how to maximise sap automation
TRANSCRIPT
How to maximise SAP automationEnhance P2P, master data, O2C processes
Introduction & Agenda
Typical pains and issues in business process
How to overcome those issues with automation
Examples of best practice
Focus is on SAP environment within SSCs
Split by 3 sections– P2P processes, master data, O2C processes
Your hosts– Simon Shorthose, Managing Director, ReadSoft UK
– Adam Chapman, Marketing Manager, ReadSoft UK
The business issues
Finance Manager/SSC Manager:– Eliminate inefficiencies in P2P/O2C processes– Need better process visibility & compliance– Need better cycle time– Continual improvement in cost reduction
SAP/Information Technology: – Need SAP certified solution– Simple to administer and upgrade– Fits corporate SAP IT strategy
Corporate Management:– Lowest possible cost outlay– Visibility and control of liabilities– Auditability and SOX compliance– Enable more centralisation– Increased use of SSCs– Satisfying internal & external customers - CQI
What’s driving SAP automation?
Fundamental processes in business
Something that all businesses have in common
Document based processes
Request based processes
These processes are often full of problems that cause additional expense or worse
• Slow processes
• Expensive processes
• Wrong postings and excessive corrections
• Low visibility (or no visibility) into the processes
• No transparency
• Difficulty in maintaining compliance
• Department’s reputation in the organization is harmed
• Processes run manually and without any way to control them (phone, email, paper)
• People avoid using complicated systems
• People try to bypass established processes
• Incorrect or no changes tokey master data
• Quality of service is low or varies in quality and cannot be guaranteed
Document or request driven processesTYPICAL PROBLEMS... ...WITH TYPICAL RESULTS
TRY TO CREATE AN EFFECTIVE AND EFFICIENT ORGANISATION
What do we mean by automation?
Automating your business processes is not workflow.
Workflow is about managing exceptions.
The key to efficiency is not having to handle exceptions in
the first place!
With a degree of automation – even the remaining manual
% can be unwieldy and expensive.
Aberdeen Group figures show laggards
have 10x the cost and 5x the cycle time
than market leaders in P2P processes
Key benefits to automating processes
Automate and control processes and master data
Lower costs in your core service areas
Improve productivity throughout the process chain
Improve service to the entire organisation and your customers
Increase visibility – measure what was previously unseen
Ensure compliance both internally and externally
Maximise your investment in SAP
Key areas to automate
Procurement / purchase requisitions
AP
Delivery note processing
Audit trail and price negotiation
Payment approval
Master data management
Sales orders
Order confirmation
AR
P2P
MD
O2C
P2P MD O2C
The P2P Process
P2P MD O2C
The “end to end” story
AP
P2P
36%
56%
64%
91%Non-top performer
Top performer AP only
improvement will
take you so far.
Add in P2P for an
even bigger boost.
Full “end to end”
automation needs to
happen to get the
best possible overall
result.
P2P MD O2C
P2P MD O2C
P2P
Procurement /
Purchase
Requisitions
Delivery
Note
Processing
Accounts
Payable
Early
Payment
Discount
Payment
Approval
Procurement / Purchase Requisitions
On average:– 30%-45% of indirect
purchasing is „Maverick
purchasing‟ (phone orders)
• Maverick purchasing costs
35% more in price than
agreement prices
– A savings potential of 26%
– Indirect order value is $120
– Processing cost is between
$20 and $30 per transaction
– Processing costs can be
reduced to $10 per
transaction
Aberdeen Group figures
30%
66%
70%
33%
Transaction volume Total spend
Indirect
Direct
“In failing to control the commercial aspects of their
indirect spends-leverage, total cost, terms and conditions,
supplier performance specifications and measurements –
corporations may be leaving 8% - 15% of their indirect
dollars on the table. They may also be missing
opportunities for improving service quality and reducing
their cycle times. Typically, indirect spending is not linked
to business-unit performance.”
Steve Trecha, CEO of Integrated Strategies
P2P MD O2C
Process walk through
Manual
A Purchase Requisition is generated
by a person inside an organization to
notify Procurement of items needed.
The Purchase Requisition is normally
sent to a superior for approval.
Final processing by Procurement
results in an SAP Purchase Order to
the vendor.
Automated
Any authorized person can create a
Purchase Requisition for any
approved item via an easy-to-use
online catalogue.
The automated workflow simplifies
authorization.
An approved Purchase Order is
generated automatically inside SAP
with all the procurement controls
applied.
