning (MRP).

Nestlé stock levels.Vendor is allowed to generate

Purchase Orders. Advance Shipping Notification documents Invoices.

Vendor planning and capacity management is improved.

Pro-active involvement in anticipating and responding.

Partnership is strengthened.

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Vendor Managed Inventory3. Benefits 4/4

Benefits for Vendors (Supplier Workplace): Access to real-time data is provided. Vendor is allowed to monitor

Nestlé's requirements coming from Stock

and Requirements List.

Vendor is allowed to generate Purchase Orders. Invoices.

Vendor planning and capacity management is improved.

Pro-active involvement in anticipating and responding is allowed.

Partnership is strengthened.

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Vendor Managed Inventory 4. Business Requirements & Constraints 1/2

Since starting VMI, Nestlé is moving to a long term strategic partnership with a single source implying following requirements:

A strong Vendor selection process (high business maturity level).

Wilingness to share strategic Nestlé information. Communication and openness amongst all stakeholders

involved. Definition of clear responsibilities at organizational level. Speed on internal and external information transfer. Vendor more connected to our plants for a better

understanding of our requirements.

N. B. Attention is drawn to the fact that this long term partnership will give

limited opportunities to participate in spot markets.

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Vendor Managed Inventory 4. Business Requirements & Constraints 2/2

Constraints for VMI implementation from Nestlé's side are

poor sales forecasting and production planning. high seasonality businesses. Only one vendor can be responsible for a

material/plant combination.

Scalability: Not all messages/transactions need to be implemented

from the beginning of the VMI relationship.

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Vendor Managed Inventory 5. Business rules 1/3

VMI Agreement: is a document created for VMI operating rules.

This will be referenced in the SAP generated contract.

VMI Agreement contains Business Rules e.g. : Methods of invoicing. Target stock levels. Messages/transactions used within the VMI relationship.

Contract: is a system generated contract which covers price, contract

validity, volume, specification number and terms & conditions.

Contract Business Rules: Vendors can only display their own contracts and purchase

orders (SWP only).

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Stock Data exchange: A feedback of exceptions compared with

the target stock levels must be communicated to the Strategic Buyer and the Vendor.

The method of monitoring VMI compliance by Nestlé must be part of the process.

Purchase Orders : Every purchase order generated by a vendor is linked to an

existing contract. In order to create a purchase order, the Vendor is only allowed

to specify the quantity and delivery date for each purchase order item. All other information are defaulted from the contract.

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Invoices: Operational controls must be

established to ensure that the invoice data input of the Vendor is correct and references both the PO and goods receipt confirmations.

Vendor-generated Purchase Orders must always be configured to ensure that no invoicing can be done for this Purchase Order without a Goods Receipt.

Vendor-generated Invoices with price variances are blocked for payment.

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Vendor Managed Inventory 6. Assumptions

A VMI agreement is in place. A method of transmitting

messages is developed between Nestlé and our vendors (MP only).

Vendors are granted access to the Nestlé Business Extranet (SWP only).

Providing two methods of accessing Nestlé's transaction will help to maximize the benefits from the VMI process, by offering a greater number of vendors the opportunity to enter a VMI agreement.

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Vendor Managed Inventory 7. Key decisions

A decision to operate VMI must be part of the Spend Category Strategy.

Clear working parameters must be included in the VMI agreement.

Vendors will be authorized to perform selected Nestlé transactions via Supplier Workplace (SWP) or to send messages via Marketplace (MP).

Purchase Orders created by vendors must be linked to a contract: price, payment terms, currency and conditions will automatically default from the contract.

Vendors will be responsible for the accuracy of the Purchase Order quantity based on Nestlé demand and stock targets.

Vendor performance level must be monitored.

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Vendor Managed Inventory 8. Change impacts 1/2

Decision Making VMI purchasing is a strategic decision based on

strategic/operational needs of a Nestlé market to perform an enhanced relationship scope which goes beyond the basic service level expectations with a vendor.

Workload Shifts The Vendor monitors the stock levels and initiates stock

replenishment when necessary. The Vendor may have authority to perform the following:

Create purchase orders. Review purchase documents, i.e. POs and contracts (SWP only). Monitor and check stock levels and planning schedules. Create Advance Shipping Notifications (ASN) and final delivery

documents (MP only). Generate invoices.

