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The Power of LinkingProcurement with Payables    •The “How To” Enable One P2P
Agenda Introduction to Newmont Overview of P2P Experience Journey: Infancy to Maturity of Global P2P How to Lower P2P ...
Background on Newmont World’s second largest gold producer Market cap ~$30 billion 2011 gold production ~5.2 million ou...
Different Fortune 300 Companies:                Same Goals General Electric Healthcare  Responsible for Global Rollout   ...
Problems of Decentralized: Siloed P2PStage 1: Separate Decentralized Procurement and         Payables DepartmentsGenetics:...
Stage 1:Vertical Departments:Separate Department Roles within P2P Accounts Payable                                Supply C...
Effect of P2P Misalignment: Tip: If you don’t centralize > Missed Opportunities       Payment       Process               ...
Align P2P GoalsStage 2:    One “Service Level Agreement”            Separate/Decentralized Procurement and            Paya...
Stage 2: Strengths and DeficienciesGenetic Strengths: One Service Level Agreement in annual goals:  Transactional employe...
Stage 3: Regional P2PRequired DNA:   Upper Management Support to Regionalize P2P   If P2P moved under SC: Leverage IA/SO...
Stage 3 Example: Pre/Post Savings       Procure to Pay         Stage   Stage     Savings        Earnings                  ...
Stage 4: Global P2P /SSORequired DNA:   Upper Management Support to globalize P2P   One ERP Platform   One scanning/wor...
Impact of P2P Shared Service:          Functions                          Definition and Roles                            ...
Tips to Lower P2P CostsMap end to end Procure to Pay process Identify in flow risk/control areas Identify in flow time c...
Example: MonthlyBase Data/ Productivity MeasuresMeasurement                   Definition                           Stage 1...
Join up P2P : Automate for SuccessAfter identifying efficiency of current throughput-determine types of transactions with ...
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The power that comes from linking departments

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How do you practically link traditional functional silos such as supply chain and payables together? And what results can you expect from this? In this session, Cynthia Haug shares her experience and results from achieving this at GE Healthcare, Johnson Controls and now at Newmont Mining Corporation. Attend this session to discover how to:

- Conduct P2P process analysis to identify where there are breaking/risk points in your P2P process and what is causing high costs
- Gain buy-in from your key internal P2P stakeholders so they take appropriate action for change
- Move from functional silos to being in control of a global end-to-end P2P process – what results can you expect?

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The power that comes from linking departments

