Hackett tradeshift webinar final

Presenting your speakers
Susie West
Founder and CEO
sharedserviceslink
Chris Jablonski
Director of Content &
Communications
Tradeshift
Amy Fong
Purchase-To-Pay Program
Leader and Senior
Procurement Advisor
The Hackett Group

Questions
• Send me your question early
• Use this opportunity to get the answers/info you seek
• The sooner you send me the question, the more likely it
will be asked
• Remember to stay on for Q&A in the last 10 minutes of
the show

Agenda
• Context
• Introduction to Tradeshift and The Hackett Group
• Best practices and metrics for next generation P2P
• Questions

Context
• The value of a high performing P2P department
• Lower barriers to entry are changing the use of
P2P technology
• Understanding what top performance looks like

Poll question
• Do you invoice electronically?
- Yes we have e-invoicing and are happy with our
program
- We have e-invoicing but are looking to improve
or expand
- We are looking to roll out e-invoicing in the next
18 months
- We use scanning / OCR and email PDFs, but
not e-invoicing
- We are highly manual

All Your Suppliers.
All in One Place.
Streamline your supplier interactions
with a platform built for business-to-
business collaboration.

Tradeshift is a supplier collaboration platform that connects buyers,
suppliers, and all their processes in one global network.
We help businesses transform the way they work with suppliers today –
and adapt to whatever the future brings.
All Your Suppliers
Onboard fast & collaborate in real
time with your entire network.
Powerful Platform
Respond to your growing business
needs with apps on our flexible,
open platform.
Direct + Indirect
Manage more of your spend
(including services) than ever
before.

May 19th, 2015
Amy Fong
P2P Program Leader
Best practices and metrics for
next generation P2P
Sponsored By

11© 2015 The Hackett Group, Inc. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Agenda
 Hackett Group
Introduction
 Top Performance
Defined
 Key Capability
Enablers
 Summary

The Hackett Group – Introduction
Lifecycle support bringing intellectual capital and seasoned practitioners to yield sustainable
benefits
 We are the global leader in operations
improvement strategies, implementation know-
how, and G&A agility
 We address both efficiency and effectiveness
improvements to enable strategic business
objectives
 Our insights are fact based, from over 7,500
performance improvement consulting
engagements
 Our Best Practices Intelligence Center™ is a
significant differentiator and enabler. It contains:
– 20,000+ performance metrics updated annually
– 1,500+ best practices across 95 business processes
– 1,000+ best practice-based process maps,
requirements and configuration guides
– 1,000+ case studies, implementation examples and
research
 We deliver results through a global team of senior
practitioners using a consistent methodology and
best practice-based toolset
Hackett Value Grid™
We help companies
establish and implement
business performance
improvements.

Enabling World-Class: Hackett’s Solution Portfolio
Benchmarking, Advisory, Business Transformation
Membership Advisory
Insight into World-Class Performance
Benchmarking
Assess World-Class Performance
Business Transformation Consulting
Transforms Performance
Deliverables
 Peer & world-class comparison
performance metrics
 Detailed analysis
 Stakeholder survey
 Executive presentation
Benefits
 Objective comparison to peer
group and world-class performers
 Quantify performance gaps
 Uncover hidden costs
 Prioritization of improvement
initiatives
Deliverables
 Strategic direction
 Detailed business case
 Initiative plans & detailed
designs
 Implementation of best practices
Benefits
 Reduced cost
 Working capital optimization
 Enhanced service delivery
 Business insight
 Sustainable benefits
 Speed of solution delivery
 Merger integration
 Risk mitigation
Deliverables
 Best practice research
 Advisor access
 Best Practice Intelligence Center
 Peer interaction
 World-Class Progress Report
Benefits
 Identify the strategies and
practices employed by Leaders
 Validation of current initiatives
 Determining what’s possible
(World-Class Performance
Metrics)
 Process implementation support
 Continuous best practice
adoption

Agenda
 Hackett Group
Introduction
 Top Performance
Defined
 Key Capability
Enablers
 Summary

