Mission Possible: You Can Achieve Touchless Invoice Processing

Mission Possible: You Can Achieve Touchless
Invoice Processing
Chris Rauen, Solutions Marketing, SAP Ariba
Kim Berg, Director, Financial Services, Bemis
Jeremy Henkel, Director, Procurement Services, Holiday Retirement
Kathy Hinton, Vice President, Supply Chain Management, Tesoro Companies / March 15, 2016
Public

© 2016 SAP SE or an SAP affiliate company. All rights reserved. 10Public
“Nearly 56% of all
incoming invoices are
still paper based.”
- TAPN 2014
“30% of invoices have
exceptions”
- AberdeenGroup
“$9 million in contract
leakage per billion in
spend on average.”
- The Hackett Group
“80% of early payment
discount opportunities
missed.”
- SAP Ariba
High Cost of
Paper Invoices
Too Many Exceptions Lack of Compliance Lack of Control
Receipt &
Capture
Matching &
Approvals
Inquiries
& Exceptions
Discounts &
Payments
A broken process

“Other”
GST/VAT
Compliance
PO & PO-Line
Match
Buyer Match
(non-PO)
UOM & SKU
Change
Currency
Match
Sub Total
& Total
Amount
PO-Line
Change
Line & Total
Consumption
Thresholds
Shipping & Tax
Thresholds
Invoice
Number
Bill To /
Ship To
PO
Number
Requestor
(Non PO)
Invoice
Date
VAT / GST
IDs
Account
Coding
Contract &
Receipt
Match
Price & Tax
Compliance
98%+ Auto Post
Network-centric payables

Buyer & Seller Benefits
$2 million discount savings
per $1B spend
DSO Reduction of over
6 Days
Spend Savings
$400K+ in AP Error &
Fraud Elimination per $1B
in spend
$4M per $1B of contract
leakage avoidance
Effectiveness Gains
98%+ touchless
processing
70% decrease in approval
times
Efficiency Gains
60 – 80% operational cost
takeout in AP
“Nearly 56% of all
incoming invoices are
still paper based.”
- TAPN 2014
“30% of invoices have
exceptions”
- AberdeenGroup
“$9 million in contract
leakage per billion in
spend on average.”
- The Hackett Group
“80% of early payment
discount opportunities
missed.”
- SAP Ariba
High Cost of
Paper Invoices
Too Many Exceptions Lack of Compliance Lack of Control
Receipt &
Capture
Matching &
Approvals
Inquiries
& Exceptions
Discounts &
Payments
Capture 100% of your
invoices in a digital
format from any
supplier regardless of
volume, location or
capabilities
Resolve invoice errors
at point of submission
with self-serve supplier
portal and over 80
Network business
rules
Match invoices against
POs, Contracts,
Service Sheets.
Workflow routing and
approval
Control payment
timing and maximize
early payment
discount capture
Eliminate & Digitize Paper
Capture & Correct
Exceptions
Systemic Compliance Control Payment Timing
Fixing a broken process

Best-in-class results
Metric All Others Best-in-
Class
SAP Ariba
Cost to process an invoice $15.96 $2.94 <$2
Time to process an invoice 16.6 days 3.6 days Minutes
Invoice exception rate 19.1% 9.8% <2%
% invoices process straight
through
17.3% 54.1% 98%+
Source: Ardent Partners, SAP Ariba

Bemis Company
NYSE: BMS
Supply packaging for food, consumer, medical
and pharmaceutical companies worldwide
Based in Neenah, WI
2014 net sales $4.3 billion
60 locations – 11 countries
17,000 employees worldwide

BEMIS: A BETTER WAY
Our customers
Our Mission
Passionate commitment
to the growth and success
of our customers
will make Bemis the clear choice
for inspired packaging solutions

Financial services strategy
Provide premier financial transaction - master data services for business units
Productivity: Provide first quartile cost performance as benchmarked
against the industry
Service: Documented service levels through Service Level Agreements, and regular
reporting of results.
Control: Maintain controls that fully meet internal and external audit requirements

Need for procure-to-pay automation strategy
Indirect space in the middle:
many fragmented systems &
processes, many of which
are paper-based.
$$’s
Suppliers
Raw Materials.
Few transactions,
big $’s: MRP
Many low $
transactions:
P-Cards

Procure-to-pay project charter
Automate the indirect procure-to-pay process
with best-in-class technology
that is a scalable solution
providing information for advanced sourcing,
transactional process efficiency, contract pricing visibility
for low-cost item requisitioning and ease of use

Systems and applications
SAP SRM
• One foundational system for
document of record
SAP Ariba
• Sourcing Professional
• Ariba Network
• PO Automation
• Invoice Automation
• Procurement Content
(Catalog)
Environment
• Multiple ERPs
• Multiple purchase
order systems
• Multiple purchase order
methods and processes
• No integration
• Lack of visibility to data
• Manual 3-way match
• No automation

Project leadership
Steering committee
CIO, Functional VPs
Business sponsors
Director of Procurement
Director of Financial Services
A Procurement and
Finance led project.
Strong top-down
alignment required.

