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About This Presentation
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Slide Content
All rights reserved. Reproduction of this document or any
portion thereof without prior written consent is prohibited.
““Achieving World-Class Performance Achieving World-Class Performance
Through Supplier Electronic Enablement”Through Supplier Electronic Enablement”
Bruce KellyBruce Kelly
Managing DirectorManaging Director
The Hackett GroupThe Hackett Group
Petroleum Industry Data
Exchange Conference
April 2, 2007
Houston, TX
portion thereof without prior written consent is prohibited.
““Achieving World-Class Performance Achieving World-Class Performance
Through Supplier Electronic Enablement”Through Supplier Electronic Enablement”
Bruce KellyBruce Kelly
Managing DirectorManaging Director
The Hackett GroupThe Hackett Group
Petroleum Industry Data
Exchange Conference
April 2, 2007
Houston, TX
| 2
PIDX Conference – April 2 , 2007 – Houston, TX
AgendaAgenda
World Class Performance Defined World Class Performance Defined
Achieving World Class Procure-to-Pay Process Achieving World Class Procure-to-Pay Process
Performance Through Supplier Electronic Enablement Performance Through Supplier Electronic Enablement
—
Accounts Payable Performance Statistics and ComparisonsAccounts Payable Performance Statistics and Comparisons
—Purchasing Performance Statistics and Comparisons Purchasing Performance Statistics and Comparisons
Leveraging “ Electronic Automation” and “Other High Leveraging “ Electronic Automation” and “Other High
Impact” Best Practices to Improve Your Performance Impact” Best Practices to Improve Your Performance
Questions and Answers Questions and Answers
PIDX Conference – April 2 , 2007 – Houston, TX
AgendaAgenda
World Class Performance Defined World Class Performance Defined
Achieving World Class Procure-to-Pay Process Achieving World Class Procure-to-Pay Process
Performance Through Supplier Electronic Enablement Performance Through Supplier Electronic Enablement
—
Accounts Payable Performance Statistics and ComparisonsAccounts Payable Performance Statistics and Comparisons
—Purchasing Performance Statistics and Comparisons Purchasing Performance Statistics and Comparisons
Leveraging “ Electronic Automation” and “Other High Leveraging “ Electronic Automation” and “Other High
Impact” Best Practices to Improve Your Performance Impact” Best Practices to Improve Your Performance
Questions and Answers Questions and Answers
| 3
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class is defined as top quartile performance in both World-Class is defined as top quartile performance in both
efficiency and effectivenessefficiency and effectiveness
Process quality
Supplier leverage
Information & analysis
Business integration
Role of procurement
Non-operational FTE allocation
Examples:
% of suppliers comprising top 80%
of spend
Total spend cost reduction as a % of
spend
Percent of spend under
procurement management influence
Percent of procurement activity
allocated to decision support
EFFECTIVENESSEFFICIENCY
•Process costs
•Productivity
•Cycle times
•Technology leverage
•Cost per transaction
•Staffing Levels
Examples:
Cost as a % of spend
By Geography, Business Unit
FTEs per $1B of spend
# of POs processed per FTE
PO processing cycle time
Staff time allocation by process
Cost as a % of spend vs suppliers
ABC Co.Peer Group
Hackett Value Grid™
1
st
Quartile
Breakpoint
1
st
Quartile
Breakpoint
““Doing things right”Doing things right”““Doing the right things”Doing the right things”
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class is defined as top quartile performance in both World-Class is defined as top quartile performance in both
efficiency and effectivenessefficiency and effectiveness
Process quality
Supplier leverage
Information & analysis
Business integration
Role of procurement
Non-operational FTE allocation
Examples:
% of suppliers comprising top 80%
of spend
Total spend cost reduction as a % of
spend
Percent of spend under
procurement management influence
Percent of procurement activity
allocated to decision support
EFFECTIVENESSEFFICIENCY
•Process costs
•Productivity
•Cycle times
•Technology leverage
•Cost per transaction
•Staffing Levels
Examples:
Cost as a % of spend
By Geography, Business Unit
FTEs per $1B of spend
# of POs processed per FTE
PO processing cycle time
Staff time allocation by process
Cost as a % of spend vs suppliers