The Purchase to Pay Process is often under appreciated as a
source of business value by both Finance and Procurement
Hackett Purchase to Pay Value Grid™
Example of Effectiveness Drivers
 First Pass Match Rate
 On Time Payment Rate
 Level of Spend Visibility
 Streamlined Transaction
Strategy
 Level of Centralization
 Training Investment
 Compliance to Preferred
Suppliers
 Guided Buying Effectiveness
 Supply Base Consolidation
Example of Efficiency Drivers
 Cost per Transaction
 Transactions per FTE
 Span of Control
 Order Cycle Time
 Invoice Processing Cycle
Time
 Percent of Electronic
Transactions
 Level of Automation
Supplier
Master Mgmt
Verification
and Approval
Invoice
Pre-
Processing
Invoice
Processing
Discrepancy
Resolution
Supplier
Payment
Customer
Inquiry and
Response
File, Store, &
Retrieve
Reconciliation,
Accrual and
Compliance
Purchasing Operations
Accounts Payable
End-to-End Purchase to Pay Process
Requisition &
PO
Processing
Supplier
Scheduling
Receipt
Processing
Item Master/
Content Mgmt
Catalog Mgmt
Contract
Master Mgmt
Pcard
Management

AP Top Performers have 62% lower costs per invoice, and are
significantly more productive in processing invoices
$3.85
$1.46
$1.20
$0.35
$0.49
$0.24
Total Cost ($) per Invoice
Other
Technology
Process Costs*
$ 5.54
$ 2.06
Peer Top Performer
*Process Costs include Labor and Outsourcing Costs
Cycle time for PO Invoices
(from receipt to approval)
7
5
Peer Top Performer
*Cycle time for Non-PO invoices is 10 days for Peers and 7
days for Top Performers
Source: Hackett P2P Study

Invoice
pre-processing
Verification and
approval
Invoice
processing
Discrepancy
resolution
Supplier
payment
File, store &
retrieve
Customer
inquiry &
response
Automatically
sort paper
documents,
eliminating
the need for
batching
of invoices
Automate
Approval steps
and accounting
code verification
Auto-matching
of PO-based
invoices and
“touch-less”
processing of
non-PO invoices
Increase first-pass
match rates;
reduce need for
discrepancy
resolution via
Invoice validation
against PO and
MDM system
Greater visibility
into
invoice status
helps prioritize
payments to
capitalize on
early payment
discounts
Reduce
physical
shipping and
storage costs
with digital
Invoicing
Self-service
allows
suppliers and
internal parties
to look up
status quickly
Source: The Hackett Group
Technology is a key differentiator: AP automation
opportunities
Characteristics of a highly automated AP organization include
 Receive at least 60% of invoice line items electronically.
 Invoice approval is tracked through an automated system with automatic follow-up on
outstanding verifications and approvals. Exceptions that occur between invoices, purchase
orders and receiving information are reconciled within the tool.
 Documents imaged through optical character recognition (OCR) are imported to enable
online approval/verification through workflow management, not just imaged later in the
process for retention and storage purposes.
 Employee and supplier inquiries are responded to primarily via an automated self-service
solution.
 AP managers access business intelligence and analytics tools to view metrics on invoice
capture and AP automation in near real-time.

Technology Drives Efficiency: Among organizations with the highest level
of AP technology implementation, transaction costs are lower and cycle
times are faster
$4.95
$8.12
AP Automation Users Non-Automated AP
Organizations
Cost per Invoice by Level of AP
Automation
9.9
11.2
12.5
13.3
PO InvoicesNon-PO Invoices
Invoice Cycle Time from Invoice Receipt
Through Approval for Payment
(Average Business Days)
AP Automation Users Non-Automated AP Organizations
- 40%

Value drivers for Purchase-to-Pay
 Drive greater adoption to preferred supplier contracts
 Reduce supplier non-compliance process errors
 Improve focus on demand management
 Improve strategic sourcing effectiveness through greater spend visibility
 Support working capital objectives through DPO optimization
 Achieve greater early payment discounts
 Drive greater rebates from purchasing card usage
 Improve P2P process efficiency

Which
capabilities
differentiate Top
Performers?
 Guiding Requisitioners
 Process Automation
 Spend Visibility
 Supplier Information
Management

Buy-channel design emphasizes guiding the requisitioner
to use the correct channel upfront
P2P key process steps
Guided buying
Buying approach Buying channels
Requisitioning & PO
requirements drive
buy-channel selection
Requisition
Order
creation
Transmit
order
Receive Invoice Pay
Requisition
approval
Trusted source
review
Invoice
approvals
Self-managed buying
P-card E-shopping cart
Manual request Pull from supply
Procurement-assisted
buying
Tactical Strategic
Requests for goods or services managed by requisitioner
through predefined set of buying channels
Procurement intervenes based on buying rules or
requisitioner’s need for assistance

