Closing the Loop in Your Procure-to-Pay Process
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Without connecting invoice processing to the broader source-to-settle process, a P2P transformation project will have limited success. In this session, you will hear how you can implement a "closed-loop" P2P process that enforces invoices against catalogs, orders, and contracts; monitors supplier performance; and improves control over your spend.
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Closing the Loop in Your Procure-to-Pay Process
- 1. #AribaLIVE @ariba Closing the Loop in Your Procure-to-Pay Process Chris Rauen, Solutions Marketing, Ariba Lou Valdes, Senior Manager, Procurement Operations, Ryder Logistics & Transportation Solutions Asad Zaidi, Director of Procurement & Performance Improvement, Al-Futtaim Group April 8, 2015 © 2015 Ariba – an SAP company. All rights reserved.
- 3. #AribaLIVE @ariba Commerce Level 1: Concentrated Siloed Processes Sourcing & Procurement Supplier AP Mail Email Fax Mail Scan OCR © 2015 Ariba – an SAP company. All rights reserved.3
- 4. #AribaLIVE @ariba Commerce Level 2: Connected Supplier Portals Sourcing & Procurement AP Supplier Send PO Invoice Receipt & Status © 2015 Ariba – an SAP company. All rights reserved.4
- 5. #AribaLIVE @ariba Defined & Approved Catalog Content Commerce Level 3: Collaborative Closed Loop Value Chain Catalogs Perfect Invoice Payment Visibility, Execution & Remittance Perfect PO Analyze Source Order Match Invoice Receipt Requisition Manage/ Approve Order Acknowledgement & Ship Notice Contract “Actual ” Spend Data Pay Supplier © 2015 Ariba – an SAP company. All rights reserved.5
- 6. #AribaLIVE @ariba Ryder Profile 6 FLEET MANAGEMENT SOLUTIONS SUPPLY CHAIN SOLUTIONS (1) These amounts result from continuing operations. (2) Net Earnings from Continuing Operations are $243 million. 209,500 RYDER IS A FORTUNE 500 COMPANY WITH FULL YEAR 2014 28,900 VEHICLES EMPLOYEES 6.4 Billion ANNUAL REVENUE (1)$ $ 257 Million COMPARABLE EARNINGS (1) (2) $ 9.1 Billion ASSETS
- 7. #AribaLIVE @ariba Procure-to-Pay Challenges 7 Culture, policy-procedures and technology did not easily support P2P transition A fragmented procurement structure Limited use of technology and workflow Limited visibility to contract information Very manual payment process Inadequate supplier contact information Project approved in 2009 The biggest challenge …….…Change management! © 2015 Ariba – an SAP company. All rights reserved.7
- 8. #AribaLIVE @ariba Days in the Life of an Invoice Code Invoice Receive Invoice Deliver to approver Sort and scan Key © 2015 Ariba – an SAP company. All rights reserved.8
- 9. #AribaLIVE @ariba Goals - Objectives 9 Journey to transform the way Ryder buys and pays goods & services Deploy in a controlled manner Approval to Buy vs. Approval to Pay Automate transactions (target 90% e-invoicing) Standardize processes and enhance controls Obtain visibility to contracts and spend Pay the right price Continuous improvement © 2015 Ariba – an SAP company. All rights reserved.9
- 10. #AribaLIVE @ariba Solution Approach Launched in a controlled approach (crawl, walk, run) Maximize the use of P2P and the Ariba Network Focus on change management, supplier enablement and deployment strategy Integrate with Ryder systems to increase automation Develop an efficient P2P program Enable catalogs Improve how transactions are processed Create compliance reports to measure success with users and suppliers 10 © 2015 Ariba – an SAP company. All rights reserved.10
- 11. #AribaLIVE @ariba Results - Benefits 11 Spend visibility Having details of what you buy creates new opportunities for RFP On-demand dashboard reporting (info. on PO spend, suppliers, invoices) Eliminates need for manual PO logs Approvals obtained before $ is spent Ensures we pay negotiated price and reasonable shipping costs Enforces Ryder’s standard terms and conditions Cost reduction due to elimination of paper invoices and leveraging spend Strong validation rules to ensure invoice accuracy © 2015 Ariba – an SAP company. All rights reserved.11
- 12. #AribaLIVE @ariba Results - Benefits 12 Automated accruals (including tax) Standardization and centralization in procuring and paying for goods & service Less manual journal entries as commodities are mapped to correct GL accounts Leverage communication with the Field to share existing tools to the Field Key Metrics 2014 YTD e-invoices represents 96% of all invoices 2,200 enabled suppliers 2,300 users 50 catalogs 2015 e-invoices target of 96-98% of all invoices Expect 3,000+ enabled suppliers Increase to 3,500 users Expand to100+ catalogs 2014 2015 © 2015 Ariba – an SAP company. All rights reserved.12