ABC Co.Peer Group
Hackett Value Grid™
1
st
Quartile
Breakpoint
1
st
Quartile
Breakpoint
““Doing things right”Doing things right”““Doing the right things”Doing the right things”
| 4
PIDX Conference – April 2 , 2007 – Houston, TX
Cost per Invoice Line Item
$0
$50
$100
$150
$200
$250
1815222936435057647178859299106
Companies (Pareto)
First Quartile is a statistical definition used when we look at First Quartile is a statistical definition used when we look at
a metric and compare a company against all other resultsa metric and compare a company against all other results
1
st
Quartile 2
nd
Quartile 3
rd
Quartile 4
th
Quartile
1
st
Quartile
Example
Median 3
rd
Quartile
PIDX Conference – April 2 , 2007 – Houston, TX
Cost per Invoice Line Item
$0
$50
$100
$150
$200
$250
1815222936435057647178859299106
Companies (Pareto)
First Quartile is a statistical definition used when we look at First Quartile is a statistical definition used when we look at
a metric and compare a company against all other resultsa metric and compare a company against all other results
1
st
Quartile 2
nd
Quartile 3
rd
Quartile 4
th
Quartile
1
st
Quartile
Example
Median 3
rd
Quartile
| 5
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Accounts Payable Organizations Process World-Class Accounts Payable Organizations Process
Invoices for Significantly Less than their Peers Invoices for Significantly Less than their Peers
Cost per Accounts PayableTransaction
$2.89
$1.16
$1.53
$0
$1
$2
$3
$4
Peer World-Class 1st Quartile
Invoice Line Item
The Hackett Group Purchasing Operations and Accounts Payable Benchmark
149%
Lower
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Accounts Payable Organizations Process World-Class Accounts Payable Organizations Process
Invoices for Significantly Less than their Peers Invoices for Significantly Less than their Peers
Cost per Accounts PayableTransaction
$2.89
$1.16
$1.53
$0
$1
$2
$3
$4
Peer World-Class 1st Quartile
Invoice Line Item
The Hackett Group Purchasing Operations and Accounts Payable Benchmark
149%
Lower
| 6
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Accounts Payable Organizations are Much More World-Class Accounts Payable Organizations are Much More
Productive than their Peers Productive than their Peers
Accounts Payable Transactions per FTE
25,000
77,016
53,571
0
20,000
40,000
60,000
80,000
Peer World-Class 1st Quartile
Invoice Line Item
The Hackett Group Purchasing Operations and Accounts Payable Benchmark
208%
Higher
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Accounts Payable Organizations are Much More World-Class Accounts Payable Organizations are Much More
Productive than their Peers Productive than their Peers
Accounts Payable Transactions per FTE
25,000
77,016
53,571
0
20,000
40,000
60,000
80,000
Peer World-Class 1st Quartile
Invoice Line Item
The Hackett Group Purchasing Operations and Accounts Payable Benchmark
208%
Higher
| 7
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Accounts Payable Organizations Leverage World-Class Accounts Payable Organizations Leverage
Electronic Invoicing more than their PeersElectronic Invoicing more than their Peers
Percentage of Invoice Transactions
Received Electronically
10%
42%
65%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
Electronic Invoice Receipt
The Hackett Group Accounts Payable Benchmark
550%
Higher
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Accounts Payable Organizations Leverage World-Class Accounts Payable Organizations Leverage
Electronic Invoicing more than their PeersElectronic Invoicing more than their Peers
Percentage of Invoice Transactions
Received Electronically
10%
42%
65%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
Electronic Invoice Receipt
The Hackett Group Accounts Payable Benchmark
550%
Higher
| 8
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Accounts Payable Organizations Leverage World-Class Accounts Payable Organizations Leverage
Electronic Payments more than their PeersElectronic Payments more than their Peers
Percentage of Payment Transactions
Made Electronically
20%
57%
80%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
Electronic Payment
The Hackett Group Accounts Payable Benchmark
185%
Higher
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Accounts Payable Organizations Leverage World-Class Accounts Payable Organizations Leverage
Electronic Payments more than their PeersElectronic Payments more than their Peers