P2P MD O2C
Procurement / Purchase Requisitions
Key benefits from automating
– Easy to use – more people will use/comply
– Enjoy a better basis for price and conditions negotiations
– Reduced costs for purchasing, logistics and accounting
– Improved incoming invoice processing
– Improved reporting ability
– Optimized supplier selection
– Optimization of existing SAP infrastructure
– Low total cost of ownership
P2P MD O2C
Case Study
A European company that reduced its indirect
procurement costs by over 50%– This company, a manufacturer of industrial pumps, was processing thousands
of indirect purchase requisitions in SAP each month.
– They automated their P2P processes – including
• Implementing a web shop for office supplies to reduce maverick purchasing
• Automating invoice processing, reducing extraneous inter-departmental queries
• Creating a fully automated purchase requisition system
– The automated purchase req system increased control, ensured compliancy
with approved suppliers and meant any exceptions were “true” exceptions
Their purchasing
manager said: “In the past, we spent too much time retyping
order data rather than managing processes
(control especially) and strengthening buyer
relations, to achieve better purchasing terms.”
P2P MD O2C
P2P MD O2C
P2P
Procurement /
Purchase
Requisitions
Delivery
Note
Processing
Accounts
Payable
Early
Payment
Discount
Payment
Approval
Delivery Note Processing
A document accompanying a
shipment of goods, for
matching against PO‟s and for
creating Goods Receipt Notes
(SAP MIGO).
A signed copy is usually
returned to the seller or
consignor as a proof of
delivery.
P2P MD O2C
Process walk through
Manual The recipient of delivery notes is either a
central warehouse or a person as specified in
the purchase order.
It is compared with the delivery and transferred
to either the Purchase, Logistics, or Accounts
Payable department.
Delivery Note data is entered into SAP as a
goods receipt entry & matched against the PO
to compare the quantity ordered against the
quantity delivered – the quantity may differ
owing to such things as damage/short shipment.
In many European countries, Delivery Note
documents must be stored for several years in
order to fulfil compliance regulations.
Automated The Delivery Note is captured as soon as
possible for best quality. Required fields are
extracted. Data is transferred into SAP and a
digital image is automatically archived, linked to
the SAP transaction.
The warehouse clerk can check the delivery
physically and against the scanned document.
Focus is on quantity & quality checks and other
relevant information. (i.e. Hazmat/chemical data
sheets, special storage/movement instructions).
In case of deviations, workflow inquiries are
automatically initiated before the GRN is
posted.
Automatic electronic archiving makes for fast
and simple retrieval as well as a complete audit
trail, of all documentation.
P2P MD O2C
Delivery Note Processing Key benefits from automating
– Lowers costs and saves time by archiving delivery notes electronically with
easy access
– Improves process control and provides full transparency for accounting,
receiving, and purchasing departments as well as suppliers
– Reduces manual data entry time needed to register goods received
– Improves process handling and earlier identification of errors and exceptions
and accuracy of data
– Delivery Note data is immediately available to others in the P2P process
– Safe & automatic posting of deliveries by extensive consistency checks in SAP
– One click retrieval of historic documents from SAP transactions
P2P MD O2C
Case Study
Sappi Europe– A global company with >15,000 employees. Sales in 100+ countries,
manufacturing in 9 countries on 4 continents.
– The delivery note business challenge:
• After delivery by the supplier, Sappi always made a visual inspection of the items.
• For deliveries to end users (non-stock material), a cost centre or repair order was
sent via internal mail or e-mail, along with a copy of the delivery to the consignee.
• For storage material, the original delivery was classified along with a copy of the
order in an archive. The SAP material number was noted on the delivery manually.
• All documents (delivery notes and printouts) must be kept for 5-10 years in the
archives
P2P MD O2C
Case Study
Post-implementation, what was the result?– Digital archiving of all delivery notes.
– Full automation of the goods receipt posting.
– Easy to use, speed, stability, flexibility, fully integrated to SAP.
– Control and proof of receipt of non-stock supplies.
– Automated information about goods receipt via e-mail to the recipient.
– Ability to find and display archived original documents from within SAP.
P2P MD O2C
P2P MD O2C
P2P
Procurement /
Purchase
Requisitions
Delivery
Note
Processing
Accounts
Payable
Early
Payment
Discount
Payment
Approval
Accounts PayableAccounts Payable (AP) is still a paper-heavy business
function. For companies responding to Aberdeen's
latest AP survey, nearly 77% of all incoming invoices
were still paper-based. This is an area still maturing in
terms of process automation and technology
adoption, with great (and as of yet untapped) potential
for driving savings to the bottom lines of every
organization.
