Starting off the 2012 P2P event was John Gregory, Director, European Financial Shared Services from Kellogg’s. Find out from his presentation: - Requirements and dedication in the journey towards complete automation - Accuracy, transparency and reduced errors improved with end-to-end automation - KPIs of a fully automated AP function

1. Developing a successful
Roadmap towards achieving
100% AP Automation
9th Annual Accounts Payable and Purchasing
Process Summit
Singapore 2012

2. Purpose of this session
• Introduction to Kellogg and our European Finance Shared Service
Centre
• Our roadmap towards achieving 100% AP invoice automation
• Key factors for successful implementation
• Accuracy, transparency and error reduction
• KPI’s of a fully automated AP function

3. Kellogg Company Overview
• Global Company - Founded 1906
• Head Quarters is in Battle Creek, Chicago, USA
• UK HO is in Manchester and the European HO is in Dublin
• World's largest manufacturer of Ready to eat Cereals - Turnover $12
billion . PRINGLES!
• Employs 36,000 people worldwide
• 40 cereal brands, 160 countries, 19 manufacturing plants, operating on
6 continents

4. Finance within Kellogg’s Worldwide
Manchester
FSC
Dublin COE
North America
FSC and COE
Mexico FSC
KL Finance
Hub
3 Finance Shared Service Centres:
• Manchester, UK – 120 finance employees
• Battle Creek, USA – 150 finance employees Sydney
• Queretaro, Mexico – 130 finance employees Finance Hub
2 Centres of Excellence:
• Dublin, Ireland – 50 finance employees
• Battle Creek, USA – 30 finance employees
Asia Pac:
• Kuala Lumpur – 12 finance employees
• Sydney – 30 finance employees

5. We deal with approx 20 EMEA markets, all with varying degrees of
statutory complexity and fiscal requirements when considering e-
billing arrangements
Including:
• UK
• Ireland
Nordics Russia • Denmark
UK Benelux • Finland
Ireland Germany • Norway
• Sweden
France Italy • Russia
• Germany
Spain • Austria
Greece
• Switzerland
• Belgium
MED/ME
• France
• Spain
• Portugal
• Greece
• MED/ME
• Italy
• Poland

6. Split of Finance responsibilities - Europe
EFSC
• The Financial control centre for Europe handling all
European Financial transactional activities
COE (MFG/MFP)
• Delivering reporting and data management; analysis and
first line query resolution; this team bridges the gap
between transactional process work and highly
commercial business partnering
Local market
• Focused on highly commercial activity and tasks which
require specific local knowledge
Manufacturing Plants
• Plant Controllers support the operational activity and
budgeting of 5 European Plants. Giving value adding
advice, supporting plant operations

7. Introducing the European Finance
Shared Service Centre
Accounts Payable Accounts Receivable Costing Intercompany
General Ledger Fixed Assets VAT Control
Payroll Cash Statutory Reporting KLean

8. 2006 - Time for Change
Our Approach to e-Invoicing roll out:
• Financial Business Case, improved control, reduction in error rates, cost benefit
• Engage Key Stakeholders for a successful implementation - Stakeholders included
European VP of Finance, European Chief Procurement Officer & European Leadership
Team
• Established dedicated Project Team - Procurement & Finance Alliance – focused on
value stream not functional silo’s
• Mapped Current PTP Process
• Standardise and simplified - Enforcement of 3 way match process
• Vendor Rationalisation - Vendor database cleansed - reduced suppliers by over 50%
• Identified Modes of Delivery
• Partner Selection
• Adherence to Fiscal requirements
• Pan – European solution
• Flexibility and scalability

9. Mode of Delivery - Potential Solutions
The exchange of electronic data between 2 parties using
1 globally recognised format
Dedicated e- Invoicing network used to pass invoice data.
This solution is simple, secure and certified.
2
Kelloggs creates a suppliers payment based on the goods
3 receipting. Paper invoices eliminated
PCard – Procurement card used for low volume suppliers; full
spend visibility, comparatively low purchaser administration
Key Learning: One Size doesn’t fit all…yet

10. Key Factors for Successful Implementation
• Standardised processes
• Optimisation of SAP platform
• “Loud” communication to business and vendor base
• Tough “on-boarding” message. Mandated as a
condition of supply
• ELT Sponsorship
• Dedicated resource for 18 months
• Vendor rationalisation
• Create momentum – rapid progress and quick wins
• Change Management

11. E-Invoicing Process Flow
Integrated Supplier
• Confirmation/
Rejection report • Kazeon - Legal archive
• Validate
• Translate
Readsoft SAP
Virtual analyst
WebForm Supplier
OB10
Archive
Touch less
BTB EDI SUPPLIERS

