Transformation, Spend Control & eProcurement – Putting Strategy into Action


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eWorld Purchasing & Supply Conference
Day 2 - September 29th, 2010

12:00 to 12:30 PM Transformation, Spend Control & eProcurement – Putting Strategy into Action


In this session we look at achieving efficiency gains and ROI with industry best practice in spend control and eProcurement.

Hear first-hand about emerging practice in spend control and eProcurement and how it can transform your procurement operations, improve efficiencies and deliver cash release savings.

The session will explore:

• Insights from the UK’s leading and most recent spend control projects
• Purchasing policy adherence and contract compliance
• Techniques to enhance procurement capacity and management of key supply markets
• Focus areas for planning future spend control initiatives


Joe Taylor, Director of Solutions, PROACTIS

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Transformation, Spend Control & eProcurement – Putting Strategy into Action

  1. 1. Putting Strategy Into Action Joe Taylor, Director of Solutions, PROACTIS
  2. 2. Agenda This session: About PROACTIS Spend Control and eProcurement Processes involved How to derive benefit Summary
  3. 3. PROACTIS in Brief 100% focused on Spend Control & eProcurement: UK market leader 350+ clients: Across all business sectors 2,000,000+ PROACTIS users in 70+ countries Global presence: Direct - UK and US Partners - UK, US, the Netherlands, France, Belgium, Norway, Germany, Spain, Portugal, Australia, South Africa and the Middle East
  4. 4. Organisations we have helped Commercial Not for Profit Public
  5. 5. About PROACTIS Best-of-Breed eProcurement Vendors: #1 for Unified purchasing/ eProcurement #1 for Overall product score in use cases #1 for Basic purchasing functionality #1 for Public-sector functionality
  6. 6. Current Climate Headlines: ‘UK economic growth slows to 0.2%’ ‘UK inflation rate rises to 3.4%’ ‘UK unemployment increases to 2.5m’ ‘UK borrowing hits record £163.4bn’ Top line objectives/challenge: Public sector -> do the same with less Commercial sector -> protect margins
  7. 7. Spend Control and eProcurement? Spend Control: Process techniques to identify, capture and control spend in a transparent manner eProcurement: Solutions that support procurement, buying and accounts payable activities and streamline supplier engagement = decrease operating costs + improve efficiency Awareness is growing > Market is growing
  8. 8. How can this topic help? Current Procurement ‘market’ intelligence: Metric Bottom Top Performers Performers Overall invoice cycle time? 32.9 days 2.9 days What proportion of spend is “under 0-30% 70%+ management”? What savings from Sourcing 5% 17%+ activities? 35% 76% What level of Contract compliance? 100-300% 700% What is the Procurement ROI?
  9. 9. How can this topic help? Areas to attack: Source well, to secure savings and quality Push employees to use ‘best value’ agreements Ensure high level of “spend under management” Increase visibility and impose the rule book for all spend Establish ‘great’ supplier trading relationships Automate Accounts Payable ncy +E fficie Remove paper C ash vings! Sa
  10. 10. Processes involved Spend Control and eProcurement: Purchase to Pay (P2P) Purchasing AP Automation Sourcing and Tendering
  11. 11. Purchase to Pay Internal External
  12. 12. Purchase to Pay User Approvers Finance Internal Match? Finance Ledgers Suppliers External
  13. 13. Purchasing Example situation: Commercial Sector 21% of spend without PO’s 75% of invoices sent out for troubleshooting Accrual reporting – 8+ man days a month 5,000+ new suppliers per annum
  14. 14. Purchasing Opportunity: Single system for all purchasing activities Policy compliance, transparency Management of budgets, commitments Accounting for spend automatically High invoice match rates = low intervention Purchase cards for low value spend How are new suppliers brought on? Data? ncy +E fficie C ash vings! Sa
  15. 15. Purchase to Pay User Approvers Finance Internal Match? Finance Ledgers Order output techniques Order output techniques Invoice receipt techniques Invoice receipt techniques Suppliers External Sourcing Sourcing Enquirie Enquirie & Data & Data s s Transactions: Supplier Data: New opportunities?: Supplier Enquiries: •Orders •Supplier details •PQQ, ITT, RFQ, RFP, RFI, •Orders •Invoices RFx •Catalogues •Payments •Tenders •Status •eAuctions
  16. 16. Sourcing and Tendering What are we talking about? You have identified a need How do you go about securing a new line of supply? Source a list of potential supply and evaluate to award
  17. 17. Sourcing and Tendering What are we talking about? You have identified a need How do you go about securing a new line of supply? Source a list of potential supply and evaluate to award
  18. 18. Sourcing and Tendering What are we talking about? You have identified a need How do you go about securing a new line of supply? enges : Chall requirement Source a list of potential supply and evaluate toetaward e the deal M e best t process Get th paren trans effort En sure a ministration e ad ri s k Reduc igate away Mit crutiny Sur vive s
  19. 19. Sourcing Example situation: Local Authority Situation Manual sourcing process, 10% coverage 8% of suppliers under contract 9% savings from sourcing activities Aspiration: Better, compliant and transparent evaluations Find and use the best deals
  20. 20. Sourcing Opportunity: Increase number of sourcing activities – same staff levels Adopt standard online processes: Submit responses Evaluate sourcing events Timeline, event monitoring Clear visibility & ownership But…once in place, will they be used? ncy +E fficie C ash vings! Sa
  21. 21. Typical Projects Aspirations and initial impetus: Streamline and ensure transparency in sourcing and tendering activities Get control and transparency of contracts Drive staff to ‘best value’ agreements to the organisation Impose the rule book Automate where no process exists Automate Accounts Payable
  22. 22. Invoicing Example situation: Commercial Sector 15 heads in Accounts Payable 5,500 invoices per FTE, per annum = 25 per day Exceptions cycle time: 11 days Average days to pay increasing: 29-33 Payment past due date: 17% Only 20% of available settlement discounts taken
  23. 23. Invoicing Opportunity: Cut paper Automate routing & approvals Electronic payments Self Service Supplier enquiries? ncy +E fficie C ash vings! Sa
  24. 24. How to Determine the Benefits? Procurement Review & Spend Analysis: Historic spend is analysed, e.g.: By category Top/strategic suppliers Average invoice value by category, etc... Identify benefits and propose strategy, e.g.: Contract / category target savings Consolidation Savings Move low value orders to Purchasing Cards ncy +E fficie Identify key supplier risks C ash vings! Sa Which trading techniques remove cost? Specific benefits and project phasing
  25. 25. Practical things to do Rationalise the supplier database: • More is the Enemy of Better • Fewer suppliers, fewer relationships, fewer enquiries, etc. Push costs out to suppliers: • Answer their own queries • Update their own details. • Use electronic tools for RFP (tender) publication, supplier bid submission, buyer bid evaluation and supplier management processes
  26. 26. Practical things to do Remember, one-size doesn’t fit all: • Adopt electronic ordering/invoicing strategies • There are lots of techniques – use the right tool for the job Eliminate error, make it easy: • Drive staff to pre-negotiated contracts • Automate so staff find what they need, best prices, lowest risk • Ensure compliance
  27. 27. Summary PROACTIS Spend Control & eProcurement: Better deals More spend can be sourced Electronic trading: Cash savings Fulfilment, mail, storage etc. Settlement discounts Process efficiency Slicker process + less distraction = less staff Single solution, simple adoption
  28. 28. Joe Taylor Joe +44 (0)1937 800 078