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Dr Pepper Snapple Group

Leveraging Esker On-Premises AND in the Cloud for AP and Order Processing

Presented by: Cindy Reid, Senior Director Accounts Payable and Commercial Trade AccountingNicole Bowles, Customer Logistics Manager

ü Dr Pepper Snapple Group is a $6B company (NYSE: DPS) § #1 Flavored CSD company with 6 of the Top 10 Non Cola’s in the US§ 13 of our 14 leading brands are No. 1 or No. 2 in their flavor categories

üDPSG manufactures, markets and distributes over 50 brands of CSD’s, juices, ready to drink teas, mixers, and other premium beverages across the United States, Canada, Mexico, and the Caribbean

üDPSG operates 22 manufacturing and bottling facilities with over 19,000 employees

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Our Brands are Leaders in Their Categories

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#1 Pepper CSD in U.S.#2 Overall Flavored CSD in U.S.

#2 Lemon / Lime CSD in U.S.

#1 Ginger Ale CSD in U.S. & Canada

#1 Orange CSD in U.S.

#1 Root Beer CSD in U.S.

#1 Grapefruit CSD in U.S. & Leading CSD in Mexico

#1 Carbonated Mineral Water in Mexico

#1 Premium shelf-stable RTD tea in U.S.

#1 Branded apple juice in U.S#1 Branded apple sauce in U.S

We are Flavor Leaders in U.S. CSDs

Allied Brands Complement our Portfolio

We have Leading Non-Carb Brands

Source(s): Nielsen Scantrack XAOC incl Convenience 52 weeks ended 1/3/15

#1 Branded shelf-stable fruit punch in U.S

A leading spicy tomato juice brand in U.S., Canada and Mexico

Fun Facts

What does the famous tagline for Dr Pepper “Drink a bite to eat at 10, 2, 4” mean?

What is the oldest carbonated beverage in the world?

ØSchweppes - 1783

ØThose are the times that people should drink a Dr Pepper. Resulted from a scientific study by Columbia University in the 1920’s, in which researchers documented the average person’s blood sugar level was lowest at 10:30am, 2:30pm and 4:30pm

Is one of the secret 23 flavors of Dr Pepper prune juice?

ØDr Pepper never has and never will contain prune juice

What carbonated beverage can help roses bloom for 7-10 days?

Ø7 UP – mix ½ cup of water with a ½ can of 7UP

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Accounts Payable Journey to Lean

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Cindy ReidSenior DirectorAccounts Payable & Commercial Trade Accounting

Cindy Reid has been with the Dr Pepper Snapple company for 22 years.

She has prior experience working in the Commercial Trade Accounting department, National Accounts, Account Receivable and led several major data migration teams on large projects including the Trade Promotion Management system, Master Data Management of materials and vendors as well as the Packaged Beverage SAP system.

Her most recent success has been leading the Accounts Payable team from bringing back outsourced jobs to the successful current state with implementation of the Esker Accounts Payable system. Based in Plano, Texas Cindy has a special interest in developing people and she believes the road to success is trying (sometimes you win, sometimes you learn). She holds a bachelor's degree in business management. Contact her at [email protected]

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Accounts Payable Responsibilities

• Accounts Payable– Invoice Processing (Purchase Orders and Non Purchase Order Invoices)– Disbursements– 1099 Reporting– Travel & Expense (T&E)– AP/T&E Compliance Audits– Escheatment/Returned Checks–GRIR/Corporate Card Reconciliations

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Back in Time…What was it like in 2011 for Financial Services?

• Rapid Continuous Improvement became part of DPSG culture, but difficult to impact outsourced areas

• “Transactional Services” were under contract to be outsourced until the end of 2013

• Continuous retraining of Third Party Outsourcer (3PO) became extremely time consuming

• Bottlers were being acquired and processes were not standardized, but were “lifted and shifted”

• Transaction culture of “that’s the way we have always done it”

• No tracking or productivity of work

• Text field on SAP transactions were used for notes

• No system/process to prioritize work

• Majority of correspondence was either mailed, or printed/scanned/emailed

• AP Metrics were Red

• AP issues became a topic at the DPSG Executive Leadership Team Meetings

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üUnderstand

üSimplify

üAutomate

The Vision began in 2011….

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What was the Game Plan?

• Utilize Lean Six Sigma tools to:– Define Current State (GEMBA and Value Stream Maps)– Eliminate waste– Define future state to standardize processes– Implement Metrics

• Must be well thought out and insured that there are no unintended consequences• Leverage technology to automate standard processes and metrics

– AP Automation• Evaluated Receipt Settlement (ERS)• Esker OCR/Workflow• Corporate Card Expansion• Expansion of Upload Processing

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What is GEMBA?