Project team
Core team
Business sponsors, Project manager and IT lead
SMEs: Procurement, Finance, Maintenance
Support: Internal audit, master data, training
SAP Ariba: Project management and supplier enablement
Deployment team
Core team
Site champion
Pay-it-forward resources
Local cross functional team of key users and end users
Change
management
requires high end-
user involvement
and ownership.

Results
Financial Services
Automation = headcount reduction = lower transactional costs
Improved internal controls.
Procurement
Improved information and greater spend leverage
Contract price and terms compliance
Operations
Standard processes
Improved controls for receiving

Accounts Payable headcount timeline
Concur
SAP Ariba
SAP, P-card
Scan
and
Capture
SAP Ariba,
P-card
Standardized
and Improved
Processes

SAP Ariba
73.2%
44,973
pCard
4.2%
2,554
Non-SAP Ariba
22.7%
13,950
Percentage & Count of Indirect
Line Items
iSave: Network usage KPIs
Original Success Criteria:
Purchase Order Line Items through Ariba Network
Year 1 – 60%
Year 2 – 75%
Current State – 73.2%

Lessons learned
Assure top-down alignment
Drive a focused deployment process
Use pay-it-forward and local teams
Conduct closed-loop testing
Maximize catalog content
Comprehensive training and support
Close the gap between current / to be
workflows
Start small with current
requestor base
CHANGE
MANAGEMENT

About Holiday Retirement
Founded in 1971 to create independent living lifestyles
Second-largest operator of senior living communities in the U.S., with 308 communities

Invoice processing challenges
Front-end AP process
Decentralized and manual
Predominantly paper-based
No workflow tools to streamline approval process
Limited visibility into liabilities
Excessive costs

Solution approach
Centralized AP system end-to-end
Ariba Procure-to-Pay
Supplier enablement
Target suppliers with large volumes of paper invoices to move to an electronic process

Results
Payments made within vendor terms
Faster processing, with fewer invoice duplications and exceptions
One workflow – multiple product types
Improved efficiencies for managers and field members
Tightened controls in AP
Detect duplicate payments
Reliable approval process
Costs reduction of >60%

Lessons learned
Know your desired outcome
Carefully plan your deployment
Impact of business decisions on how items are processing
Connect with companies that have made the transition
Serve as mentor for your deployment

Next steps
Expand catalogs-PO invoicing to improve compliance
Transition JD Edwards PO system to SAP Ariba
Target new spend categories such as maintenance
Goal of cleaner transactions
Continue P2P integration with sourcing-contract modules
Convert more ICS suppliers to transact electronically
Improve capture of early payment discounts

Tesoro Corporation
Fortune 100 company
Independent refiner and marketer of
petroleum products
Operates six refineries in western US
Combined capacity of 850,000 barrels per day
35% ownership in Tesoro Logistics LP (NYSE: TLLP)
2300 retail stations under ARCO, Shell, Exxon, Mobil, USA
Gasoline and Tesoro brands

What we do
Through our advantaged crude supply and integrated value chain, we’re
positioned for strong growth potential
Operate six refineries in
the western United
States
Refine up to 875,000
barrels of oil per day
that we market
wholesale, commercially
and at retail
Gather, transport, store
and distribute crude oil
and refined product
through Tesoro Logistics
LP, formed by Tesoro to
own, operate, develop
and acquire logistics
assets
Supply more than 2,300
retail stations in 18 U.S.
states, branded
Tesoro®, Shell®,
ARCO®, Exxon®,
Mobil® and USA
Gasoline™

Our SAP Ariba story
Implemented Ariba Sourcing, Ariba Contract Management, Ariba Supplier Performance and
Information Management in 2014
Loaded over 10,000 documents in contract repository
Set up templates for RFPs and contracts
Established supplier self-registration site powered by SAP Ariba
In 2015, we implemented Ariba Procurement Content, launching 12 new catalogs
and began the Ariba Invoice Professional design
In 2016, we are implementing Ariba Invoice Professional

