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Strategies for migrating suppliers from paper invoicing to true e-Invoicing. This session will discuss proven strategies for segmenting, targeting and onboarding suppliers for PO, contract, and non-PO invoice automation.
Proven Strategies for Driving SuppliersOff Paper to E-InvoicingJune 4, 2013 – 15:00 – 16:00Paola Parra-Filipe, FCCChristine O’Shea, Ariba© 2013 Ariba, Inc. All rights reserved.
#AribaLIVE© 2013 Ariba, Inc. All rights reserved.2
#AribaLIVESuccessful Supplier EnablementRequires…© 2013 Ariba, Inc. All rights reserved.3Strong LeadershipCommitment• Executive support and oversight• Established program charter• Regular Steering Committee meetings and quarterly reviewsFocus On ProgramGoals/ROI• Documented goals and success metrics• Program scorecard regularly reviewed through Steering Committee• Ongoing benchmarking and continuous improvement focusFoundationalPillarsEnablement Lead /Team• Dedicated team that manages enablement process• Team members understand sellers and internal stakeholders and are changeagents within the organizationSupportingInfrastructureSupplier Flight Plan• Flight Plan for supplier onboarding: Pilot, Waves, and Timing• Comprehensive analysis based on ROI and probability of successfully transactingacross the Ariba NetworkCommunication Plan• Internal communication plan educating org. and driving adoption• External communication plan for suppliers focused on compliance (see below)and Ariba Network benefitsComplianceManagement• Agreed upon approach to ensure sellers participate in initiative• EDICT with: Expectations, Deadlines, Incentives, Consequences, andTogetherness MessagesDynamicElements:Review andUpdateRegularly
#AribaLIVEFocus on Program Goals/ROI© 2013 Ariba, Inc. All rights reserved.4Objective Metric Best in ClassProcessEfficiency% of Addressable spend that is automated 80%% of Electronic Invoices 67%Invoices per FTE 33,000% of Invoice Exceptions 12%Days to Approve Invoices 4.1Touchless Invoice Processing 85%ComplianceContract Leakage Savings 0.46%% of Spend Under Management 55%CashManagementDiscount Capture 0.20%Working Capital 0.27%Source:The Hackett Group, Aberdeen, Ariba
#AribaLIVEInternal Communication© 2013 Ariba, Inc. All rights reserved.StrategicOperationalIndividual• Business strategy, expected value and benefits• Program timeline and measures of success• Critical success factors• Specific operational changes resulting from the initiative• Process, technology and people objectives• Consideration of local operations and impact• Team accountability and involvement• Actions to be taken to prepare stakeholders• Impact on individual and team goals and objectives• Individual job and career benefits:“What’s in it for me?”• Specific job requirement changes/impact on roles & responsibilities5
#AribaLIVESegmenting Suppliers for TargetedCommunication MethodsRequire differentcommunicationapproaches and strategiesfor the successfulenablementon the Ariba NetworkStrategic Suppliers(A)(E.g. Suppliers contributingmore than 3,000 Invoicesp.a.)Core Suppliers(B)(E.g. Suppliers contributingmore than 900 Invoices p.a.) General Suppliers(C)(E.g. Suppliers contributingless than 900 Invoices p.a.)© 2013 Ariba, Inc. All rights reserved.6
#AribaLIVESupplier Summits• Supplier Summits are high-touch enablement sessions for targeted supplierswhose engagement is critical to the success of an enablement program© 2013 Ariba, Inc. All rights reserved.7• Summits can be face-to-face or virtualbut the emphasis is always on changemanagement - delivering apersonalized message to ensure thatthe audience feels involved,understands the need for change andis ready to act• Events should be hosted by the buyingorganization to ensure that suppliersrecognize the significance of theenablement program
#AribaLIVECompliance Policy: “Issue an EDICT”• Expectation: Inform suppliers of the project and what youwant them to do• Deadline: Set a deadline date for enablement• Incentive: Provide an incentive for participation• Consequence: Establish realistic and executableconsequences for Non-Compliance• Togetherness: Assure your suppliers that these changesare mutually beneficial; You are in this together.© 2013 Ariba, Inc. All rights reserved.8
#AribaLIVEExecuting Supplier EnablementValidation ofBuyerRelationshipRegistrationon AribaNetworkConfigurationof AN AccountPublishing ofCatalogsManagement ofTechnicalIntegrationEnsure FirstSuccessfulTransaction© 2013 Ariba, Inc. All rights reserved.9Single Point of Contact for SuppliersEnsure successful enablement onto the Ariba Network fromFirst Contact to First TransactionSE Lead Managing and Reporting On Progress
#AribaLIVEQuestions / Comments© 2013 Ariba, Inc. All rights reserved.10
Proven Strategies for Driving SuppliersOff Paper to E-InvoicingFCC ExperienceJune 4, 2013 – 15:00 – 16:00© 2013 Ariba, Inc. All rights reserved.Servicios Ciudadanos
#AribaLIVEIntroduction: FCC GroupFCC is one of the main European groups in Construction andCitizen Services.Highly diversified activity:» Construction of big infrastructures, building and industrial,» Environmental services and full water cycle management,» Power generation from renewable resources,» Cement, concrete and derivatives production,» Urban equipment, logistics and others.© 2013 Ariba, Inc. All rights reserved.12
#AribaLIVEIntroduction: FCC Group© 2013 Ariba, Inc. All rights reserved.13International presence:Over 50 countries worldwide.Over 50% of turnover from international markets outside Spain, mainly Europe and USA.Revenue:11.152 millions.Employees:86.000 employees.