“Farming looks mighty easy when your plow is a pencil, and you’re a thousand miles from the corn field” – Dwight D. Eisenhower

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• Gemba is a Japanese term meaning the real place

• Think CSI…..The power of any investigation is to actually go to the scene of the crime, or where the action takes place (or took place)

• Gemba can help identify:• Non Standardized processes• Non Value added process steps• Training needs• Variations not documented• Challenges/Obstacles not known by management• Process Improvements to be shared• Over-processing

• It’s imperative that Management removes themselves from theory and continues to go to GEMBA as business needs/situations change as well as employees

Process Obstacles before Esker

• Process challenges:– Process challenges driven by culture and lack of buy in

– Greater than 50% of paper invoices are received by internal DPS employees vs. directly from the vendor

– Paper invoices represent over half of total invoices processed annually

– Paper invoices represent over 70% of AP resource time to process

– Over 20,000 duplicate invoices are received annually

– Vendor compliance was identified in last AP Kaizen as a method of attacking root cause of issue – challenge is national rollout and support

• Automation challenges:– Approximately 375,000 invoices are received annually in paper or email form and are manually processed by AP

– Routing of invoices for issue resolution or approval is manual

– No way to address duplicate payments at front end of process without enhancements identified in last Kaizen ($100k in cost for minimal benefit)

– There is no data to drive changes in behavior around invoice submission – no system to track data or provide life cycle analysis

– Two ERP systems

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Current State (2011-2012) for Paper/Emailed Invoices

Desired Future State (2011-2012) significantly less ‘touch’

Future State

Invoice Receipt Invoice Processing

•Paper•Email•Fax

•PO Based•Non PO based•Exceptions•Analytics

Capture Invoice Data & Archiving

Capture Process Pay

OCR • OCR reads the relevant information from the invoice as it is scanned, performs validations, applies business rules• Enhance invoice with SAP data• Reporting database for search

Document Archiving• Archives image and links to SAP accounting document

Workflow• Exception processing for business rules– Duplicate invoice– No Goods Receipt– Vendor Compliance– Invalid/missing PO– G/L coding– Approval

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Future State

Invoice Processing•PO Based•Non PO based•Exceptions•Analytics

Invoice Processing

Capture Process Pay

SAP Invoice Processing• Scanned invoice data is enhanced to provide straight-through processing• Once exceptions are resolved, invoice is posted/block is released• Reporting, metrics and analytics

Workflow• Exception processing for parked or blocked invoices

• Routing for coding and approval

Invoice Portal• Web based portal for coding and approval

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Phase II

Phase I

Two Phases

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Planning Phase

Kaizen / Process work

Process Review

High Level Requirements / Initial Vendor reviews / RFP for Partner Selection

Blueprint

Detailed Requirements / Solution DesignVendor Selection

Implementation Phase

DevelopmentTesting/Training

TestingTraining

Go Live/Support

ProductionHypercare

Phase I Approach

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DPSDesign

Documents

OptimalIntellectual Capital

Develop Business Requirements

Engage & Investigate Potential Solutions

• Business Requirements Documents

• Architecture Document

• Project Definition Document

• High-level Functional Specifications

• Business Case (top 2 solutions)Target Vendor Info

OptimizeTools/Methods

DeliverablesInputs/ Prep Key Activities

DPS Training

Best Practices

Selected Work Products:

• Project Schedule • Governance Model (RACI)• Workshop Schedule & Invitations• Target Vendor Engagement• Document Review

• Business Process Workshops • Process & Data Design Documents (Revisions/ Drafts)• Infrastructure Assessment• 3rd Party Vendor Solution Analysis & Fit Gap• Evaluation Criteria

Finalize & Present Recommended Solutions

Optimal:• Project Manager• Solution Architect• Technical Architect• Development Lead

Resources:

DPS:• Business SMEs – AP Processes

• SAP System support (FICO)

• IT System Analyst

ftp.