High adaptors of order automation drive greater activity
through electronic catalogues and achieve lower processing
costs as a result
Automated Orders: Orders that require no (or minimal) intervention from a buyer (e.g. system
generated, e-catalog)
Process Cost = Requisitioning & PO Processing (Labor + Outsourcing)

Leveraging order automation also drives higher levels of spend
visibility, first-pass yield, and contract compliance
57%
Automated Orders: Orders that require no (or minimal) intervention from a buyer (e.g. system
generated, e-catalog)
Source: Hackett P2P Study and 2014 Procurement Benchmark

Increased catalog use depends heavily on interface
 Develop Easy to Use Interface
– Use friendly means easy to create and submit requisitions in just a few clicks
 Self-guiding search offers targeted results for self-service users
– Advanced search for attribute specific criteria
– Control catalogue access to users based on needs and usage
 Enable productivity enhancement tools to minimize data entry
– Shopping lists (Favorite and Public)
– Saved shopping carts
 Vendor-agnostic search
– Free text searches that cross multiple vendor catalogs are easiest for users

Top Performers establish a Source to Settle Channel Strategy
then take action to guide requisitioners to preferred suppliers
28% 8% 56%
67%
8%
33%
Non Top performer
Top Performer
No standard buy/pay channels established Not Effective Mostly Effective with gaps Very Effective
How effective are you at driving requisitioners to preferred buy/pay
channels with the right supplier/right price/right buy method?

Four required capabilities for enabling guided buying
Source: The Hackett Group
1. Enable self-service buying
 Predefined channels that put buying in the hands of the requisitioner
 Comprehensive company “marketplace” to guide the buying experience
 Procurement-enabled buying capabilities
2. Deploy easy-to-use tools
 Single point of entry to initiate self-managed requisitioning
 Standard, common “shopping cart” experience that streamlines and automates buying
 Decision support tools that guide buying requirements by spend type
3. Build a base of approved, trusted suppliers
 Predefined trusted suppliers for recurring purchases of goods and services
 Automated selection of the right supplier
 Compliant buying enabled and negotiated savings realized
4. Provide professional buyer help when needed
 Easy link to professional buyer via company buying desk
 Automated assistance based on system-managed buying rules
 Automated compliance triggers to help buyer make the correct choice

Poll: What are your primary methods of receiving invoices from
suppliers? (select all used regularly)
 Paper
 Fax
 Email (ex. PDF attachment)
 EDI (Electronic Data Interchange) through a VAN (Value Added
Network)
 Direct connect through internet: Supplier upload to a company portal
 Third party network through internet (EIPP)

Invoice Automation
Advanced Invoice
Processing
Electronic
Invoicing
Supplier Portal
Third-Party
Network
EDI (via VAN)
File Upload /
Self Entry
PO Flip
Invoice Capture
Scan-based
Fax-based
Email-based
Invoice Elimination
Evaluated Receipt
Settlement (ERS)
Purchasing Card
(P-card)
"Invoice automation" can refer to any solution that is designed to
mitigate the inefficiency of traditional paper invoice processing.
Invoice is received in an
electronic format from
the supplier enabling
automated data entry
Invoice is not received from the
supplier
Invoice is received in
a non-electronic
format and/or requires
manual intervention
for data entry
 In practice, nearly 60% of all invoice line-items are still
received on paper
 The latest generation of imaging technology is
sometimes referred to as intelligent data capture (IDC),
advanced recognition (AR) or intelligent document
recognition (IDR) in Hackett research and elsewhere.
 Invoice capture includes imaging of a physical document
(transmitted via mail, fax, email), enhanced recognition of
the image, extraction and validation of digital
information, and workflow connectivity with downstream
systems

27%
50%
44%
33%
23%
25%
70%
60%
60%
40%
30%
20%
Direct connect through Internet
(supplier portal solution)
Email-based solution
Value Added Network through
non-Internet (EDI through VAN)
Third-Party Network through
Internet (EIPP)
Fax-based solution
Primarily paper based - No
electronic strategy exists
Peer Top Performer
EDI is no longer the dominant connectivity strategy, Top
Performers are leading the transition to web-based solutions
Primary Vendor Connectivity Strategies
(Percent of all Participants)
?