#AribaLIVEInitial Situation: 2010Three years ago FCC started the transformation of the procurement functionand, as one of the actions, FCC decided the use of Ariba as a Service modelin order to implement an electronic end-to-end process.Previously to the Ariba implementation, all our invoices were paper invoices.The main challenges we faced were:• Low implementation of the electronic invoice in the construction sector• Low use of technological tools and great resistance to changeWithin the transformation of the procurement function, FCC Group tries toextend the use of the electronic invoice© 2013 Ariba, Inc. All rights reserved.14
#AribaLIVEChallenges & SolutionsThe deployment strategy followed was:• Gradual deployment with low impact on the organization• Simultaneously with the Purchasing Model: eInvoice only was used for purchasesunder the new Purchasing Model• For our internal user, it was set mandatory through the FCC Internal Rules• To manage the resistance, paper invoices that should be electronic are rejected• Before participating in a new negotiation process, our supplier must accept aclause in the event terms and conditions which indicates that the awarded suppliermust invoice electronicallyAfter a first phase of deployment, FCC decided to encourage the use of theeInvoice beyond purchases negotiated under the Purchasing Model:• Generalize the electronic invoice, at a faster rate than the model: because of theadvantages for FCC© 2013 Ariba, Inc. All rights reserved.15
#AribaLIVEImplementation Process© 2013 Ariba, Inc. All rights reserved.162012920112010nov/dec 2009Electronic Negotiation (17 Feb ).Electronic PO (1 April).Interface with SAP and Electronic Invoice (17 July).23 people 30 people 37 peopleInternal Rules approved by the Steering Committee (Threshold: 5 millions €)1 million € From 0,75 to 0,25 M€ From 0,5 to 0,1 M€AribaTeamModelApprovedInternal RulesSelectionAribaselectedPLs managers appointment Construction Purchases IntegratedElectronic Invoice Internal Rule (all PO greater than a threshold must be done electronically in Ariba)> 100.000 € > 50.000 €42 people1.000 M € In Purchase OrdersFrom 0,25 to 0,1 M€
#AribaLIVEeCommerce SolutionElectronic end-to-end process:• Supporting the Sourcing and procurement chains• Integrated with SAP for accounting and payment© 2013 Ariba, Inc. All rights reserved.17FCC Users3.600ARIBASAPAccounting and PaymentSourcingContractPurchase OrderReceiptInvoiceFCC Suppliers5.000ARIBANETWORK
#AribaLIVEChallenges & SolutionsThe main issues were:• Small and medium suppliers:resistance was due to fear and lackof knowledge about the e-Invoice• Large suppliers: resistance weredue to these companies oftenhave their own electronic invoicingtool and do not want to use theclient tool© 2013 Ariba, Inc. All rights reserved.18The actions taken:• Provide enough information aboutthe legality of the electronic invoiceand inform them of the Aribaprocess in detail• Collaborate with these suppliers atthe connection of their systems withAriba NetworkOnce they have started using Ariba Network, our suppliers are satisfiedwith the functionality, being better rated and more helpful for our smalland medium suppliers.Additionally, this barrier has been overcome because we provide direct supportfrom FCC to the suppliers for the use of Ariba Network.
#AribaLIVEChallenges & SolutionsHowever, the greatest resistance to the electronic invoice comes not fromour suppliers but from internal users. The electronic process changes theway of working:• The purchase order becomes the communication tool with the supplier and not justan accounting record to associate the invoices• The request and its approval necessarily have to be done before the invoice andwith enough detail to be invoiced (FCC do not accept Ariba Network invoiceswithout PO)These resistances are overcome by:• The mandatory compliance for users established by the Internal Rules• Plans for communication at all organizational levels and• Training and support of users using the own staff of Purchasing Department• The gradualness of the process helps to overcome the resistances more easily© 2013 Ariba, Inc. All rights reserved.19
#AribaLIVEBenefits RealizedThe main benefits obtained with the electronic invoice are:• Assure compliance to awarding terms: electronic process up to the invoice• Cost reduction by the electronic processes: Efficiency and productivity increase• Removal of mistakes in the manual processing of orders and invoices• Immediacy in communication• Elimination of paper handling and use• Favorable treatment in Spanish legislation for the electronic invoice overconventional paper invoice© 2013 Ariba, Inc. All rights reserved.20
#AribaLIVEeInvoice in FCC© 2013 Ariba, Inc. All rights reserved.2156,317010,00020,00030,00040,00050,00060,000Jan-11 Jul-11 Jan-12 Jul-12 Jan-13Number650 M€0100200300400500600700Jan-11 Jul-11 Jan-12 Jul-12 Jan-13Amount050001000015000200002500030000350002010 2011 2012 2013Number0501001502002503003504002010 2011 2012 2013Amount (M€)The use of electronic invoicing in FCC has increased exponentially in recentyears, and in 2013 is expected to double the number of electronic invoices received
#AribaLIVEKey InsightsFor FCC, the electronic invoice is providing great benefits, and we believethat part of the success of our deployment is because of:• The training and support for internal user and supplier is given by FCC, that notonly provides support on the use of the tool but also in the functionalprocess, knowing both the Purchasing Model and the treatment of FCC forcertain products and services• Users are responsible for the compliance with the electronic process, asestablished by Internal RulesThe next steps for FCC are to continue expanding the use of theelectronic invoice.© 2013 Ariba, Inc. All rights reserved.22
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