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Closing the Procure-to-Pay Loop: How AP Drives Strategic Savings and Compliance to Procurement

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Without connecting invoice processing to the broader source-to-settle process, a procure-to-pay transformation project will have limited success. In this session, you will hear how you can implement a "closed-loop" procure-to-pay process that enforces invoices against catalogs, orders, and contracts; monitors supplier performance; and improves control over your spend.

Published in: Business
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Closing the Procure-to-Pay Loop: How AP Drives Strategic Savings and Compliance to Procurement

  1. 1. #AribaLIVE @ariba Closing the P2P Loop: How AP Drives Strategic Savings and Compliance to Procurement Bradley Hill, Supplier Performance & Evaluation Executive, Al-Futtaim Automotive Andrew Bartolini, Chief Research Officer, Ardent Partners 9 June 2015 © 2015 Ariba – an SAP company. All rights reserved. @andrewbartolini @ardentpartners
  2. 2. #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.2
  3. 3. #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.3
  4. 4. #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.4
  5. 5. #AribaLIVE @ariba Background • Centralized procurement in 2008 • Implemented Ariba Sourcing in 2009  Entire Group now using Ariba Sourcing  Over 400 online bidding events  Over USD 40 mn saved (18%) • Initially handled only Non-Trade spend • Now handling Non-Principal Trade spend as well © 2015 Ariba – an SAP company. All rights reserved.5
  6. 6. #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.6
  7. 7. #AribaLIVE @ariba Solution - Ariba Procure-to-Pay © 2015 Ariba – an SAP company. All rights reserved.7 Make it Easy Make it Transparent Finance Suppliers Central Procurement Approvers / Senior Management Business Users … increased realized savings o Leverage group’s buying power o Contract Compliance o Greater Spend Visibility o Extended supplier network … spend visibility o Spend reporting for monitoring & control o Mobile PO approval capability … supplier enablement o Timely payments o Increased process transparency o Building strategic supplier relationships … item catalogs o Search and find items o Quick approval & tracking o Online contracted rates … process efficiencies o On-Time Accurate Invoicing o Streamlined goods receipt process o Tighter control on budget
  8. 8. #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.8
  9. 9. #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  Was done well in advance so as 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 were made available to the users  Train the Trainer approach – Wider reach and business ownership © 2015 Ariba – an SAP company. All rights reserved.9
  10. 10. #AribaLIVE @ariba Results Q4 2014 + Q1 2015 data • 65 % of transactions fast tracked through Catalogs  170 catalogues with 7000 + line items • 96 % of 3rd party POs electronically transmitted through the Ariba Network • 36 % reduction in PR to PO turn around time • 93% of invoices processed through automatic IV • 97% of POs without rework © 2015 Ariba – an SAP company. All rights reserved.10
  11. 11. #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 P2P © 2015 Ariba – an SAP company. All rights reserved.11
  12. 12. #AribaLIVE @ariba Closing the P2P Loop: How AP Drives Strategic Savings and Compliance to Procurement Andrew Bartolini, Chief Research Officer, Ardent Partners 9 June 2015 © 2015 Ariba – an SAP company. All rights reserved. @andrewbartolini @ardentpartners
  13. 13. #AribaLIVE @ariba Agenda • Introduction • P2P in 2015 • Closing the P2P Loop • Summary © 2015 Ariba – an SAP company. All rights reserved.13 @andrewbartolini @ardentpartners
  14. 14. #AribaLIVE @ariba Andrew Bartolini • This is a content bullet  This is a content sub-bullet number one  This is a content sub-bullet number two  This is a content sub-bullet number three • This is a content bullet  This is a content sub-bullet number one © 2015 Ariba – an SAP company. All rights reserved.14  Chief Research Officer, Ardent Partners  Publisher, CPO Rising & Payables Place Summary  Recognized expert in sourcing, procurement, AP, and supply management  Advisor to solution providers & CPOs alike around the world  Presented more than 200 times in seven countries  Benchmarked 10,000+ enterprises across all facets of their supply management operations  Published 1000+ research reports, analyst insights, articles, and other briefs  Named a “Pro to Know” by Supply and Demand Chain Executive three times Experience Decade plus as Industry analyst. Leadership roles in sales, marketing, and services at Ariba and Commerce One. Rich experience in strategic sourcing, business process transformation, and software implementation. Background also includes consulting and investment banking. Education  MBA – Indiana University  BA – College of the Holy Cross @andrewbartolini @ardentpartners