Organizations benefit significantly from e-Invoicing - in efficiency
and effectiveness
Invoice per Accounts Payable FTE
1 Based on organizations with high percentage of transactions through dominate strategy
20,314
9,484
7,459
E-invoicing Invoice Capture and Imaging
& Workflow
Paper
Difficulty of Enablement

Top Performers leverage electronic transactions for
invoicing and payment far more than Peers
Percent of Electronic Invoices and
Invoice-less Transactions*
25%
64%
Peer Top Performer
*Invoiceless transactions includes Evaluated Receipt Settlement

Poll: For what percent of spend do you have complete visibility
to supplier, spend category and line item level detail
 0-20%
 21-40%
 41-60%
 61-80%
 81-100%

Top Performers have higher levels of visibility to spend at the
line item level, a key contributing factor to spend management
effectiveness
Percent of Spend Visibility with Supplier,
Category and Line Item Level
54%
64%
Peer Top Performer

Fully automating spend analysis has major benefits
Today, only 19% of companies describe their spend analysis process as fully automated.
33% report having a completely manual spend analysis process.
Companies who have highly (versus partially) automated spend analysis solutions experience:
• 258% greater improvements in the time it takes to complete analysis.
• 155% greater increase in the amount of spend being analyzed
• 109% greater improvement in spend reporting accuracy.
 Spend analysis is the process of aggregating, cleansing, and analyzing corporate spending data for the
purposes of reducing costs and improving operational performance.
 Spend analysis can be an important competitive advantage for companies that use it, especially in highly
competitive industries. It enables companies to out-think and out-execute their competitors by helping them
lower costs and leverage supplier relationships.
 Spend analysis (and the visibility it enables) provides the necessary foundation for procurement organizations
to make better, more informed sourcing decisions.
Definition

Requisition
1
Order
2
Receive
3
 Complete purchase order form
(either paper or electronic)
based on approved Requisition
 Route PO to appropriate
management authority for
approval (Requestor should be
different from individual
ordering)
 Route order to supplier (either
electronically via EDI or via fax)
 Confirm receipt of PO with
supplier
 Process received goods
or acknowledge
completion of services
 Communicate receipt of
goods or services to AP
for processing
 Complete requisition
form (either paper or
electronic)
 Route requisition form to
appropriate management
level for approval
 Route requisition to
Procurement for
processing
Pay
4
 Receive invoice from
supplier
 Check invoice for
accuracy
 Perform match (either
two-way or three-way)
 Take discount
 Send payment to
suppliers either
electronically or via paper
check
Manage
5
 Conduct spend analysis
to check contract
compliance and
continuous sourcing
 Review supplier
performance
 Manage discounts and
rebates
 Assess overall contract
compliance
Spend Visibility Benefits to the Procure to Pay Process
Effective spend analysis creates improvements at almost every stage of the procure-to-pay process:
Introduction
 Results in list of
approved vendors
which streamlines
requisition process
 Identify and reduce
non-compliant or
“maverick” spend
 Reduces financial
savings leakage by
driving compliance to
negotiated contracts
 Increased visibility into
enterprise-wide spend
and improvements in
reporting capabilities
Visibility into spend enables the management of expenditures and ongoing spend efficiencies
Benefits of spend analysis

Benefits achieved through automated spend visibility are
significant
Benefit Type Actually Achieved
Reduced the amount of time required to complete spend analysis by: 33.33%
Increased the % of total spend being analyzed and reported on by: 33.67%
Increased the accuracy of spend reporting by: 38.33%
Identified and reduced non-compliant or “maverick” spend by: 18.17%
Identified cost savings opportunities leading to additional strategic sourcing
savings of (on average):
15.17%
Identified opportunities and was able to consolidate the supply base by: 8.00%
Source: The Hackett Group’s Spend Analysis Poll, February 2015

Outsourcing spend analysis also drives greater benefits
40
35%
31%
36%
44% 43% 44%
88%
53%
73%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% reduction in the time required to complete
analysis
% increase in the total spend being analyzed % increase in spend reporting accuracy
The Benefits of Implementing a Spend Analysis Tool
Only internal staff are used Partially outsourced Completely outsourced
Key takeaways
Companies who completely outsource
data collection (versus use internal
staff) experience:
• 151% greater improvements in the
time it takes to complete analysis.
• 71% greater increase in the
amount of spend being analyzed
• 103% greater improvement in
spend reporting accuracy.
Source: The Hackett Group’s Spend Analysis Poll, February 2015