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Vendor Managed Inventory 8. Change impacts 2/2

Communication Structure of communication and feedback to and from vendors is

defined in the VMI agreement. Vendor's compliance to the VMI agreement is monitored closely

and regular feedback on performance data is given to vendors so that action plans can be developed.

New Ways of Working Vendors perform transactions via the SWP functionality. Access will be provided to the Vendor (SWP only) for all relevant

documents (contracts and POs), material requirement data, stock level of materials, planning schedule and stock consumption.

On time data availability and accuracy are critical. Operating controls will be managed by VMI agreement that

specifies pricing details, inventory parameters, detailed material description & specification and other vital conditions.

Vendor’s performance is captured, stored, monitored and shared to ensure consistency with agreed evaluation parameters. Continuous improvement of all VMI activities is an on-going process.

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Vendor

Materials Handling /

QualityManagement

2. Maintain Contracts

16. Monitor VMI compliance

4. Exchange Stock Level

8. Generate ASN Document

(MP)

7. Generate Purchase Order

13 Exchange Self-billing Data

(MP)

3. Periodic Stock Analysis

5. Exchange Planning Schedule

12. Goods Receipt

Confirmation(MP)

11. QualityInspection

9. Goods Arrive10. Post Goods

Receipt

Procure to Pay

Demand

and

Supply Planning

1. Calculate Time Phased

Material Requirements

14. Generate Invoice

15. Accounts Payable

Vendor Managed Inventory 9. High Level Process Flow

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Nestlé Marketplace

Planning Schedule*

Inventory Levels*

Sales Order / Purchase Order / Purchase Order Change

Advance Shipping Notification

Goods Receipt Confirmation

Self-Billing Invoice

Remittance Advice

VendorVendor

VendorVendorVendorVendor

VendorVendorVendorVendor

VendorVendor

* Synchronized messages

Vendor Managed Inventory10. Marketplace Messages

Self-Billing Invoice for Consignment

Agreement

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Vendor Managed Inventory 11. MP Message Rules

Vendor Sales Order (SO) / Nestlé Purchase Orders (PO) Vendor Sales Order (SO) / Nestlé Purchase Orders (PO) change Planning Schedule and Inventory Advance Shipping Notification (ASN) Goods Receipt Advise (GRA) Self-Billing Invoice (SBI) Self-Billing Invoice for Consignment (SBIC) Remittance Advice (RA)

(click on message rule for more details)

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Vendor Managed Inventory 12. Key Roles

DSPMRP Planner

P2PStrategic Buyer


MHStock Goods Issue

& Receipts

QMQM Material Batch

Maintenance

F&CAccounts

Payable Clerk

MHMaterials Handling

Display

P2PVendor/VMI Vendor

(SWP only)

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Vendor Managed Inventory 13. Process variant

Consignment stock : The major difference with Consignment Stock is that

the ownership of the stock passes to Nestlé only at the point of consumption and not on receipt into the warehouse.

Self-billing Invoices must be used with Consignment Stock.

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2. Definition

3. Business Objectives

4. Benefits

5. Assumptions

6. Key Decisions

7. Change Impacts


9. Working Process

10. Key Roles



P R O C E S S

Introduction Definition Business Objectives Benefits Assumptions Key Decisions Change Impacts High Level Process Flow Working Process Key Roles Process Variants Links to other End-to-End

OUTPUTS

Understand business objectives Understand business benefits Understand Key decisions


P-Card Management

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P-Card management1. Introduction

One of the key deliverables in Procure-to-Pay is to reduce transactional costs. A number of solutions have been identified and developed to reduce the costs of purchasing. Markets should evaluate these solutions to determine which tool is most appropriate for each spend category, P-Card being one of them.

P-Card is ideal for high volume low value spend categories. As this is not template dependent, markets can benefit immediately by introducing this solution.

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P-Card management2. Definition

P-Card Management is an End-to-End process whereby Corporate Purchasing Cards (CPC or P-Cards) are issued to companies and used by employees as charge cards simplifying streamlines for purchases of high volume, low value goods and services for company use.

The company carries the liability and is responsible for making one monthly payment for all purchases on a consolidated invoice statement to the Corporate Purchasing Card company e.g. American Express.

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P-Card management3. Business Objectives

The objective is to provide an effective solution to significantly reduce the cost of the administration required to process the large quantity of low value orders and invoices Nestlé receives.

The main deliverables are:

A simplification of the purchasing and payment process for goods and services.

