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Horizon 2013 TouchlessTail Spend - The New Benchmark for World Class P2P Process Efficiency
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Horizon 2013 TouchlessTail Spend - The New Benchmark for World Class P2P Process Efficiency

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"Gartner predicts that by 2017, 25 percent of enterprises will have an enterprise app store for managing corporate-sanctioned apps on mobile devices. The adoption of mobile apps is proliferating, be …

"Gartner predicts that by 2017, 25 percent of enterprises will have an enterprise app store for managing corporate-sanctioned apps on mobile devices. The adoption of mobile apps is proliferating, be it for networking, shopping or working. Mobile apps are accessible anytime, easy and give the required information, just when you need it the most!
So would it not be great to have a mobile app that is a gateway to procurement analytical data? Attend this session to find how Zycus makes procurement smarter.
"

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  • Our Usability Use case starts where each user starts – by searching for what they need.I’ve heard more than one procurement leader summarize their P2P user requirements as follows: “Google Search and Amazon Shopping” – both familiar B2C models, and the analogy works – for the most part.Like Google, users want a single search and multiple options – including simple keywords. However, the Guided Buying Concept is actually closer to Amazon’s category-based search than Google keywords that could return 000’s of thousands of search results. At Amazon, users must pick a category or department to sort search results. As in the Guided Buying example shown here, Categorization is the key to more efficient, relevant searches.A keyword search for blade for example, could return search results from any number of categories that include the keyword anywhere in the description – anything from electrical plugs to cutting tools, servers or drives, even roller blades. By auto-classifying the user search term and presenting them with relevant categories, the user avoids extraneous search results that could be frustrating – or worse, could invite an impulse buy for those long sought after roller blades.
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    • 1. “Touchless” Tail Spend The New Benchmarks and Business Case for World-Class P2P
    • 2. Agenda  Benchmarking World-Class P2P Performance  The P2P Process – The Happy Path  Happy Path Detours  P2P Process Use Cases  Building the Bullet-Proof Business Case
    • 3. Benchmarking P2P Performance Efficiency P2P Efficiency World-Class P2P Transaction Cycles Peer Group 100% 90% 80% PO Based Invoice Approval 3 70% 15 60% 3.3 50% Ad-Hoc Req-to-PO 40% 2 30% 20% 1 Catalog Req-to-PO 10% 3.5 Hours 0% % POs % POs No Re- % Invoices Automated Work 1st Pass Match    % Early Pay Discounts Taken % Spend With Line Item Visibility Cycle Time Days - Peer Group Cycle Time Days - World Class ~80% or More POs Automated, Early Pay Discounts Taken, and Line Item Spend Visibility for Top Performers 90%+ POs Processed and Invoices Matched On First Pass Transaction Cycle Times 40-80% Faster Source: Hackett Group Procurement Benchmarks
    • 4. Benchmarking P2P Performance Effectiveness P2P Effectiveness Peer Group 3.00% World-Class % Indirect Cost Savings 6.69% 0.85% % Indirect Procurement Process Cost as % Spend Nearly 10X ROI 0.68% 0.018% % Early Payment Discounts as % Spend 0.13% 0.000%   1.000% 2.000% 3.000% 4.000% 5.000% World-Class Generates Nearly 3X More ROI at 20% Lower Process Cost Almost ¾ of Cost Savings is Cost Reduction vs. Cost Avoidance Source: Hackett Group Procurement Benchmarks 6.000% 7.000% 8.000%
    • 5. P2P Process – The Happy Path Requisition Buy Transmit Catalog Auto Workflow “Touchless” PO xCML/EDI/Portal Pay Approve Invoice Receive EFT/P-Card Auto Match (3 or 2 Way) E-Invoice Goods Receipt