- 13. #AribaLIVE @ariba Lessons Learned "Change is hard because people overestimate the value of what they have—and underestimate the value of what they may gain by giving that up.“ James Belasco & Ralph Stayer - Flight of the Buffalo (1994) 13 Develop strategy and prepare accordingly Be prepared to manage change Leadership support is key Have accurate supplier information for enablement Plan and adjust deployment (users/suppliers) Build a strong team Automate and build tools to assist program Change is hard. © 2015 Ariba – an SAP company. All rights reserved.13
- 14. #AribaLIVE @ariba Next Steps 14 Continue deployment to the Field Expand catalogs Add new commodities to the program Continuously improve Enhance user experience and support tools Further automate compliance reporting Expand Ariba tools Continue journey to transform how Ryder buys and pays for goods & services © 2015 Ariba – an SAP company. All rights reserved.14
- 15. #AribaLIVE @ariba Agenda • Al-Futtaim Introduction • Vision, Mission and Customer Values • Background • Business Challenge • Solution - Ariba Procure-to-Pay • Complexities in Implementation • Solution Themes • Results • Way Forward © 2015 Ariba – an SAP company. All rights reserved.15
- 16. #AribaLIVE @ariba Al-Futtaim Introduction • Part of 80-year-old privately held group • Dominant market leader Multi-billion dollar revenues Market share of 40% + in UAE Represents 25 top global automotive brands Over 250,000 units sold annually 12,800 employees from 70 nationalities Presence in 14 countries across Middle East, Asia & Africa © 2015 Ariba – an SAP company. All rights reserved.16
- 17. #AribaLIVE @ariba Vision, Mission and Customer Values Vision To be the auto company of choice by providing value-based customer experiences delivered by an empowered and engaged workforce Mission Customers and vehicles for life © 2015 Ariba – an SAP company. All rights reserved.17
- 18. #AribaLIVE @ariba Background • Centralized procurement in 2008 • Implemented Ariba Sourcing in 2009 Entire group now using Ariba Sourcing Over 400 online bidding events Over $40M saved (18%) • Initially handled only non-trade spend • Now handling non-principal trade spend © 2015 Ariba – an SAP company. All rights reserved.18
- 19. #AribaLIVE @ariba Business Challenge • Inadequate Spend Visibility Multiple SAP platforms Maverick buying Cumbersome reporting • Lengthy Procure-to-Pay Cycle No centralized rate contracts Tedious PO approval process Manual invoices Manual 3-way matching for payment © 2015 Ariba – an SAP company. All rights reserved.19
- 20. #AribaLIVE @ariba Solution - Ariba Procure-to-Pay © 2015 Ariba – an SAP company. All rights reserved.20 Make it Easy Make it Transparent Finance Suppliers Central Procurement Approvers / Senior Management Business Users … increased realized savings • Leverage group’s buying power • Contract Compliance • Greater Spend Visibility • Extended supplier network …spend visibility • Spend reporting for monitoring & control • Mobile PO approval capability …supplier enablement • Timely payments • Increased process transparency • Building strategic supplier relationships …item catalogs • Search and find items • Quick approval & tracking • Online contracted rates …process efficiencies • On-Time Accurate Invoicing • Streamlined goods receipt process • Tighter control on budget
- 21. #AribaLIVE @ariba Complexities in Implementation • Some trade purchase is also handled • Extensive integration with SAP • Complex and different P2P scenarios for in-scope trade purchase Some categories needed pricing conditions and some batch numbers Advance Shipping Notifications for accessory procurement Procurement triggered from job cards and sales orders • Supplier Adoption None of our suppliers were on the Ariba Network. Concept very new to the Middle East Supplier apprehension about Ariba Network fees • User Adoption 700 + users scattered across 100-plus locations Well-entrenched As-Is process © 2015 Ariba – an SAP company. All rights reserved.21