The reductions of invoice process cost by reducing the number of paper invoices processed.

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P-Card management4. Benefits 1/2

Introduce a simple, convenient and easy to use ordering process against agreed vendors, contracts and conditions which devolves the buying activity to the end users.

Increased speed and reduction of costs and administrative complexity in the procurement process.

Substantial reduction in workload in the Accounts Payable and Purchasing Organizations.

Reduction in invoice processing costs through the direct integration with Nestlé's Accounts Payable systems.

Improved overall visibility, across the organization, of S&IM spends.

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P-Card management4. Benefits 2/2

Improved cash flow for vendors.

Predictable vendor payment.

Eventual contribution in stock reduction. Increased control and compliance of the use of preferred

vendors i.e. reduction in maverick buying. No need for vendors to create customer invoices and

statements. Transactions are posted in the month in which they

occur.

Allow many types of orders i.e. telephone, e-mail, e-catalogue, planned maintenance etc.

Empowerment of employees to purchase goods and services necessary to continue operations.

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P-Card management5. Assumptions 1/2

Selection of a Spend Category to be bought with P-Cards is done through the ''Define Procurement Strategy for a Spend Category '' process.

On a monthly basis, all current data required to generate up-to-date reports are received from American Express and are uploaded in Accounting Link.

The Department/Cost Center Head will proactively inform the P-Card Administrator in case a specific P-Card's validity date is not to be renewed.

The current Globe solution is based upon Accounting Link (a software tool from American Express to reconcile P-Card statements) being used to generate reports.

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P-Card management5. Assumptions 2/2

Screening of P-Card vendors has been done through the ''Study Supply Market'' and "Screen & Select Vendors'' processes.

The Corporate P-Card (CPC) Vendor List is posted on the Purchasing Intranet for easier accessibility.

Human resources will inform the P-Card Administrator about P-card Holders changing departments or leaving the company.

The P-Card Holder orders S&IM only from a vendor/s listed on the CPC Vendor List, from which he/she is authorized to buy.

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P-Card management6. Key decisions

Following Key Decisions have to be applied:

(please click on according key decision for details)

6.1. P-Card Providers

6.2. Use of P-Cards

6.3. CPC Vendors

6.4. P-Card Holders

6.5. P-Card Limits

6.6. Service & Goods Receipt

6.7. Statement Reconciliation

6.8. Tax Reporting and Documentation

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P-Card management7. Change impacts 1/2

New Ways of Working Employee awareness, understanding and acceptance of

new purchasing roles is vital. High level of empowerment is given to employees in this

process. Requirements for S&IM (high volume, low value) are

purchased using P-Cards via phone, fax, e-mail, vendor's website, Enterprise Buyer Professional (EBP) application or in person. No Purchase Orders are required to be created (except in the case of EBP and Asset and Maintenance Management (AMM)).

''Buyerless" procurement where internal users, who are P-card Holders, across the company will execute the operational buying activities.

The P-Card can only be used for the payment of S&IM ordered from vendors listed on the Corporate Purchasing Card (CPC) Vendor List.

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P-Card management7. Change impacts 2/2

Checks and controls in the process, policies and guidelines for P-Card purchases should be in place to meet business needs while preventing abuse.

P-Card usage and efficiency will be monitored and measured.

Simplified purchasing and payment process with

- one payment per billing cycle and charged to accounting information provided by the

Cardholder or that, which is embedded in the P-Card itself.

- monthly statements provided to the Cardholder and to the Corporate Program Administrator.

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P-Card management8. High Level Process Flow

ProcureTo Pay

7. Receive Goods & Services

1. ManageP-Card Vendor

Enrolment

2. ManageP-Card Holder

Enrolment

5. MonitorP-Card Usage

4. ManageP-Card

Transfers & Terminations

6. Order Goods & Services with

P-Card

3. ManageP-Card

Revisions / Renewal

8. Handle Returns, Credits &

Disputed Items

9. ReconcileP-Card

Statements

AMEX Transaction

Approval

AMEX Transaction

Approval

OKOK

ReconciledReconciled

Yes

No

Yes

Yes

No

No

End

Finance& Control

10.Register 3rd Party/Intercompany

Commitments

15. Comply with P-Card Sales &

Use Tax

11. Create Payment Proposal

12. Approve Payment Proposal

13. Execute Payment Run &

Create Payment File

14. Transfer Payment File

Yes

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P-Card management9. Working Process

This process consists of following steps:

An employee issued with a corporate purchasing card (P-Card) can use his/her P-Card for the payment of high volume, low value services and indirect materials from approved vendors listed on the CPC (Corporate Purchasing Card) Vendor List on the Purchasing Intranet.