    • 6. P2P Process – Happy Path Detours Top Performers - On Catalog The Guided Path Off-Catalog/On-Contract   77% Off-Catalog Spend for Top Performers 94% Off-Catalog Spend for Others 50% 40% 30% 20% 10% 0% Transactions 42% Transactions Spend % Negotiated Cost Reduction Lost Due to Maverick Buying The (Buyer) Guided Path Off-Catalog/Off-Contract   1.6% Top Quartile Significant Maverick Buy Potential 6x More Lost Savings for Worst Performers Bottom Quartile 3.9% World-Class Peer Group 4.6% Peer Group 9.6% Bottom Quartile 2.0% The Bread Crumb Path   Higher Non-PO Indicates Less Control 1 in 5 are Non-PO for Even Top Performers World-Class Top Quartile 0.0% No PO Invoices Spend 23% 4.0% 6.0% 8.0% 10.0% % Non-PO Transactions 40% 30% 20% 10% 0% 38% 21% World-Class Peer Group World-Class Peer Group Source: Hackett Group Procurement Benchmarks
    • 7. The P2P Use Cases The Happy Path On-Catalog/On-Contract Use Case Scenario 3 Click Shop and Checkout Auto-classify to correct category code, invoke category-specific workflow, map to GL account and default ship to/bill to from profile
    • 8. The P2P Use Cases The Guided Path Off-Catalog/On-Contract Use Case Scenario Guided Form for non-catalog contracted service Menu of guided e-Forms for off-catalog requisitions instead of blank, free-form requisitions
    • 9. The P2P Use Cases The (Buyer) Guided Path Use Case Scenario Off-Catalog/Off-Contract “Req-to-Quote” - Guided Form for noncontracted item routed to buyer for quote Guided form, wizard interface to prompt for required attributes and specifications if “off-catalog” service or configurable product
    • 10. The P2P Use Cases The Bread Crumb Path Use Case Scenario No PO Invoices Invoice approval workflow for No PO invoice Invoice Manager • Flip PO to enter invoices • Review recvd. eInvoices Non-PO Invoice Supplier Non-PO Invoice e Confirm (Optional) Send for Matching Invoice Reviewer (as per business rule • Review / Modify • Accept / Match again Rule-based Automatic Invoice Matching- Flag Non PO Invoice Invoice On-hold Matching Exceptions Return in case of insufficient information Auto-matched Invoice Matched Optional Invoice Approver(s) Accept Invoice with Exceptions Payment Approver • Confirm Amount • Schedule Payment Release Approve • Approve / Return / Cancel • Review / Modify Optional Invoice Approved Scheduled for Payment Paid
    • 11. Building The P2P Business Case ` Pro-Forma Business Case Business Metrics - Annual Spend & Transaction Volume Total Adressable Spend Estimated Compliant Spend (%) Realized Savings (%) Annual Requisition Volume Annual Purchase Order Volume Annual Invoice Volume Esitmated Non-Compliant Spend (%) $300,000,000 30% 8% 9,297 12,396 18,594 Targeted Compliant Spend (%) Req-to-Order Cycle Time (Days) Invoice Processing Cycle Time (Days) Per PO Processing Cost Per Invoice Processing Cost Business Value - Savings & Process Improvement Component Incremental Realized Savings($) - Contract Compliance Incr. Realized Savings ($) - P-Card Rebates/PP Discounts PO Processing Cost ($) Invoice Processing Cost ($) Current Incremental Improvement Target Performance Incremental Savings 30% 30% $30 $39 40% 10% 23% 92% 70% 40% $23 $3 $9,600,000 $600,000 $86,772 $663,434 Total Savings $10,950,206 Cycle Time Improvement: Requisition-to-Order Cycle (Days) Invoice Processing Cycle (Days) 7 21 * Note: Assumes Best-in-Class Cycle Time Achievement with P2P of 1 Day Order and 3.8 Days Invoice Process Cycle Times 86% 82% 1* 4* 70% 70% 7 21 $30 $39
    • 12. Business Case Assumptions ROI Improvement Opportunity Performance Area Laggards Average Best-in-Class ROI GAP Spend Under Management 22% 62% 80% 58% More Spend Under Management Procurement Contract Compliance 11% 30% 78% 67% More Compliant Spend 2% 8% 12% 10% More Savings Realized Requisition-to-order cycles 7-8 days 2-3 days < 1 day 85% Faster Cycle Time Requisition-to-order costs $30 $27 $23 23% Savings per PO 20.8 days 9.7 days 3.8 days 82% Faster & 2x Higher Early Payment Discount $38.77 $15.61 $3.09 92% Savings per Invoice Realized/Implemented Savings Invoice process cycles Invoice process costs Source: Aberdeen Group – The State of Strategic Sourcing 2011, Invoicing and Workflow 2011, Effective E-Procurement 2010, E-Procurement Benchmark Report 2008 , E-Procurement Trials and Triumphs 2007,