- 22. #AribaLIVE @ariba Solution Themes • Scope definition – Striking the balance between SAP-MM and Ariba Procure-to-Pay Detailed spend analysis to support the scope Customizations wherever possible to bring spend in scope Keep customer-facing spend out of scope • Supplier education and training Completed well in advance to address any challenges before go-live AF-Auto and Ariba team educated suppliers on the benefits through hands-on training sessions in three waves For key strategic suppliers, one-on-one sessions carried out before the trainings • OCM and User Training Engage and communicate with key stakeholders at right time SOPs, training collaterals and online transaction simulations made available to users Train the Trainer approach – Wider reach and business ownership © 2015 Ariba – an SAP company. All rights reserved.22
- 23. #AribaLIVE @ariba Results • Q4- 2014 data • 62% of transactions fast tracked through catalogs 168 catalogs with 6000 + line items • 96% of third-party POs electronically transmitted through the Ariba Network • 33% reduction in PR to PO turn around time • 94% of invoices processed through automatic IV © 2015 Ariba – an SAP company. All rights reserved.23
- 24. #AribaLIVE @ariba Way Forward • Leverage the reporting capability of the tool Monthly spend visibility reports for managing directors Reports for category specialists to identify new sourcing opportunities • Enhance the existing solution Buying against budget • Drive Supplier Performance Management Track on-time delivery through Ariba Procure-to-Pay © 2015 Ariba – an SAP company. All rights reserved.24
Editor's Notes
- Talking Points for Speaker: Jim Ryder started this company with a $35 down payment on one truck Today, we have more than $6 Billion in annual revenue And that one truck has become a huge fleet: Ryder now has the largest fleet of commercial vehicles in North America with more than 200,000 vehicles on the road. And our footprint has extended well beyond trucks – we have almost 29,000 employees and operate nearly 35 million square feet of warehouse space and over 800 service and maintenance locations across North America 2 primary business units FMS - Fleet Management Solutions leases & rents vehicles, provide maintenance and support services to commercial customers. FMS Customers include Coca-Cola, Dunkin Donuts, International Paper, NAPA SCS - In Supply Chain Solutions, we provide logistics services to meet customers’ supply chain and distribution requirements. SCS Customers include Toyota, Whirlpool, P &G, Kraft, ConAgra Foods, CVS Did you know We manage $4.2 Billion in transportation 9 of the top 10 food & beverage companies use Ryder We manage over 200 warehouses globally Have 5,000 trained professional technicians + 5,000 drivers
- A fragmented procurement structure with limited number of resources focused on strategy, policy, measurement and compliance. Procurement policy was unclear and different practices were occurring across the different business locations Spend was not rationalized, we did not have visibility to Field negotiated contracts and we did not have catalogs We were unable to leverage spend across a smaller supply base Limited use of technology and work flow to provide access and guidance to the field for requisitioning and ordering goods and services “Buyers” exist at every location and were negotiating deals, without procurement assistance and training Limited use of purchase orders across the enterprise We did not have an e-procurement system to workflow requisitions, purchase orders and supplier set-up Field locations were making decisions and we were not using catalogs, Ryder had over 50,000+ suppliers Very manual payment process A lot of paper invoices sent directly to the field, then mailed to the shared services center It was easy to bypass the contracting process and issue a verbal requisition, manual PO, and were just using suppliers in the AP system Approval to pay – the ordered the goods & services and the invoice showed up, but the $ was already spent Challenges - As we all know the biggest challenge in deploying is change management, for us it was getting business owners and suppliers to shift to Approval to Buy and getting them to follow our process. The other significant challenge has been enabling thousands of suppliers. Finally, at times we have had high volume of user support.
- Messaging is important. Getting manual invoices processed at Ryder or any other large or organization is hard so we created a visual representation to demonstrate to business owners and suppliers why it’s so hard and why it would take long to process transactions if they did not use P2P and the AN.