The approved Vendor processes the order and sends the details to the P-Card Provider (American Express).

American Express (AMEX) accumulates the transactions from the vendors, pays those vendors, and sends Nestlé a consolidated P-Card transaction file each month. The P-Card Holder's manager must approve the transactions listed.

Each month, each P-Card Holder will receive a copy of the transactions that have been charged to their card. The P-Card Holder will then be required to check each transaction and validate it both in terms of price charged and that the goods or services were received as shown on the transaction.

The P-Card transaction file received from AMEX is uploaded into the SAP Finance system, which results in a payment to AMEX.

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P-Card management10. Key Roles

P2PStrategic Buyer

P2PP-Card Administrator

P2PP-Card Approver

P2PP-Card Holder

F&CAccounts Payable

Supervisor

F&CTreasury Back

Office

F&CAccounts Payable

Clerk

P2PP-Card

Reconciliation Administrator

P2PPurchasing Manager

HRHR Administrator

F&CController

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P-Card management11. Process Variants

1. Stock or Non-Stock Services & Indirect Materials online Card Type E (E-Card).

2. Amex "Financial Event" A "Financial Event" can occur, if Amex places additional

charges on Nestlé, within the contract, but not initiated by Nestlé P-Card.

3. Misused Card

4. Offline Procurement Card Type P (Product Card) Card Type B (Buyer Card)

5. Offline Procurement with Card Type G (General Requisitioner Card) Card Type I (Internal Order Card) Card Type D (Department Card)

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P-Card management12. Links to other End-to-End

Purchasing of Services & Indirect Materials Asset Maintenance Management

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2. Definition

3. Benefits

4. Triggers

5. Business Requirements & Constraints

6. Business Rules

7. Assumptions

8. Key Decisions

9. Change Impacts


11. Key Roles

P

R

O

C

E

S

S

Introduction Definition Benefits Triggers Business Requirements &

Constraints Business Rules Assumptions Key Decisions Change Impacts High Level Process Flow Key Roles

OUTPUTS



Vendor Life Cycle

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Vendor Life Cycle1. Introduction

A Vendor is a business partner providing direct, indirect materials and services.

The purpose of this process is to have formal and cross-team procedures with clearly defined and segregated roles and responsibilities to manage the Vendor master records across the company.

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Vendor Life Cycle2. Definition

This process is the sequence of activities necessary to effectively and efficiently introduce a business partner as a unique Vendor master record (one code in SAP) into the system.

This End-to-End process is applicable whenever a vendor is

introduced changed blocked unblocked

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Vendor Life Cycle 3. Benefits

Manage Vendor master data as a company asset.

A standardized process ensures that purchasing is done in a professional way throughout the company.

When processing procurement documents, there is less likelyhood of errors because of high quality Master Data management and one point of entry.

Easy access and transparency of available Vendor data information will accelerate the procurement process.

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Vendor Life Cycle4. Triggers

A new Vendor can be introduced after a supply market analysis following a new material/service requirement, the development of a new product, etc.

A Vendor can be changed based on communication received from the Vendor, as a result of a negotiation, etc.

A Vendor can be blocked for quality reasons, financial reasons, business reasons, etc.

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Vendor Life Cycle 5. Business Requirements & Constraints

Scalability: This process covers the Vendor life cycle, either locally or

globally, managed by Procurement. Sharing the information through other tools (e-mail, fax,

intranet) will enhance the process, because it will reduce the workload of other organizations.

Usability: The speed at which requests may arise and approval

decisions are taken in local or global organizations, is a key element of this process.

Every role and stream involved in the process must be efficient and effective.

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Vendor Life Cycle 6. Business rules

The company can be supplied and can receive invoices only if Vendors are identified by a Vendor master record.

Procurement is responsible for the approval process of a Vendor as a business partner.

Each Vendor is identified by one Vendor master record.

A new Vendor can be set up only if it does not already exist in the Master Data Repository (MDR).

A Vendor with the same name/address/search term must exist only once on the MDR.