Percentage of Payment Transactions
Made Electronically
20%
57%
80%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
Electronic Payment
The Hackett Group Accounts Payable Benchmark
185%
Higher
| 9
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations Process Purchase World-Class Purchasing Organizations Process Purchase
Orders for Significantly Less than their Peers Orders for Significantly Less than their Peers
Cost per Purchase Order Transaction
$23.05
$9.07
$7.34
$0
$5
$10
$15
$20
$25
Peer World-Class 1st Quartile
Purchase Order
The Hackett Group Purchasing Operations and Accounts Payable Benchmark
213%
Lower
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations Process Purchase World-Class Purchasing Organizations Process Purchase
Orders for Significantly Less than their Peers Orders for Significantly Less than their Peers
Cost per Purchase Order Transaction
$23.05
$9.07
$7.34
$0
$5
$10
$15
$20
$25
Peer World-Class 1st Quartile
Purchase Order
The Hackett Group Purchasing Operations and Accounts Payable Benchmark
213%
Lower
| 10
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations are Much More World-Class Purchasing Organizations are Much More
Productive than their Peers Productive than their Peers
Purchase Order Transactions per FTE
2,733
6,447
11,853
0
5,000
10,000
15,000
Peer World-Class 1st Quartile
Purchase Order
The Hackett Group Purchasing Operations and Accounts Payable Benchmark
334%
Higher
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations are Much More World-Class Purchasing Organizations are Much More
Productive than their Peers Productive than their Peers
Purchase Order Transactions per FTE
2,733
6,447
11,853
0
5,000
10,000
15,000
Peer World-Class 1st Quartile
Purchase Order
The Hackett Group Purchasing Operations and Accounts Payable Benchmark
334%
Higher
| 11
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations Disseminate World-Class Purchasing Organizations Disseminate
Purchase Orders Electronically more than their PeersPurchase Orders Electronically more than their Peers
Electronic Purchase Order Dissemination - Direct
43%
77%
91%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
The Hackett Group Purchasing Operations Benchmark
112%
Higher
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations Disseminate World-Class Purchasing Organizations Disseminate
Purchase Orders Electronically more than their PeersPurchase Orders Electronically more than their Peers
Electronic Purchase Order Dissemination - Direct
43%
77%
91%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
The Hackett Group Purchasing Operations Benchmark
112%
Higher
| 12
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations Disseminate World-Class Purchasing Organizations Disseminate
Purchase Orders Electronically more than their PeersPurchase Orders Electronically more than their Peers
Electronic Purchase Order Dissemination - Indirect
25%
68%
76%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
The Hackett Group Purchasing Operations Benchmark
204%
Higher
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations Disseminate World-Class Purchasing Organizations Disseminate
Purchase Orders Electronically more than their PeersPurchase Orders Electronically more than their Peers
Electronic Purchase Order Dissemination - Indirect
25%
68%
76%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
The Hackett Group Purchasing Operations Benchmark
204%
Higher
| 13
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations Utilize Evaluated World-Class Purchasing Organizations Utilize Evaluated
Receipt Settlement more than their PeersReceipt Settlement more than their Peers
Percent of Suppliers Participating in ERS
9%
17%
36%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
The Hackett Group Purchasing Operations Benchmark
300%
Higher
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations Utilize Evaluated World-Class Purchasing Organizations Utilize Evaluated
Receipt Settlement more than their PeersReceipt Settlement more than their Peers
Percent of Suppliers Participating in ERS
9%
17%
36%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
The Hackett Group Purchasing Operations Benchmark
300%
Higher
| 14
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations Utilize Electronic World-Class Purchasing Organizations Utilize Electronic
Purchasing Tools more than their PeersPurchasing Tools more than their Peers
Percent of RFPs, RFQs and RFIs Performed