Aberdeen Group, May 2011
0% 10% 20% 30% 40% 50% 60% 70%
Average
Best in Class
% investing in automation of invoice receipt &
workflow
P2P MD O2C
2.6
0.76
0.29
0.79
0.47
0.13
0.35
0.17
0.18
Non Top performer Top Performer RS
Total cost per invoiceRS Components
Labour Technology Other
Accounts Payable
Pursue comprehensive AP automation
to drive continued performance
improvement. Even for the highest-
performing enterprises, there is room for
improvement. Maximizing the impact of
automation on all AP processes, from receipt
to scanning and approval workflow through
payment, is the end goal.
Respondents that have completed this
picture ... report invoice processing costs
21% lower than others, while also securing
early payment discounts on more than twice
the number of transactions.
Data from Aberdeen Group report, May 2011
P2P MD O2C
£0.60
£3.74
£1.4
Hackett Group benchmark
P2P MD O2C
P2P
Procurement /
Purchase
Requisitions
Delivery
Note
Processing
Accounts
Payable
Early
Payment
Discount
Payment
Approval
Early payment discount/dynamic discounting
By taking advantage of EPD/DD it is possible to achieve
savings of 1/10th of 1% of annual spend– That‟s £1 million for every £1 billion spent
Best in class companies achieve approval cycles below 10
days and capture 95% of available discounts
...but it needs to be automated to hit deadlines!
ICG Consulting data
P2P MD O2C
P2P
Procurement /
Purchase
Requisitions
Delivery
Note
Processing
Accounts
Payable
Early
Payment
Discount
Payment
Approval
Payment Approval
An internal process where
invoices to be paid are
gathered in a payment
proposal document and
circulated for payment
approval
P2P MD O2C
Payment Approval – Process walk through
Manual Invoices posted for payment in SAP are gathered
in a payment proposal document and circulated
for approval.
The items in the proposal are approved by the
appropriate persons.
Finally, there is a manual transfer of the payment
proposal which is then executed as a payment
run. The payment run results in cheques printed
or wire transfers executed.
Automated Each proposal can be viewed at the line item
level. For each item, the original invoice image is
viewable to the user.
Proposals are brought into a single ledger. A
workflow to gather approvals is automatically
started.
When the workflow is complete, information
gathered during the workflow is transferred to
the payment proposal and then executed as a
payment run. The process fulfils SOX
requirements for payment approval similar to
requirements for invoice approval. Payment
Approval meets business rules.
P2P MD O2C
Payment Approval
Key benefits from automating– Payment approval meets business requirements
– Fulfils SOX requirements for payment approval similar to
requirements for invoice approval
– Invoice image is directly accessible in the workflow
– Easy access to see image or related information
– Eliminate paper documents that are printed just for payment
approvals
– Direct integration
– User friendly interface
– Higher user acceptance as compared to SAP transactions
P2P MD O2C
Master Data Management (in P2P process)
P2P MD O2C
Process walk through
Manual To create or update records, a request must be
sent to the data owner. This request should be
as complete and valid as possible when sent by
the requestor.
Often an approval is required before a change
can be made in the system.
The approved change request is processed by
the data owner (i.e. could be the purchasing and
accounting department).
Typical master data types for P2P are: Vendor,
G/L Account, Cost Centre, Profit Centre…
Automated Simple to use web application as entry point for
any request. Controlled collection of all
maintenance requests.
Integrated approval routines of any request in
line with established business processes.
Single point of processing and full overview of
requests for all parties in the organisation.
Improved reporting to measure service level
quality.
P2P MD O2C
Master Data Management
Key benefits from automating & controlling
– Reduction of uncontrolled inbound processes via phone, fax and e-mail – all
master data requests can be collected easily using the same procedure
– Approvals can be collected throughout the request process
– Better compliance management for master data handling
– Shorter processing times
– Improved reporting to measure service level quality
– Higher automated matching
P2P MD O2C
The O2C Process
P2P MD O2C
P2P MD O2C
O2C
Sales
Orders
Order
Confirmation
Accounts
Receivable
Sales Orders
Internal document, used
for filling the order and as
a basis for the invoice.
A Customer Order, or
Sales Order, is created by
translating an incoming
Purchase Order into your
own product codes and
inventory requirements.