The creation request form can be raised in other departments by a local person, but the decision to accept a Vendor is only taken by Procurement through business approval.

The 'Vendor master data initiator' is a Data Management role that only proposes the creation of a new Vendor master record.

The 'Strategic Buyer' is a procurement role authorized to deal with a Vendor.

For more details, please contact your local GC.

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Vendor Life Cycle7. Assumptions

The request form for creation, maintenance and change can be raised by non-procurement roles. A daily report ensures critical field checking.

A procurement business approval for change in the MDR is not required.

Data quality, consistency and validity are a co-responsibility of the Initiator, Procurement, Local Data Organizations and Globe Centers.

Rationalization of the Vendor database and a higher degree of uniformity across the markets is recommended.

A procurement function triggers the introduction of a new Vendor within the company and this determines the creation of a new Vendor master record in the system.

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Vendor Life Cycle 8. Key decisions

However, clearly defined rules must be applied for One Time Vendor (OTV), please see attached Key Decision Document.

Microsoft Word Document

No Key decisions exist for the Vendor Life Cycle process.

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Vendor Life Cycle9. Change impacts 1/2

Responsibilities / Accountabilities and Decision Making The Procurement Unit is responsible for the approval of a

Vendor as a long term business partner. This Vendor Life Cycle process is applicable for three

scenarios, i.e. create, change and block/unblock Vendor. Local data management checks correctness, completeness

and compliance with the Data Standards and then uniqueness in the Supplementary Data Repository (SDR) and the Global Master Data Repository (MDR).

GLOBE Centers (data management) are responsible for the quality of the 'global data' of the Vendor which are recorded in the Global Master Data Repository (MDR).

Communication and Workload Shifts Electronic workflow is used in the process of creating and

changing a Vendor record.

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Vendor Life Cycle9. Change impacts 2/2

New Ways of Working The Vendor Life Cycle follows a defined and structured process, all

involved must adhere to workflow steps in their respective roles. Entry of Vendor information requires discipline and must be timely

and accurate. Workflow administrators should exercise discipline and timeliness

in updating all who have a role in the workflow. Master data records adhere to Nestlé data standards. Requests for new Vendors go through three approval stages, i.e.

Procurement, Local data organization and the GLOBE Center. Requests to change Vendors on MDR go through two approval

stages, i.e. Local data organization and GLOBE Center. Requests to change Vendors on SDR go through one approval

stage, i.e. Local data organization. The creation of a new released Vendor will depend on the timings

involved in data creation and approval from more than one department (i.e. Initiator, GC Data management, Local Data Organization, Purchasing and Accounts Payable).

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Any

Department

Procure

to

Pay

Finance

and

Control

Local

Data

Organization

Globe

Center

Vendor Life Cycle10. High Level Process Flow Vendor Creation

1. Request Form for Vendor Creation

6. Start Local Workflow

5. Replicate MDR to Secondary Data

Repository (SDR) and local SAP system

2. Business Authorization Create

Vendor

4. Create Vendor in Master Data

Repository (MDR)

Reject and Send Back to Requester

3. Completeness Correctness and

Uniqueness Check

exists

already?

10. Approve Vendor and Inform Interested

Parties

9. Complete Bank Details Views

7. Complete Purchasing

Accounting Views

End

No

Yes

MDR SDR

8. Complete Accounting Views

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Any

Department

Procure

to

Pay

Finance

and

Control

Local

Data

Organization

Globe

Center

Vendor Life Cycle10. High Level Process Flow Vendor Modification

1. Request Form for Vendor Change

1. MANUAL Request Form for Vendor Change

5. Replicate MDR to Secondary Data Repository (SDR) and local SAP system

3. Change Vendor in Master Data Repository (MDR)

2. Completeness Correctness and Uniqueness Check

3. Change Vendor in Secondary Data Repository

(SDR)

4. Replicate Changes in Local SAP System

2. Completeness Correctness and Uniqueness Check

MDR Changes on Global View

INFORM MARKETUSERS

SDR Changes on Local View

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Vendor Life Cycle11. Key Roles

Initiator

P2PVendor Master

Business Authorizer

P2PMaster Data Entry

Purchasing

F&CMaster Data Entry

Banking

F&CMaster Data Entry

Accounting

LDOVendor Master Local

Data Approver

GCVendor Master MDR

Data Approver

SAP p2p End to End Processes

Documents

Transcript of SAP p2p End to End Processes