Electronically
18%
34%
52%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
The Hackett Group Purchasing Operations Benchmark
188%
Higher
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations Utilize Electronic World-Class Purchasing Organizations Utilize Electronic
Purchasing Tools more than their PeersPurchasing Tools more than their Peers
Percent of RFPs, RFQs and RFIs Performed
Electronically
18%
34%
52%
0%
20%
40%
60%
80%
100%
Peer World-Class 1st Quartile
The Hackett Group Purchasing Operations Benchmark
188%
Higher
| 15
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations have Consolidated World-Class Purchasing Organizations have Consolidated
Spend with Fewer Strategic SuppliersSpend with Fewer Strategic Suppliers
Degree of Supplier Spend Consolidation
4.9%
3.0%
2.0%
0%
2%
4%
6%
8%
Peer World-Class 1st Quartile
Percent of Suppliers Representing 80% of Spend
The Hackett Group Accounts Payable Benchmark
63%
Lower
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations have Consolidated World-Class Purchasing Organizations have Consolidated
Spend with Fewer Strategic SuppliersSpend with Fewer Strategic Suppliers
Degree of Supplier Spend Consolidation
4.9%
3.0%
2.0%
0%
2%
4%
6%
8%
Peer World-Class 1st Quartile
Percent of Suppliers Representing 80% of Spend
The Hackett Group Accounts Payable Benchmark
63%
Lower
| 16
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations have Consolidated World-Class Purchasing Organizations have Consolidated
Transactions with Fewer Strategic SuppliersTransactions with Fewer Strategic Suppliers
Degree of Supplier Transaction Consolidation
13.0%
7.0%
6.5%
0%
2%
4%
6%
8%
10%
12%
14%
Peer World-Class 1st Quartile
Percent of Suppliers Representing 80% of Invoice Transactions
The Hackett Group Accounts Payable Benchmark
100%
Lower
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Purchasing Organizations have Consolidated World-Class Purchasing Organizations have Consolidated
Transactions with Fewer Strategic SuppliersTransactions with Fewer Strategic Suppliers
Degree of Supplier Transaction Consolidation
13.0%
7.0%
6.5%
0%
2%
4%
6%
8%
10%
12%
14%
Peer World-Class 1st Quartile
Percent of Suppliers Representing 80% of Invoice Transactions
The Hackett Group Accounts Payable Benchmark
100%
Lower
| 17
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Organizations Leverage “Key, High Impact Best World-Class Organizations Leverage “Key, High Impact Best
Practices” to Achieve Superior Performance Practices” to Achieve Superior Performance
Align Purchasing and Accounts PayableAlign Purchasing and Accounts Payable
Rationalize Supplier and Transaction BaseRationalize Supplier and Transaction Base
Clearly Define “Buy-Pay Channels” Clearly Define “Buy-Pay Channels”
Leverage Electronic TransactionsLeverage Electronic Transactions
Re-Engineer and Standardize Processes Across the CompanyRe-Engineer and Standardize Processes Across the Company
Flatten Organizational StructuresFlatten Organizational Structures
Measure and Monitor PerformanceMeasure and Monitor Performance
PIDX Conference – April 2 , 2007 – Houston, TX
World-Class Organizations Leverage “Key, High Impact Best World-Class Organizations Leverage “Key, High Impact Best
Practices” to Achieve Superior Performance Practices” to Achieve Superior Performance
Align Purchasing and Accounts PayableAlign Purchasing and Accounts Payable
Rationalize Supplier and Transaction BaseRationalize Supplier and Transaction Base
Clearly Define “Buy-Pay Channels” Clearly Define “Buy-Pay Channels”
Leverage Electronic TransactionsLeverage Electronic Transactions
Re-Engineer and Standardize Processes Across the CompanyRe-Engineer and Standardize Processes Across the Company
Flatten Organizational StructuresFlatten Organizational Structures
Measure and Monitor PerformanceMeasure and Monitor Performance
| 18
PIDX Conference – April 2 , 2007 – Houston, TX
Align purchasing and accounts payable Align purchasing and accounts payable
Establish a holistic end-Establish a holistic end-
to-end Procure-to-pay to-end Procure-to-pay
process management process management
approach approach
Establish process Establish process
ownership and ownership and
accountability (single accountability (single
individual or a cross-individual or a cross-
functional team)functional team)
Establish common and/or Establish common and/or
complimentary process complimentary process
goals and objectives goals and objectives