Supplier Information
Management

Poll: Which of the following supplier facing activities does your
current technology infrastructure support?
 Setup of supplier payment data
 Setup of supplier terms and conditions
 Supplier financial screenings
 Tracking of supply chain locations
 Automated checks against third party databases (ex. FCPA, OFAC)
 Pre-qualification of new suppliers
 Performance management
 Risk management

Supplier master data is directly tied to sourcing and supplier
management; procurement must be involved to establish data
structure
Sourcing & Supply
Base Analysis
Invoice &
Payment
ProcessingPO and
Requisition
Processing
Supplier
Scheduling
Supply Data
Management
Receipt
Processing
Accounts Payable
Sourcing Execution Supplier
Management &
Development
Customer / Demand
Management
(e.g., NPDI)
Procurement
Function
Management
Compliance &
Risk Mgmt
P2P
(Purchase-to-Pay)
Pay (Finance)Purchase
Source Manage
Plan, Support,
Transform
Protect
Source: The Hackett Group Procurement Process Taxonomy

Leaders are Evolving their SIM Capabilities
Vendor Master File
Focused primarily on
ERP/e-Procurement
fields needed to place
POs, pay invoices, and
analyze spend
Supplier Information
Management (SIM)
Organizing and managing
all key supplier
information more
efficiently and effectively.
Supplier Lifecycle
Management (SIM
2.0)
Tying information into
knowledge, intelligence,
and analytics
 AP and Purchasing Ops
biased
 Data governance (who can
do what to which fields)
 Data integration (e.g.,
across multiple VMFs)
 Data quality for spend
analysis
 “Virtual Supplier Master”
 Starts earlier in lifecycle
(e.g., pre-registration via
supplier portal)
 Focus on hosted supplier
self-service
 Inclusion of document-
based and/or external
content
 SIM application vendors:
“SIM Platform”
 Increasing level of bi-
directional MDM integration
 Workflows driven by custom
supplier attributes and other
rules (process, regulatory) to
support:
 Supplier Performance
Measurement
 Regulatory Compliance
 Supply Risk Management
 Intelligence from “Supplier
Network”
 Integrating supplier data to
analytics (e.g., supply base
segmentation analysis)

Supply Information Mgmt is foundational to Supply Analytics &
Intelligence, a core Procurement capability

Agenda
 Hackett Group
Introduction
 Top Performance
Defined
 Key Capability
Enablers
 Summary

Summary of Leading P2P Capabilities
Master Data Management
 P2P process captures a level of spend visibility useful for spend analytics and compliance
 Supplier validation and onboarding process is formalized and standardized
 Formal supplier master file maintenance program with well defined accountability
 One time suppliers are set up using one-time vendor functionality within the ERP
Governance and Talent
 Single End-to-end P2P process accountability at an enterprise level
 Skill levels of resources are consistently high
 Resources and budget more focused on planning and strategy than transaction processing
Service Delivery Strategy
 Activity is centralized across the enterprise
 Appropriate use of Center of Excellence and Shared Service models
 Processes have been segmented, transformed, and appropriately outsourced and offshored
Enabling Technology
 Easy to use, cross searchable catalogs for goods and services
 Automated invoice routing and approval workflow
 Self-service solutions for supplier data updates, inquiries, and dynamic discounting
 Imaging technology for storage and retrieval of invoices and related documents
Process Design
 Invoice receipt is centralized
 Optimized supplier payment strategy
 Refined P2P Chanel Strategy supported by clear requisitioner guidance
 Channel strategy leverages 2 way match where feasible
 Utilize automated solutions to settle payments with third party suppliers.

Next on sharedserviceslink.com
Webinar programme

Next on sharedserviceslink.com
Conference programme

Thank you
Download this and other excellent webinar slides and
videos at:
sharedserviceslink.com/webinars
Become a free member at:
sharedserviceslink.com

Hackett tradeshift webinar final

More Related Content

What's hot

Viewers also liked

Similar to Hackett tradeshift webinar final

Recently uploaded

Hackett tradeshift webinar final