12. Our Virtual Analyst
WHAT ? HOW ? Resulting Action
1 Confirms who the supplier is SAP Vendor number & VAT Reg move to next check
rejects wrong data
2 Verifies who they are invoicing Matches the PO entity, Kellogg VAT reg
move to next check
and the entity identification number
rejects wrong data
3 Checks the financial calculations Performs same fiscal checks as OB10 move to next check
rejects wrong data
4 Checks the PO valid for this supplier PO line open & in correct entity? move to next check
rejects wrong data
5 Compares the invoice data to the PO Matches invoice to the PO line
posts to Sap
data
rejects or stops
6 Notifies supplier via email if the Happens automatically / manually
supplier to resend
invoice is being rejected
Checks credit notes are valid Quoting a PO? Quoting an invoice? Always stops for EFSC
7
review
8 Checks Duplication Status Document already in SAP? yes? reject
no? post to SAP
9 Creates invoice image from the Attaches to the SAP document requisitioners, receiptors
invoice data – visible in SAP can view

13. ePTP Automation Profile
% Invoice
Volume
Supplier
1 Direct via EDI 35%
25 suppliers
2 Via OB10
41 %
2500 Suppliers (through
web portal and
integrated connection)
3 Self-Billing (ERS) 11 %
SAP
400 suppliers use ERS
(5.5% of all suppliers)
87 %

14. Our roadmap to achieving 100% AP Automation
40% 80% 82%
Auto Auto Auto
Time for
Change
0%
2011
2007
2008
2009
2010
2004
2005
2006
87%
Auto Auto
69%
Invoice Volume 130000 132000 173000 177000 187,000 increase
4%
Company Codes 47 47 47 47 49 increase
55%
Vendors 11000 7000 4700 5000 4900
reduction
40%
FTE’s reduction
37%
CPT £7.02 £6.77 £6.02 £4.80 £4.43 reduction
CPT Target for 2012 - £3.75

15. Where are we now?... Pure E- Invoicing
2011
Key drivers of the GAP
Electronic 87% • Tax code assignment -
57%
Touchless 78% • Credit note - 21%
• PO/invoice setup - 9%
Gap 9% • Service Entry - 7%
Number of Number of
Invoice Process
invoices Suppliers
EDI 66,000 26
OB10 76,000 2545
Self Bill 22,000 394
Paper 23,000 2005
Total 187,000 4970

16. Benefits and Achievements
Benefits:
• Cost reduction/Resource re-allocation
• Inefficiencies addressed
• Standardised process
• Business re-education
• Value add activities- Projects, Financial visibility reporting,
Cash flow forecasting, variance analysis, driving compliance
We have achieved:
• Streamlined invoice process - 87% electronic and 78%
touchless
• An increase in invoice volume by 44%
• A reduction/reallocation of headcount by 40%
• CPT reduced by 37%

17. We use LEAN tools SIPOC and VSM to work out
what metrics we should be using

18. KPI’s in a fully automated PTP process
Our lean Information Centre
Talent Continuous Quality and Customer
Management Improvement Control Service
• Staff capability • Automation KPI’s • Error rates : • Service Level
Matrix – Invoices/STP/per – VAT coding scores
FTE – Payments
• Staff turnover rates • Outstanding
–Invoice Cycle Times – Reversals
• Staff Quarterly – Payments
customer actions
• GRIR
Survey – Cash Matching
– Control
• Backfill ready for – Special/Manual
– Missed CWC
payments
Key roles – 3 way match
– Master data set up adherence
• Recognition and
• Cost per transaction – % invoices paid to
Reward
• Cost vs NSV terms
• Call/E-mail volumes – Aged ledger items
and response times –Debit balances
• Pagares suppliers • Outstanding Rec
review points
• Same day payments
• DPO and Cashflow
• Vendors and vendor
KPI’s
set up
• Rep Letter points
• Items in cockpit
• OB10 rejection

19. Next Steps on our Journey to 100% Automation
• Continue “onboarding” suppliers
• Look for solutions to tail
– Currently 23,000 paper invoices from 2005 suppliers
• Use Lean methodologies to
– Drive Down ‘ Gap Blocks’
– Further Streamline process especially upstream
– Enhance Control
• Even more rigorous KPI management
• Continually review market for cheaper offerings and innovation
– OB10
– Social Networking
– EDI usage
– PO Flip
– Portal
– P-Card
– Indirect spend catalogue

20. Any questions