Automating the Procure to Pay Process “Garbage at the Speed of Light”

or “Billion Dollar Company Syndrome” Paul Cyphers COLLABORATE 07 April 19, 2007

Overview of Presentation
u Automating Processes u Suppliers u Items and Catalogs u Requisitions/Quotations u Purchase Orders/Contracts u Receiving u Inventory u Processing Invoices u Accounting u Reporting
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Procure to Pay Process
Sourcing
Identify Contract Sources Obtain Item Information from Manf .
Perform Spend Analysis Establish Contracts Develop Sourcing Lists Perform Quotation Process Decide Awardee Approved Supplier Lists and Contracts

Start

Monitor Performance

A

B

Operational

Budgets

Start

Identify Purchase Requirement

Locate Product Catalog

Material Lists Designs and Specifications

Establish Supplier Catalogs

Select Requisition Templates

Procurement Lists

Generate Requisition

Route for Review and Approval of Request

Approved Requisition

Purchasing
Establish Procurement Sources

Start

Perform Quotation Process

Establish Purchase Prices /Disc .

Establish and Update Contracts and Agreements Yes

Existing Contract

Generate Purchasing Documents

Approve Purchasing Documents

Transmit Purchasing Documents

Generate Purchasing Analysis

No Updated Purchasing Information Purchasing Correction Process

D Inventory Control

B A Maintain Item Master Information
Created Blanket Release Create Purchase Order

Project Cost Control

Accounts Payable
Complete Supplier Request Form Existing or Duplicate Update Supplier Infromation

Specs
Supplier Up -to Date ?

Yes Matching and Approval Process Supplier Provides Goods or Service C

No

Electronic Invoices

Process Invoices

Yes

Create Supplier

C
Update Supplier Site Information

No Invoice Information

Hold and Variance Process

Payment Register

Receiving Process

Treasury
Remit to Information

Cash Flow Report

Update Payment Information

Correct ?

Create Payment Batch

Issue Payment

Disbursement Register

Cash Management

Accounting
Commitment Reports D
General Ledger Accounting Cost Control Accounting Budget Reporting

Budget Information

Project Accounting

Fixed Asset

Tax Accounting

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Procurement Priorities
uStrategic lever for bottom line improvement uAssess for insight and opportunities uSource for cost savings uEnable buyers and suppliers to turn contracts into commerce uTransact though management tools in order to capture savings, compliance and efficiency uManage continuous improvement in order to maximize procurement performance
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Automation Opportunities
uBusiness Processes – Workflow, BPEL uEnterprise Service Bus/Web Services uBatch Processing and Interfaces uAutomation Tools
l “Automate, Integrate and Accelerate”

(10%) (30%) (50%) (100%)

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Tools for Automation
uBusiness Process Management Suite (BPMS)
l Business Process Modeling (BPM) l Business Activity Monitoring (BAM/BPA)

uEnterprise Service Bus (ESB)
l Web services l SQL Programs / Interfaces

uAutomation Tools
l Scheduling Tools l Automation Tools
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Oracle Modules (Advanced Procurement)
u Sourcing – improves strategic sourcing u iSupplier Portal – secure portal with supplier u Supplier Network – electronic transaction service u iProcurement – seamless ordering with web interface u Purchasing – streamline processing along with compliance u Approval Manager – enhanced approval process u Procurement Contracts – creates and enforces contracts u Service Procurement – control and oversight of services u eCommerce Gateway – allows for electronic transfer u Purchasing Intelligence – provides reports for compliance
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Supplier Management
uSupplier Registration (iSupplier)
l Initial setup and contact updates

uEliminate Supplier Setup form by using BPEL to execute process flow
l Provides immediate update process

uPeriodic updates using batch updates uAllow for immediate updates uUse of data hubs release 12 and TCA approach

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Business Process Execution Language

uAutomate data generation flow uImmediate updates vs. nightly batch updates uEliminate Supplier form for both additions and updates uUpdate supplier information across multiple systems uNotify relevant parties when completed uBuild rules into process
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Data Hubs
uProvides central data repository for master files uProvides for sharing consistent information between applications uDesigned to work with APIs uPart of Fusion Middleware uCurrently for Customers and Items uSuppliers part of Release 12 – TCA model

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Enhanced Supplier Management
uCloser and enhanced relationship with suppliers uViewed as integral part of supply chain uEnhanced sharing of information between entities uSharing information more readily and electronically uBuilt in supplier contracts and long term relationships uMaximized interaction with supplier uElectronic communication – iSupplier
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Item Master/ Product Lifecycle Management uMaintaining item master is data maintenance challenge and is ever increasing uFront end of purchasing process uData hub especially with PLM, enhanced Item Master process uGreat application for the use of BPEL uSupply Chain focus on product lifecycle
l Extensive quoting and purchasing integration

uEssential for most modules in procurement suite
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Sourcing
uEnhanced procurement process uUsually part of enhanced supply chain uSeeded functionality and module in Oracle uProvides lists of items and preferred suppliers uDrives preferred supplier spending uShould be tied to procurement contracts uAutomation opportunity for efficiency uRequires maintenance and attention
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Supplier Catalogs
uRequires item strategy uSeeded functionality uData from multiple sources uCan simplify item master process uCan be updated using EDI 832 (Catalog and Price) uXML becoming preferred method uSupplier maintained content uiProcurement Punch-out uSome organizations using supplier numbers only
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Requisition Import
uSignificant automation feature uImports requisition data from numerous sources
l Other modules, applications and data sources