  15. 15. #AribaLIVE @ariba Ardent Partners - Introduction • This is a content bullet  This is a content sub-bullet number one  This is a content sub-bullet number two  This is a content sub-bullet number three • This is a content bullet  This is a content sub-bullet number one © 2015 Ariba – an SAP company. All rights reserved.15 Ardent Partners is a research and advisory firm focused on defining and advancing the supply management strategies, processes, and technologies that drive business value and accelerate organizational transformation within the enterprise. @andrewbartolini @ardentpartners
  16. 16. #AribaLIVE @ariba CPO Rising: The site for CPOs and other supply management executives www.cporising.com Ardent’s Network of P2P Sites Payables Place: Global source for ePayables news, research, and analysis www.payablesplace.com © 2015 Ariba – an SAP company. All rights reserved.16 @andrewbartolini @ardentpartners
  17. 17. #AribaLIVE @ariba New Research © 2015 Ariba – an SAP company. All rights reserved.17 @andrewbartolini @ardentpartners
  18. 18. #AribaLIVE @ariba P2P in 2015 © 2015 Ariba – an SAP company. All rights reserved. @andrewbartolini @ardentpartners
  19. 19. #AribaLIVE @ariba 22% 4% 2006 2011 Motorola Market Share: Mobile Phones Key Takeaways: • Joy’s Law: “Innovation will happen, and it will happen elsewhere.” • Innovation extends to all supply markets • A ‘static’ supply base is now a red flag • No company can risk going it alone • Increasing reliance on suppliers • Suppliers are vendors assets Why P2P Matters © 2015 Ariba – an SAP company. All rights reserved.19 @andrewbartolini @ardentpartners
  20. 20. #AribaLIVE @ariba The CPO’s Top Priorities (Next 3 Years) © 2015 Ariba – an SAP company. All rights reserved.20 @andrewbartolini @ardentpartners
  21. 21. #AribaLIVE @ariba But, Should Your Procurement Dept. Be Doing Better? © 2015 Ariba – an SAP company. All rights reserved.21 90% 3% 7% Yes No Not Sure © Ardent Partners - 2015 @andrewbartolini @ardentpartners
  22. 22. #AribaLIVE @ariba What’s Holding Procurement Back? 22 38% 37% 35% 35% Challenges aligning processes and systems Staff/Talent constraints Budget constraints Lack of technology infrastructure (i.e. gaps) © Ardent Partners - 2015 © 2015 Ariba – an SAP company. All rights reserved. @andrewbartolini @ardentpartners
  23. 23. #AribaLIVE @ariba Collaboration Will Drive P2P Forward © 2015 Ariba – an SAP company. All rights reserved.23 Procurement: “Strong” Collaboration @andrewbartolini @ardentpartners
  24. 24. #AribaLIVE @ariba Closing the P2P Loop © 2015 Ariba – an SAP company. All rights reserved. @andrewbartolini @ardentpartners
  25. 25. #AribaLIVE @ariba What Do We Mean by Source-to-Settle? Spend Analysis Sourcing Contract Management Procurement Accounts Payables Source to Settle © 2015 Ariba – an SAP company. All rights reserved.25 @andrewbartolini @ardentpartners
  26. 26. #AribaLIVE @ariba AP’s Impact on Sourcing • Sourcing  Better spend detail  Prioritize sourcing projects  Better sourcing execution  Communicate “true” opportunity to suppliers  Smarter negotiations  Higher-value contracts/suppliers © 2015 Ariba – an SAP company. All rights reserved.26 @andrewbartolini @ardentpartners
  27. 27. #AribaLIVE @ariba AP’s Impact on Contract Compliance • Contract Management  Better visibility  Increase compliance (No PO, No Pay)  Reduce maverick spend (compliance audits)  Save money and reduce risk © 2015 Ariba – an SAP company. All rights reserved.27 @andrewbartolini @ardentpartners
  28. 28. #AribaLIVE @ariba AP’s Impact on Procurement • Procurement  More spend under management  Better execution and results  Internal process efficiencies  Expanded and shared visibility for improved relationships © 2015 Ariba – an SAP company. All rights reserved.28 @andrewbartolini @ardentpartners
  29. 29. #AribaLIVE @ariba AP’s Impact on Supplier Management • Supplier Performance Management  Visibility to better track and improve supplier performance • Supplier Relationships  Visibility to better track and improve supplier performance  Drive efficiencies on a single platform  Visibility on invoice and payment status  Opportunities for discounts and other win-win deals © 2015 Ariba – an SAP company. All rights reserved.29 @andrewbartolini @ardentpartners
  30. 30. #AribaLIVE @ariba AP’s Impact on Cash • Optimize Working Capital  Faster invoice processing  Greater visibility  Early pay discounts  Dynamic discounts  Supply Chain Finance 30 © 2015 Ariba – an SAP company. All rights reserved. @andrewbartolini @ardentpartners
  31. 31. #AribaLIVE @ariba Summary © 2015 Ariba – an SAP company. All rights reserved. @andrewbartolini @ardentpartners
  32. 32. #AribaLIVE @ariba Closing the P2P Loop • AP Automation  Drives procurement value  Impacts cash  Drives internal efficiencies  Completes source-to-settle process 32 © 2015 Ariba – an SAP company. All rights reserved. @andrewbartolini @ardentpartners
  33. 33. #AribaLIVE @ariba Summary • Place more spend under management and improve procurement’s effectiveness • Better sourcing for better results • Improve contract compliance and reduce maverick spend • Track and improve supplier performance • Improve supplier relationships • Improve internal relationships • Optimize working capital 33 © 2015 Ariba – an SAP company. All rights reserved. @andrewbartolini @ardentpartners
  34. 34. #AribaLIVE @ariba Andrew Bartolini Chief Research Officer abartolini@ardentpartners.com @andrewbartolini Contact Info © 2015 Ariba – an SAP company. All rights reserved.34

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