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Are P-cards the answer to making payments easy? What about losing control? And what about fraud?

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Sometimes your P-card program seems robust but is realizing low-level savings, and you may think it’s exposing you to fraud. How do you rationalize control?

In this session, discover how to make your P-card program the most effective it can be, by hearing how one company dramatically increased spend over their P-cards, removed noise (i.e. low dollar, frequent purchases) and freed up its staff to concentrate on more strategic procurement initiatives. Learn how to:

- Set the controls you really need to manage your program globally
- Use mandatory and non-mandatory messages to maximize supplier adoption
- Communicate and train your business on how to correctly comply with your P-card program

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Are P-cards the answer to making payments easy? What about losing control? And what about fraud?

  1. 1. From Chaos to Control -- Moving from a disparate,multi-ERP environment to a standard and stableERP for P2P presented May 23rd, 2012Paul WilliamsDirector of Global Source-to-Pay BusinessProcess Management and CatalystKraft Foods
  2. 2. Agenda• Background• Process Improvement Approach• Key Learnings• Questions
  3. 3. Kraft Foods Fact figures3
  4. 4. An Amazing Brand Portfolio •12 brands with more than $1 billion in revenue •70+ brands with more than $100 million in revenue •40 brands over 100 years old •80% revenue from #1 share positions4
  5. 5. Background and ObjectiveObjective: Move from numerous disparate global processesand ERP systems to globally standardized processes across 3instances of SAP.Background: • 5 Regions -- North America (KFNA), Latin America (LA), Asia Pacific (AP), Europe (KFE), Central Europe Eastern Europe Middle East and Africa (CEEMA) • 100,000 employees; 1,000 Procurement employees • Starting point: 17 Source-to-Pay Process maps, 120 Procurement systems • Key activities during the transition: – Divestiture of the Pizza business unit – Acquisition and integration of the Cadbury business – Spin off of North American Grocery business (pending)
  6. 6. Agenda• Background• Process Improvement Approach• Key Learnings• Questions
  7. 7. P2P Process Improvement Approach 1. Detailed “As-Is” process mapping is the critical key first step 2. Define the “To-Be” process with clear regional and local governance definition 3. Establish baseline metrics and targets before making any process changes 4. Establish a cross-functional working team and steering committee. 5. Effective Change Management is critical and multifaceted7
  8. 8. Take a true view of your end-to-end process • Solicit input from process owners, inputters, and customers. • Perform real work observation to check for “ghost processes”, i.e. undocumented variations. • Prepare for surprises. View of the Accounts Payable FI Invoice Coding Process8
  9. 9. P2P Process Improvement Approach 1. Detailed “As-Is” process mapping is the critical key first step 2. Define the “To-Be” process with clear regional and local governance definition 3. Establish baseline metrics and targets before making any process changes 4. Establish a cross-functional working team and steering committee. 5. Effective Change Management is critical and multifaceted9
  10. 10. Define the To-Be Process with clear GovernanceLook at P2P in the context of a broader source-to-pay process
  11. 11. Define and Align to Functional Handoffs Everyone must understand their role in the process or P2P will be deprioritized11
  12. 12. P2P Process Improvement Approach 1. Detailed “As-Is” process mapping is the critical key first step 2. Define the “To-Be” process with clear regional and local governance definition 3. Establish baseline metrics and targets before making any process changes 4. Establish a cross-functional working team and steering committee. 5. Effective Change Management is critical and multifaceted12
  13. 13. Establish Baseline Metrics and Targets before making any process changes Who’s # Metric P2P Area Jun-11 2011 YE Target Best in Class Average Responsible 1 # of New Vendors Created Master Data 924 NA NA NA Procurement 70% 2011 YE / 80% 2 % PO Invoices PO Processing 74% (Q1 2012) 79 - 90% 64% Procurement Accounts 3 Open Invoice Counts Accounts Payable 24,557 27,000 – 36,000 n/a n/a Payable % 1st first pass match for PO 4 Accounts Payable 49% 65% 93 - 95% 65 – 80% Procurement spend Due date 53% Accounts 64% / TBD on the 7 Accounts 5 % On Time Payment 95 - 98% 80 – 87% Payable 7 day day buffer target Payable 83% buffer FI 8.8 7 days Accounts Accounts Payable 6 Average Invoice Cycle time Payable 4 days 7 days (BU and Mfg) MM 6.7 7 days Procurement 7 % OB10 Invoices Accounts Payable 14% 35%, 80% 30% Accounts 8 % EFT Payments Cash Disbursements 30% 35% 57 - 58% 9-37% Payable Data available Accounts 9 Duplicates Cash Disbursements starting in 0.1% TBD TBD Payable Aug 2011 Data available Baseline & Target Accounts 10 Payment Accuracy Cash Disbursements starting in to be established by 98 – 99.9% 90 – 95% Payable Sept. 2011 Oct. 2011 44.8 (Q211), 44.2 Corporate 11 Days Payable Outstanding (DPO) Cash Flow 41.8 Days (Q311), 43.1 (Q411) 45 Days 35 -40.2 Days Finance13
  14. 14. P2P Process Improvement Approach 1. Detailed “As-Is” process mapping is the critical key first step 2. Define the “To-Be” process with clear regional and local governance definition 3. Establish baseline metrics and targets before making any process changes 4. Establish a cross-functional working team and steering committee. 5. Effective Change Management is critical and multifaceted14
  15. 15. Governance StructureHaving a cross-functional sponsorship and operating team is critical Finance
  16. 16. P2P Process Improvement Approach 1. Detailed “As-Is” process mapping is the critical key first step 2. Define the “To-Be” process with clear regional and local governance definition 3. Establish baseline metrics and targets before making any process changes 4. Establish a cross-functional working team and steering committee. 5. Effective Change Management is critical and multifaceted16
  17. 17. Effective Change Management is critical andmultifacetedBusiness Engagement and Readiness • Early business engagement driven by Procurement Leads • Trained and properly rewarded Key User network • Detailed cutover readiness metrics with pre-determined escalation points in each BU and function • Monthly business readiness review with each part of the business; more frequently close to cutover • Upfront, tracked, mandatory training.Partnership Alignment • Clear alignment on support expected from internal and external partners during cutover and stabilization • Clear, vetted contingency plan with measurable trigger points.Communication • Robust internal and external communication plans • Simplified, “Twitter-level” monthly Newsletter • Repeat. Repeat. Repeat…
  18. 18. Agenda• Background• Process Improvement Approach• Key Learnings• Questions
  19. 19. Key Lessons Learned 1. Business Partner Support: – Be very explicit about expectations for input into design and go-live support – Dedicated Key User for onsite issue resolution 2. Stakeholder Involvement in Design: – Change management: go directly to end users to establish awareness – Process design: ensure adequate end-user input to design and review of new process and system 3. Training: – Mandatory awareness training on process change in A/P, context in the business setting and systems environment, and the tools to support – Mandatory classroom training for Key Users, high/med impact end users – Track training participation and retention – Get end user feedback on training materials prior to go-live 4. Testing: – Focus testing on the most complex scenarios – Test a broader range of situations and volume to get an accurate picture of potential issues – Despite three test cycles and end-to-end regression analyses, not all interdependencies were identified 5. Cutover: – Prioritize complex issues in legacy system clean-up – Confirm all contingent master data elements are active, as expected – ReadSoft tool under-delivered on reporting capabilities 6. Vendor Readiness: – Prioritize key/critical vendors against business disruption risk – Work closely with Procurement for supplier change readiness & impact assessment19
  20. 20. Agenda• Background• Process Improvement Approach• Key Learnings• Questions
  21. 21. Questions?

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