P2P MD O2C
Manual process walk through
Sales order received
Warehouse checks
physical stock (re-prints
or writes out order)
Fulfilment
Order confirmation
manually createdCustomer receives order
P2P MD O2C
Price, discount,
promo, etc check &
approval
Sales order rekeyed
manually into SAP
Invoice created and
sent to customer
EDI / PDF
Email / Fax
Post / TIFF
Automated process walk through
Sales order received &
captured into SAPAutomatic stock check
FulfilmentOrder confirmation
automatically created
within SAPCustomer receives order
P2P MD O2C
Price, discount,
promo, etc automated
workflow approvals
Invoice created and
sent to customer
EDI / PDF
Email / Fax
Post / TIFFQuick Case Study
An international medical device company, with over 75,000 sales orders per
year.
They were receiving faxes, printing, sorting and eventually manually re-keying.
By automating, the workload is now automatically segregated by country. All
orders are captured and processed immediately.
P2P MD O2C
O2C
Sales
Orders
Order
Confirmation
Accounts
Receivable
Order Confirmation
An incoming document
confirming, with or
without qualifications, the
supplier‟s ability to fulfil
the requirements of the
Purchase Order
P2P MD O2C
Process walk through
Manual
An incoming Order Confirmation
indicates that the Purchase Order
will be filled.
Processing of the Order
Confirmation usually takes place in
the procurement department.
Delivery note comes back, any
variances are manually processed and
entered as credit notes and manual
approvals.
Automated
Order Confirmation data is
automatically captured and matched
with the corresponding Purchase
Order which is updated as needed.
Variances are automatically logged
and posted back into SAP.
P2P MD O2C
Order Confirmation
Key benefits from automating
– Reduced order confirmation creation time
– Timely information if a supplier cannot deliver in time or not in the
quantity ordered
– Workflows and notification are easily triggered for exception
handling
– No production downtimes
– Improved data quality
– Processing times can be reduced to a minimum since all parties can
be notified automatically and due dates can be easily checked
– In the event of discrepancies, you can update the corresponding
purchase order accordingly to trigger customised follow-ups
P2P MD O2C
P2P MD O2C
O2C
Sales
Orders
Order
Confirmation
Accounts
Receivable
Other Automation Areas
Accounts Receivable &
Cash Allocation
A typical AR function is burdened
with metrics that, can become
undesirable during the month-end
rush. The amount of staff
required to cope, pulling staff
from other areas to assist, the
value of unallocated cash and any
delays in allocation and your
overall debtor days.
P2P MD O2C
Typical cash allocation process
Rece
ive &
File
Mat
chin
gM
anual
Keyi
ng
Remittances & cheques
Bank statement / file
Key matched receipts
to invoices on sales
ledger
File remittances in value order
Purge unmatched remittances
30% of effort
40% of effort
30% of effort
Unmatched receipts
to customer account
or suspense
100% effort
P2P MD O2C
Automated process
Rece
ive &
File
Mat
chin
gM
anual
Keyi
ng
Remittances & cheques
Sales ledger update
Scan and extract data
Automated matching
20% of effortnot all need
scanning
10% of effortautomated
matching
0% effortautomated upload
30% effort
Electronic bank statement
P2P MD O2C
Case study
Background
• 100,000 invoices per month
• 2 sales ledgers
• Daily average of 1,200 BACS and 700 cheque payments
Challenges
• Average working date of posting date +5 days
• High personnel costs – 15 members of staff
Results
• Reduced personnel costs, 11 headcount reduction
• Lowered unallocated payments by 90%
• 85-90% auto matched payments
• Same day allocation. DSO down by 66%
P2P MD O2C
Summary
Procurement / purchase requisitions
AP
Delivery note processing
Audit trail and price negotiation
Payment approval
Master data management
Sales orders
Order confirmation
AR
P2P
MD
O2C
Summary
Automation gives you an edge– World class performance comes from automating end-to-end processes
Reduce costs, drive process compliance and visibility
through end-user ease of use and adoption
A common approach to multiple SAP processes
Rapid and on-going ROI
Modular deployment
Speed Service ControlS S C
The power of ReadSoft
Why ReadSoft leads the market
20 years of improving the document driven workplace
A world-class, knowledge leading supplier based in 17 countries
Turnover US$72 million with 15% of the turnover reinvested in R&D
Over 6,000 customers worldwide
Over 500 SAP customers, SAP certified solutions