  1. 1. The Power of LinkingProcurement with Payables •The “How To” Enable One P2P
  2. 2. Agenda Introduction to Newmont Overview of P2P Experience Journey: Infancy to Maturity of Global P2P How to Lower P2P Costs
  3. 3. Background on Newmont World’s second largest gold producer Market cap ~$30 billion 2011 gold production ~5.2 million ounces of gold 2011 copper production ~206 million pounds 2011 reserves: a record 99 million ounces of gold and 10 billion pounds of copper ~ 43,000 employees on five continents Operations in seven countries on five continents, organized around four regions – North America, South America, Asia Pacific, and Africa
  4. 4. Different Fortune 300 Companies: Same Goals General Electric Healthcare Responsible for Global Rollout Outsourced invoice input to Hyderabad,India Mismatch resolution kept in house Tools: Oracle, ERS (Electronic Receipt Settlement) Auto Pay/Repeat Pay, “No PO No Pay” Policy Johnson Controls In house and centralized Procure to Pay regionally Tools: Bottom Line, SAP, Oracle, Excel Upload, EDI Newmont Mining In house and centralized North America Procure to Pay Tools: SAP, Open Text
  5. 5. Problems of Decentralized: Siloed P2PStage 1: Separate Decentralized Procurement and Payables DepartmentsGenetics: Two individual teams with separate processes Two sets of employee goals Separate reporting structures: One AP Manager & One Procurement ManagerGenetic Deficiencies: Separate processes encourages department “Finger Pointing” Unaligned P2P departmental goals increases time/cost Encourages “Push-Pull” relationship instead of collaboration
  6. 6. Stage 1:Vertical Departments:Separate Department Roles within P2P Accounts Payable Supply Chain Payment Process Purchase Orders Payment • Pay Vendors>Right amount Purchase • Requisition to PO Process Orders • Additions/Changes/ • Pay Vendors>Within agreed terms Close Processes Invoice Matching Process Requisitions Invoice • Match to Purchase Order Requisitions • Create Req Matching • End User/Cost • Input NOI and begin approval work flow GL Account # Review Process Vendor Desktop Vendor Administration • Valid PO/NOI Administration Review • Add/Change • Valid Vendor Vendors
  7. 7. Effect of P2P Misalignment: Tip: If you don’t centralize > Missed Opportunities Payment Process Purchase Orders • AP matched toPayment delayed/vendor relationship damaged wrong line • AP matched to wrong vendor Price/Qty Mismatch • Invoice was Invoice Insufficient PO Funds Requisitions rejected in Matching Not enough lines on PO workflow • GR but no IR No requisitioner approval No Purchase Order Desktop Vendor Review No Vendor Administration
  8. 8. Align P2P GoalsStage 2: One “Service Level Agreement” Separate/Decentralized Procurement and Payables DepartmentsRequired DNA: Upper Management Buy-In to one SLA If Global: Regional Management support Reporting Tools: Mismatches, GR/IRGenetics: Two individual teams with separate processes Goals Tied to one P2P Service Level Agreement Separate Reporting Structures: One AP Manager & One Procurement Manager
  9. 9. Stage 2: Strengths and DeficienciesGenetic Strengths: One Service Level Agreement in annual goals: Transactional employee accountability for P2P process requirementsGenetic Deficiencies: Separate Reporting Structures: Two End To End Managers Service Level Agreement needs enforcement by both Finance and Supply Chain Department
  10. 10. Stage 3: Regional P2PRequired DNA: Upper Management Support to Regionalize P2P If P2P moved under SC: Leverage IA/SOX for Finance Alignment Separate SRM from SC TransactionsGenetics: Regional P2P Departments Goals Tied to one P2P SLA End to End P2P ProcessesGenetic Strengths: One SLA in annual goals: Employee accountability in one P2P structure One Reporting Structure: P2P CollaborationGenetic Deficiencies: Lowest P2P cost not maximized
  11. 11. Stage 3 Example: Pre/Post Savings Procure to Pay Stage Stage Savings Earnings 2 3 AP 15 8 $350K Processors/Scanners (53% Reduction for North America in FTE’s) North America Discount 2.2M Earned (August-December 2011) Discount Corporate 75% 96% Capture Increase % Successful Citi One 375K Card Roll-Out (Rebate) Sub-Total 350K 2.6M Total 2.95M Since the transition, NA P2P has realized benefits totaling 2.95M Maximized efficiency by moving into a paperless environment to leverage future automation with SAP
  12. 12. Stage 4: Global P2P /SSORequired DNA: Upper Management Support to globalize P2P One ERP Platform One scanning/workflow platform/multiple languages Knowledge of regional tax/ law implication Change ManagementGenetics: Shared Service Organization Goals Tied to one P2P Service Level Agreement End to End P2P ProcessesGenetic Strengths: One SLA in annual goals: Transactional employee accountability One Reporting Structure: P2P Collaboration Lowest Cost Per Invoice due to Global platform
  13. 13. Impact of P2P Shared Service: Functions Definition and Roles Key levers Trusted advisor to business Planning and analysis • Business entity specific support focused on Business • Business partnering partners • Strategic planning, forecasting and analysis focused • Close proximity to decision makers • Decision support Knowledge driven activities Centralization of expertise • Expertise functions not specific to a particular • At global level business entity Expertise • Higher expert capacity • Highly specialized, requiring interpretation and utilization judgment • Strong proximity with • Low FTE level: limited benefit from SSO approach global function Volume driven processes Shared services model • Not critical to drive business decisions • Standardize high volume, Transactional transactional processes • Not specific to any business entity • Leverage Major ERP • Strong scale effect • Service provider culture • Value in streamlined and reliable processes
  14. 14. Tips to Lower P2P CostsMap end to end Procure to Pay process Identify in flow risk/control areas Identify in flow time constraining transactional activityIdentify current throughput of your Accounts PayableDepartment Determine Base Data Determine Cost Measures, Productivity& Process Measures Determine Quality MeasuresIdentify Key Performance Indicators and driveannual improvements with monthly report outs
  15. 15. Example: MonthlyBase Data/ Productivity MeasuresMeasurement Definition Stage 1 Value Stage 4 ValueTotal # Invoices 143,326 143,326Processed Total invoice transaction countTotal Electronically (% of Electronic Invoices 0 96,053 ( 67% )Total) 143,326 47,273 ( 33% )Total Manually (%of Total) Manual invoice = invoice entered by AP into Oracle Labor cost / total # electronicLabor Cost per Electronic invoices N/A $0.81Invoice processed Labor cost = total salaries + fringe (+ temp labor if applicable) Labor cost /total # manualLabor Cost per Manual invoices $36.79 2.47Invoice processed Labor cost = total salaries + fringe (+ temp labor if applicable)Manual Invoices Manual invoices count/FTEProcessed per FTE count 1540 3251
  16. 16. Join up P2P : Automate for SuccessAfter identifying efficiency of current throughput-determine types of transactions with ability to movefrom manual invoices to automated Purchase Order Non-Purchase Order Repeat Pay/ Auto Pay Payments Immediate Short Term Expenditures Research/Network same lines of businesses and successful use of automation
  17. 17. Questions ?

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