Vendor SelectionFunctional Fit of Solution with DPS Requirements

Requirements Matrix• Business Requirements for assessing Solution functional/technical fit

• Basis for Solution Demos

Evaluation Criteria• Basis for assessing Solution Scenarios to down-select for Business Case development

End-State Solution Scenarios

• Alternatives for ROI Analysis / Business Case

Requirements Assessment

• Vendor feedback (Fit-Gap) with respect to Requirements

Evaluation Criteria• Basis for assessing Vendor Solutions with respect to Fit-Gap as well as other factors

Solution Demos

Vendor Solution Evaluation Scenario Evaluation

Business Case

Phase II…

Why Did We Select Esker? ROI and Requirements Met By Vendor

High Level Process Diagram

Information Technology

Project Approach

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Esker is using Agile methodology. This approach focuses on rapid and frequent deliverables of partial solutions that can be evaluated and used to determine next steps. In this way solutions are built in an iterative and incremental manner. Agile methodology:

– Values early and frequent feedback from the end user– Delivers the most important/valuable features at the earliest available time

This was a big learning area for DPS as we were accustom to one implementation approach

Information Technology

Increment Overview

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• Increment 1 - Complete– Contained development items impacting the user interface and required for Go-Live

• Increment 2 - Complete– The OCR Teach training increment to help the DPSG team learn the application and “teach” the rules for the

Esker system to “learn” the Invoice data.

• Increment 3 – Complete– Delegation, workflow and user interface

• Increments 4, 5, 6 - Complete– Tax, Routing Determination, Pallets, Company Code determination, mobile launch, duplicate workflow check,

etc……

We started with our Go Live requirements and User Experience and prioritized accordingly. Any form change or requirements for go-live were in our first increments to minimize change management/training.

Results……

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Accounts Payable - FTE’s have declined by 30% while their volume has increased by 50%

• Process Variation was absolutely destroying the quality of the AP process• Different processes were “lifted and shifted” to outsourcer• In 2011, the team had over 200 SOP’s

• Lean Track was implemented in 2013 to work with the business utilizing Kaizens and Lean Six Sigma tools to address root causes of issues and streamline the process

• After several Kaizens, VSM’s, and Gemba activities, process was defined and standardized which paved the way for automation utilizing OCR/Workflow solution in 2015

• Different “Tools for the Job”: In addition to Esker OCR/Workflow, implemented ERS, Uploads, and Winshuttle

• Implemented Visual Metrics to Inspect what we Expect 25

After Esker Metrics

Avg=$3.93

Avg=$3.04

UCL=$6.17

UCL=$3.87

LCL=$1.70LCL=$2.21

$1.50$2.00$2.50$3.00$3.50$4.00$4.50$5.00$5.50$6.00$6.50

Jan-‐14 Feb-‐14 Mar-‐14 Apr-‐14 May-‐14 Jun-‐14 Jul-‐14 Aug-‐14 Sep-‐14 Oct-‐14 Nov-‐14 Dec-‐14 Jan-‐15 Feb-‐15 Mar-‐15 Apr-‐15 May-‐15 Jun-‐15 Jul-‐15 Aug-‐15 Sep-‐15 Oct-‐15 Nov-‐15 Dec-‐15 Jan-‐16 Feb-‐16 Mar-‐16 Apr-‐16 May-‐16 Jun-‐16

Sample Re

sult

Sample Number

X Chart

Avg=$0.84

Avg=$0.31

UCL=$2.75

UCL=$1.02

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

Jan-‐14 Feb-‐14 Mar-‐14 Apr-‐14 May-‐14 Jun-‐14 Jul-‐14 Aug-‐14 Sep-‐14 Oct-‐14 Nov-‐14 Dec-‐14 Jan-‐15 Feb-‐15 Mar-‐15 Apr-‐15 May-‐15 Jun-‐15 Jul-‐15 Aug-‐15 Sep-‐15 Oct-‐15 Nov-‐15 Dec-‐15 Jan-‐16 Feb-‐16 Mar-‐16 Apr-‐16 May-‐16 Jun-‐16

Moving R

ange

Sample Number

mR Chart

Est. Sigma = $0.28

ØProcess Lead Time improved 30% ØCost Per Invoice before Esker in $5 range, during increments reduced to $3.93 and now avg. is $3.04

Ø1,201 vendors are taught with 1,322 supplemental rules and 121 different layouts as of July 11, 2016

ØTaught vendors on average take ~36 seconds for routing vs. avg of 1.2 min for non-taught vendors

ØStraight through processing continues to be a learning experience with our SAP systems for POs.