uProvides for single source of data
l Eliminates duplicate entry

uAlternative to iProcurement uProvides validation and standard format uRemaining steps in process can be automated and/or controlled as much as possible
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RFQ and Quotations
uHistorically limited functionality uImportant to requisition process, especially in three bid environment with regulatory requirements uMost companies using outside process, either manual or development based uCan be interfaced with EDI uCan issue put through iSupplier uNew enhancements with RFI, RFQ and Quote uAutomation from quote to BPO to catalogs
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Self Service Purchasing
uiSupplier uiProcurement uiExpense, PCard integration uiPayment uXML Publisher uBudgets
l Commitments l Purchasing Spend

uProjects and HR integration
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iProcurement
uSelf service requisitioning, simple or complex
l Other alternatives available

uServes wide range of users uFinally viable as 11.5.10 uSupplier motivated to assist with integration uCan be expensive based on licensing uExtensive personalization uEssential to driving automation uKey to getting data right (i.e. account generator)
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Quotation Process
uRequires management, extensive data entry uSignificant source of data uDependent on spend analysis uBeginning of contract and automation process uLinks into RFI and RFQ process uHolds significant data for strategy and decisions uCan be electronically imported uUsed in both standard and blanket processes
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Standard Purchase Orders
uMost often used process, primarily manual uCan AutoCreate from requisitions but still requires review uManual requisitions often input at this point uCertain data fields can be updated through automation uOften requires second approval process uOften requires many manual steps or workarounds uRequires extensive down stream processing
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Automatic Blanket Release
uGreatest opportunity for automation uRequires extensive setup initially
l Tied to item number and pricing (Advanced Pricing)

uProvides consistent downstream information uAutomate the AutoCreate process uWill combine multiple requisitions uDoes not require approval process uNeeds additional automation checks
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Services Procurement
u Long been problematic for Oracle Purchasing u Advanced Procurement Suite
l Oracle Services l Oracle Procurement Contracts l Interfaces with existing modules

uProvides better system process uEnforce Contracted Pricing with Embedded Terms and Conditions, Contract Authoring uControl and oversight for services spending
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Self Service Receiving
u u u u Limited automation opportunities Necessary requirement for control SOX misconceptions Performed in different ways
l l l iProcurement iSupplier/SAN EDI/ASN

uImpacts to matching and accrual processes uCan be automated through receiving API
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Hand Held Receiving
uAutomation of receiving using symbol technology uUse programmable hand-helds uPerform more than one transactions uUse for multiple transaction sets uUse for multiple modules
l Inventory transactions l Fixed Assets l Physical Inventories

uHave a backup plan
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Evaluated Receipt Settlement
uQuick pay for only those items received
l “Pay on Receipt”

uSupplier negotiated receiving process
l Requires trust and proper data exchange l Designed for high volume

uTied to contracts uSupercedes the matching process uRequires minimal setup by supplier

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Inventory Transactions
uHand Held Transactions (Eliminate manual)
l Inventory moves l Issues and receipt

uAutomate multiple step processes uExecute replenishment programs uMaster carton and RFID transactions
l Cross Docking

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Inventory Counting
uCycle Counting uPhysical Inventories uSerialized Transactions uLocator Transactions uSpot Checks uFixed Assets

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Invoice Import
uCan be highly automated
l From scanning to straight through processing l Dependent on suppliers capabilities

uExtensively used for PCards and Expenses uCan be done as an EDI transaction – 810
l Best done after EDI PO transaction set – 850

uAlternative ways for smaller vendors uRequired by larger vendors uCan be controlled using invoice approval workflow
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Pay on Receipt
uQuick pay based on receiving uMust be contractual uAssociated with Advance Ship Notice
l EDI 865 l iSupplier

uWell Established Process uMust have reconciliation process

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Invoice Approvals
uStandard Practice
l Copies made and passed for signature (Non-POs)

uBest Practice
l Accounts Payable receives all invoices, entered into system l Controlled within system

uInvoice Approval Workflow uApproval Manager enhances the process uTime to process is the significant metric (>10 days)
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Project Accounting
uMaterial transactions to projects
l Drop ships l Expenses

uRequisitions capturing project information uServices contracts tied to project performance uTaxable versus non-taxable transactions uUse-tax uExtensive contracts tied to purchasing process

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Fixed Assets
uCapitalized Transactions
l Receiving services and freight after the fact

uTied to asset accounting
l Account Generator

uIn and out of service uAsset move transactions uAsset inventories uCoupled with other asset applications

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Accrual Accounting
uMost ignored process in the procure to pay cycle uRequires complete understanding of system uRequires defined process
l Receiving l Month End l Reconciliation

uOften requires custom reports uNeeds to be managed upstream uOften done outside system
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Month End Close
uGreat opportunity for automation uRequires synchronization between AP and PO uNeed to check multiple parameters
l Period Close l Pending Transactions l Invoice Sweep l Invoice Holds

uBeginning of Close Process

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Reporting
uRun Standard Set of Reports uXML Publisher uBudget Reporting (New Feature) uDiscoverer reports
l Commitment reports l Budget Reports l Purchasing Spend l Spend Analysis

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Action Plan
uMap Business Process uEstablish Priorities for automation uDecide on which protocol to use uPrepare implementation plan uExecute in a logical sequence uDon’t try to do it all uMake sure it works and obtains desired results
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Questions and Answers
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