(Purchasing and (Purchasing and
Payables) Payables)
EfficiencyEfficiency
Cost per Purchase OrderCost per Purchase Order
Cost per ReceiptCost per Receipt
Requisition to PO Cycle TimeRequisition to PO Cycle Time
FTEs per Billion $ in SpendFTEs per Billion $ in Spend
Span of ControlSpan of Control
EffectivenessEffectiveness
% of Deliveries Considered Late% of Deliveries Considered Late
Ability to View Spend DataAbility to View Spend Data
% of Spend from Approved Suppliers% of Spend from Approved Suppliers
Annual Training per FTEAnnual Training per FTE
Extent Policies and Procedures Extent Policies and Procedures
StandardizedStandardized
EfficiencyEfficiency
Cost per Invoice Line ItemCost per Invoice Line Item
Payment Cost per Line ItemPayment Cost per Line Item
Disbursements per FTEDisbursements per FTE
AP FTEs per Billion $ RevenueAP FTEs per Billion $ Revenue
Invoice Processing Cycle TimeInvoice Processing Cycle Time
EffectivenessEffectiveness
First Pass Match RateFirst Pass Match Rate
% of Invoices Rejected% of Invoices Rejected
% of PO% of PO--Based Invoices with MismatchesBased Invoices with Mismatches
% Suppliers Comprising Top 80% Volume% Suppliers Comprising Top 80% Volume
Extent Policies and Procedures are Extent Policies and Procedures are
StandardizedStandardized
Purchasing Operations Accounts Payable
Represents Selected Metrics Only
Requisition PaymentPurchase Receipt
Invoice
Processing
Sourcing
PIDX Conference – April 2 , 2007 – Houston, TX
Align purchasing and accounts payable Align purchasing and accounts payable
Establish a holistic end-Establish a holistic end-
to-end Procure-to-pay to-end Procure-to-pay
process management process management
approach approach
Establish process Establish process
ownership and ownership and
accountability (single accountability (single
individual or a cross-individual or a cross-
functional team)functional team)
Establish common and/or Establish common and/or
complimentary process complimentary process
goals and objectives goals and objectives
(Purchasing and (Purchasing and
Payables) Payables)
EfficiencyEfficiency
Cost per Purchase OrderCost per Purchase Order
Cost per ReceiptCost per Receipt
Requisition to PO Cycle TimeRequisition to PO Cycle Time
FTEs per Billion $ in SpendFTEs per Billion $ in Spend
Span of ControlSpan of Control
EffectivenessEffectiveness
% of Deliveries Considered Late% of Deliveries Considered Late
Ability to View Spend DataAbility to View Spend Data
% of Spend from Approved Suppliers% of Spend from Approved Suppliers
Annual Training per FTEAnnual Training per FTE
Extent Policies and Procedures Extent Policies and Procedures
StandardizedStandardized
EfficiencyEfficiency
Cost per Invoice Line ItemCost per Invoice Line Item
Payment Cost per Line ItemPayment Cost per Line Item
Disbursements per FTEDisbursements per FTE
AP FTEs per Billion $ RevenueAP FTEs per Billion $ Revenue
Invoice Processing Cycle TimeInvoice Processing Cycle Time
EffectivenessEffectiveness
First Pass Match RateFirst Pass Match Rate
% of Invoices Rejected% of Invoices Rejected
% of PO% of PO--Based Invoices with MismatchesBased Invoices with Mismatches
% Suppliers Comprising Top 80% Volume% Suppliers Comprising Top 80% Volume
Extent Policies and Procedures are Extent Policies and Procedures are
StandardizedStandardized
Purchasing Operations Accounts Payable
Represents Selected Metrics Only
Requisition PaymentPurchase Receipt
Invoice
Processing
Sourcing
| 19
PIDX Conference – April 2 , 2007 – Houston, TX
Rationalize purchase and payable transactionsRationalize purchase and payable transactions
Analyze transactions by Analyze transactions by
supplier and commodity supplier and commodity
categorycategory
Understand where Understand where
opportunities exist to opportunities exist to
reduce supplier base and reduce supplier base and
automate and/or eliminate automate and/or eliminate
transactions transactions
Identify initial “buy/pay” Identify initial “buy/pay”
channel strategies to channel strategies to
adoptadopt
Supplier
Inumber of
Invoices
Annual Invoice
Value
Commodity
Category
ABC Corporation 13,856 $33,467,843 1101
International Foods 13,432 $36,843,218 1403
WW Grainger 13,271 $29,347,443 1202
Commet Control Services 13,112 $31,467,900 1001
International Parts and Supplies 13,047 $43,467,900 1301
International Businrss Machines 12,897 $18,467,900 1603
Lafarge Corportaion 12,845 $8,467,900 1003
0
50000
100000
150000
200000
Transaction Volumes