Overview
The SAP Ariba implementation will generate value for the organization by automating manual Finance
and Supply Chain processes and increasing the level of accuracy in the accounts payable process.
Value will be generated by:
• Increasing processing efficiencies
• Improving overall contract compliance
• Allowing for more focus on strategic activities
Ariba PO and Invoice Automation will be used to:
• Transmit POs electronically and receive invoices submitted electronically
by suppliers through the Ariba network
• Process other electronic transactions, such as Order Acknowledgements
Ariba Invoicing Professional will be used to:
• Validate invoices (pricing, quantities, terms) prior to the invoice being
transmitted to Tesoro
• Workflow invoices internally for review and approval
Ariba Procurement Content will be used to:
• Generate touchless POs using catalogs with content provided
electronically from suppliers
Project Overview
Primary levers:
• Increase process efficiencies
• Eliminate scanning, matching and manual entry of invoices by Accounts
Payable staff
• Decrease number of incorrect invoices received, reducing internal
stakeholder review time
• Increase contract price compliance
• Increase the accuracy of POs received by suppliers
• Reduce incorrect payments to suppliers by auto- matching invoices against
Ariba-issued POs
• Dolphin retirement savings
Secondary levers:
• Reduce effort required to perform initial tests performed by contract auditors
• Increase saving by reducing the effort spent by field Supply Chain staff on
generating POs and allowing effort to be refocused on more strategic
activities
Value Creation Levers

Current P2P processTesoro Logistics Rockies P2P Process - Invoicing
Supplier
Vendor
TesoroMailRoom
ScanTeam
APCentralized
ServiceEntryTeam
Requisitioner
Receive Invoice
Deliver Service
Receive & Open
Invoice in CSE workflow
Review PTS
Record
Do
PO/SO has enough
funds?
Send Invoice to
Tesoro Mail Room
Date and Scan Invoice
Send Invoice to Requisitioner
with a PTS Note
$
Request Additional
Funds Approval
Select PO/SO Line
Begin SE
Do value tab
matches
total?
Review SE for
Errors
Send for Review
and Acceptance
NO
Invoice is in Dolphin
Receive Invoice
via link in e-mail
Log into Dolphin
Review Invoice
Approve or Reject
Log into Dolphin
Read PTS notes
NO
Funds Approved
Issue an invoice
Supplier Inquiry
Receive Invoice
via link in e-mail
YES YES
Funds added
To PO/SO
Save SE
Do
PO/SO has enough
funds?
Contact PM to
request Additional
Funds
YES
NO
Service Delivery
is in Progress
1 Link
Symbol Count Description
Legend Subtitle
Legend

$$$M
Total Process
Improvement
Benefits
Process improvement benefits
Purchase
Order
Processing
$
 Reduce buyer time by automating the PO, Order confirmation and
Advanced Shipping Notice
 Reduce time for line of business people to reconcile invoice issues.
Eliminate 4,000 of the 6,000 hours currently spend on this activity,
 Eliminate lost POs
Invoice and
Receipt &
Processing
$
 Reduce work related to invoice scanning
 Automate invoice receipt and data entry
 Reduce supplier inquiries to A/P, buyers and stakeholders
SES
Receipt &
Processing
$$$
 Reduce Service Entry Sheet workload
 Reduced reconciliation expense by creating SES against
contract terms

Invoice automation challenges
Current state - Process
Invoices can be submitted through email box or paper
Scanning done in house
Invoices are loaded in Dolphin. Vouchered against POs, GRs, SEs
Routed for approval
Matching issue resolution
Time spent on managing matching holds
Implementation challenges
Complex invoice types – it’s not just about procurement
Issues with accounting treatment
SAP integration – Service Entry Sheet
Tesoro’s supply base
Culture of nice

Where are we now?
As of mid February
First set of suppliers for goods went live – Next wave of non-PO suppliers scheduled for early March
Moving open POs and associated documents with each wave
Performed cut-over of SAP Ariba and SAP
Managing progress of SAP Ariba fixes for Services
Supplier Enablement/Change Management
261 of 349 (75%) suppliers completed Trading Relationship Requests (TRRs)
126 suppliers signed contract amendments; 81 suppliers w/o contracts will receive PO T&Cs
169 of 349 (48%) suppliers ready for enablement
Multiple training sessions for A/P, SCM, stakeholders and suppliers on going
Communicating change with each batch to stakeholders, executives and core team

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Mission Possible: You Can Achieve Touchless Invoice Processing

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