- Transactions were based on a approval to pay and not an approval to buy and were very manual, etc. We wanted to change how we did business. Our target from the very beginning was to have 90% electronic invoicing, which meant we had to obtain accurate information on suppliers that we did not have so we could enable them We wanted to standardize processes and enhance controls, approvals, rate compliance, accruals, etc. We wanted Sourcing to have visibility to contracts or pricing arrangements. Not just enter transactions but them more efficient for both Ryder and the supplier……contracts that split cost to 800 locations without journal entry or one that does debits and credits to various cost centers, and remove paper
- Leveraging the AN – We set a goal to have at least 90% of the P2P invoices go through the AN. We wanted to eliminate paper for all the in scope categories. Today 96% of all P2P invoices are electronically submitted by the supplier thru the AN. Enabled suppliers – we have put a lot of focus on enabling suppliers. Especially top suppliers This has not been easy as we may not have the correct information, have to convince suppliers of the value proposition because of the fee potential and the fact they have to amend their current billing process. Honestly we do not give suppliers really a choice and if they push back we work really hard at convincing them of the value and how we can both benefit. We recognize that we will not be able to convince some suppliers but we are very successful enabling suppliers. We have put language in all RFPs and contracts for in scope categories requiring them to agree to use the AN and to pay for any fees incurred. Now, we will not even setup a new supplier in P2P unless we have an ANID. We work with business owners to ensure we have a united front if a supplier does not want to be on the AN. Many times communications mandating they process transaction thru the AN comes directly from the business owner, which we have found to really make a difference. Transacting – we monitor not only how many suppliers we have but how many are transacting. Over the summer we contacted over 150 suppliers that were enabled and were not invoicing thru the AN. We use non-compliance reports to target and prioritize what suppliers we go after. Improvement - During implementation we wanted to find process improvement opportunities related to processing transactions. System integration - We decided to integrate Ariba P2P with other Ryder systems to find efficiencies.
- Spend visibility Having details of what you buy, created new opportunities to put out bids and lower prices…Cargo straps We created reports on users dashboard to provide spend visibility to the field and help them manage their transaction Eliminated need for manual PO logs… 1 location had 3 logs, to assign PO #, track PO and invoices Buyers now must obtain approval thru the system before the supplier delivers the good or service …Purchases are sometimes declined by management. Ensures we pay negotiated price and reasonable shipping costs Electronic POs sent to suppliers obligates them to accept Ryder’s standard terms and conditions (including indemnification). This protects us where we may not have contracts Cost reduction due to elimination of paper invoices and paying better rates Savings from lower processing costs Less time communicating with suppliers Lower storage costs, eliminates lost documents The system has strong validation rules to ensure invoice accuracy…
- Automated accruals (including sales tax if supplier does not invoice or tax amount is inaccurate) We have driven standardization and centralization in procuring goods and service Less JVs as commodities are mapped to correct GL accounts as Accounting and Finance During deployment, field personnel introduced to many tools available to them, I mention this because there are lot of side benefits that you do not originally think of that the organization will benefit from. i.e. Sourcing portal with nationally negotiated labor rates which can be used for comparison
- Strategy Obtain management buy-in how to the deploy……Controlled release or Big bang Consider what resources will you need to meet your approach Change Be prepared to manage change, obtain management buy-in & support, identify key folks in the organization to win over Continue to show them what is in it for them Users and Supplier Understand your customers challenges and how you can help them solve them Ensure you have accurate supplier information for ordering, invoicing Understand if suppliers are structured for central billing or not Team You need strong process team members to help you understand current and future state Bring in the team early to start planning and developing tools that will make you more efficient Deployment Develop strategy and be ready to adjust Obtain buy-in from stakeholders Efficient program Automate processes, training, support, reporting Build interfaces to other system to add value….data warehouse, AP/FA, asset mgt,
- Deployment Because of the deployment strategy we still have business segments we have not rolled-out yet Canada still needs to be done Grow the program Add new commodities to scope More than double the number of catalogs (target of 60+ catalogs) Add at least 750-1000 suppliers in 2015 Maintain 96% or improve e-invoicing Improve Improve everything we touch Enhance user experience Further automate compliance reporting Ariba tools Ryder will continue rolling out SIM, contract workspace, invoice pro, dynamic discounting