ØFuture user stories to help in routing and straight through processing

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Cost Per Invoice

Conclusion

ØAccounts Payable costs declined by $0.5M (annual run rate) while reducing headcount 30% and increasing volume 50%

ØOur results have been driven primarily by the following factors:

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ü Fostering the culture of continuous improvement

ü Optimize the use and understanding of technology

ü Strong Leadership team that embraced Gemba to Understand, Simplify, and Automate

Sales Order Processing

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Nicole BowlesCustomer Logistics ManagerWarehouse Direct & Beverage Concentrate

• 17 years of Supply Chain experience at Dr Pepper • Joined Canadian Customer to Cash team in 1999• Handled order management, collections & deduction resolution for foodservice accounts nationally• Subsequently, held roles such as VMI Analyst & Demand Control Manager • Returned to customer service function in 2010 as Customer Service Manager after relocating to corporate office• Transitioned to Customer Logistics role in 2015

– Work closely with Customer Service teams– Special projects / system testing / training / process & policies– SOX compliance / reverse logistics / supply chain deductions

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Customer Service Responsibilities

• Primary contact for customers• Day to day execution of customer orders, track & trace, securing Proof of Delivery, coordination of returns• Ensure customer satisfaction at the lowest delivered cost• Critical metrics: response time to customer, case fill and on-time delivery• Invoice accuracy, including pricing and investigation of invalid deductions• Reporting• Implement strategies and programs to improve service or cost to serve

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Warehouse Direct - Process Map

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Beverage Concentrate – Direct Process Map

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Direct Process:

• Concentrate orders from Franchised Bottlers, Non-Franchised Bottlers, Co-Packers and fountain syrup orders from Distributors

• Orders ship from Saint-Louis Plant or OHL warehouse

• LTL orders ship through DOW schedule

Beverage Concentrate – Indirect Process Map

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Indirect Process:

• Fountain orders shipped by a Delivery Agent. The DA can be a company owned bottler, 3rd Party Bottler or Distributor

• Orders are placed with DPSG CSR and sent to assigned DA for delivery of product

Esker Project Timelines

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Project Team

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• Strong cross functional team• Committed sponsors• Dedicated resources• Close interaction between Esker & DPSG• Consistent IT support • Ongoing & dynamic collaboration• Quick & efficient communication

Name Role FunctionAndrew Sulzer Engagement Manager Esker

Nal i Thephavong Technica l Architect Esker

Tony Thaden Solution Support Esker

Sajika Gal lege Product Consultant Esker

Scott Albright IT Project Sponsor VP IT

Laurie Breton Bus iness Project Sponsor VP Customer Service & Operations

Laurie Vi l lers Bus iness Owner Director Customer Service

Venkat Paruchuri IT IT Director

Diana Fel ler IT IT Manager

Donna Krueger Project Manager Project Manager

Nicole Bowles Bus iness Resource -‐ Lead Customer Logis tics Manager

Stephen Anaya Bus iness Resource Customer Service Manager -‐ WD

Tamara Bassett Bus iness Resource Customer Service Manager -‐ BC

Ji l l England Bus iness Resource Customer Service Manager -‐ BC

Kris ty York Bus iness Resource Customer Service Manager -‐ WD

Deb Wakel in Bus iness Resource Customer Service Manager -‐ WD Canada

Al l i son Walter Bus iness Resource -‐ Testing Customer Service Rep -‐ WD Canada

Lucy Compton Bus iness Resource eCommerce Analyst

Valyncia Crump Bus iness Resource -‐ Testing Customer Service Lead -‐ WD

Ryan Fleming Bus iness Resource -‐ Testing Customer Service Lead -‐ WD

Arthur Davi la Bus iness Resource -‐ Testing Customer Service Rep -‐ WD

Shannon Dickstein Bus iness Resource -‐ Testing Customer Service Lead -‐ BC

Tashia Quiroz Bus iness Resource -‐ Testing Customer Service Lead -‐ BC

Anoop Has i ja IT IT Lead

Dan Flamholtz Finance Risk Manager

Risk Management

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On Demand Solution for DPSG Sales Order Processing

• Short deployment from project start to go-live• Flexibility to customize 2 sales order processing solutions (Warehouse Direct and Beverage Concentrate)• No software upgrades – solution is kept up-to-date• Cost effective • Seamless to customers• User friendly interface• Simple re-routing of inbounds for order processing coverage• Visibility/ability for users to manage order validation for both sides of the business and teams in US and Canada

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Before and After…

Before:• Manual order entry into SAP• Customer Validation (Sold to)• SKU / UPC Determination• Manual archiving of customer order

After:• Manual entry replaced with Data Validation

• Customer Validation (Sold to/Ship to look up) within Esker

• SKU / UPC Determination within Esker

• Auto attachments38

High Level Process:

• Customer submits order via fax/email

• Order routed to designated CSR• CSR manages order queue online

• CSR validates and approves order

• Order is created and archived automatically in SAP

Benefits:

• Immediate visibility (not stuck in inbox or fax machine)

• Clear view of workload• 65% reduction in time spent processing non-EDI orders

• Ability to manage increased order volume without straining resources

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Questions?