Top 200 Supliers
(Transactions)
Additional 287 Suppliers
>150 transactions
>$10,000 & < 150
transactions
$5001- $10000 Annually
$2001- $5000 Annually
Less than $2000
Annually
PIDX Conference – April 2 , 2007 – Houston, TX
Rationalize purchase and payable transactionsRationalize purchase and payable transactions
Analyze transactions by Analyze transactions by
supplier and commodity supplier and commodity
categorycategory
Understand where Understand where
opportunities exist to opportunities exist to
reduce supplier base and reduce supplier base and
automate and/or eliminate automate and/or eliminate
transactions transactions
Identify initial “buy/pay” Identify initial “buy/pay”
channel strategies to channel strategies to
adoptadopt
Supplier
Inumber of
Invoices
Annual Invoice
Value
Commodity
Category
ABC Corporation 13,856 $33,467,843 1101
International Foods 13,432 $36,843,218 1403
WW Grainger 13,271 $29,347,443 1202
Commet Control Services 13,112 $31,467,900 1001
International Parts and Supplies 13,047 $43,467,900 1301
International Businrss Machines 12,897 $18,467,900 1603
Lafarge Corportaion 12,845 $8,467,900 1003
0
50000
100000
150000
200000
Transaction Volumes
Top 200 Supliers
(Transactions)
Additional 287 Suppliers
>150 transactions
>$10,000 & < 150
transactions
$5001- $10000 Annually
$2001- $5000 Annually
Less than $2000
Annually
| 20
PIDX Conference – April 2 , 2007 – Houston, TX
Accounts Payable transaction profiles comparisons Accounts Payable transaction profiles comparisons
Accounts Payable Invoice Receipt Distribution
(% of Total Invoices)
0%
20%
40%
60%
80%
100%
Peer World-Class
Evaluated Receipt
Settlement
Electroni Invoice Receipt
(EDI/XML)
Supplier EIPP
Paper Invoices Received
Pcard Transactions
PIDX Conference – April 2 , 2007 – Houston, TX
Accounts Payable transaction profiles comparisons Accounts Payable transaction profiles comparisons
Accounts Payable Invoice Receipt Distribution
(% of Total Invoices)
0%
20%
40%
60%
80%
100%
Peer World-Class
Evaluated Receipt
Settlement
Electroni Invoice Receipt
(EDI/XML)
Supplier EIPP
Paper Invoices Received
Pcard Transactions
| 21
PIDX Conference – April 2 , 2007 – Houston, TX
Purchasing transaction profiles comparisons Purchasing transaction profiles comparisons
Purchasing Transaction Distribution
(% of Total Buy Transactions)
0%
20%
40%
60%
80%
100%
Peer World-Class
Contract (Master Purchase
Agreement) Buy via
Electronic Catalogue
Contract (Master Purchase
Agreement) Buy via PO
Non-Contract Buy via PO
Non-Contract and NoPO
Buy
Pcard Transaction
PIDX Conference – April 2 , 2007 – Houston, TX
Purchasing transaction profiles comparisons Purchasing transaction profiles comparisons
Purchasing Transaction Distribution
(% of Total Buy Transactions)
0%
20%
40%
60%
80%
100%
Peer World-Class
Contract (Master Purchase
Agreement) Buy via
Electronic Catalogue
Contract (Master Purchase
Agreement) Buy via PO
Non-Contract Buy via PO
Non-Contract and NoPO
Buy
Pcard Transaction
| 22
PIDX Conference – April 2 , 2007 – Houston, TX
Clearly Define “Buy-Pay Channels”Clearly Define “Buy-Pay Channels”
Strategic and Contract Strategic and Contract
Supported Supported
Commodities Commodities
Other Purchase Other Purchase
Transactions Transactions
Requiring Purchase Requiring Purchase
OrdersOrders
Non Purchase Order Non Purchase Order
Purchases Purchases
Purchasing Card Purchasing Card
Purchases Purchases
Commodity
Family
(1)
P-Card
Invoice
Only
(3)
Purchase
Order
Invoice
Receipt
(2)
Contract
(4)
Purchase
Order
Receipt
Purchase
Order
Invoice
Invoice Options
System Recurring
Supplier Submitted
Receipt Options
Dock Receipt
Desk Top Receipt
Maps to
Specific
Optimized
Transaction
Flow Path
3-Way Match
Exception Process
Least Efficient
Four Optimized Transaction Strategy Flow Paths
Pay
Pay
Pay
Requisition
Or System Triggered
Request
Invoice Options
Supplier Submitted
PO Flip
Pay
Enabled With Electronic Tools To Manage
Requisitioning, Business & Procurement Approvals, PO
Dispatch, eInvoicing, and Electronic Payments
PIDX Conference – April 2 , 2007 – Houston, TX
Clearly Define “Buy-Pay Channels”Clearly Define “Buy-Pay Channels”
Strategic and Contract Strategic and Contract
Supported Supported
Commodities Commodities
Other Purchase Other Purchase
Transactions Transactions
Requiring Purchase Requiring Purchase
OrdersOrders
Non Purchase Order Non Purchase Order
Purchases Purchases
Purchasing Card Purchasing Card
Purchases Purchases
Commodity
Family
(1)
P-Card
Invoice
Only
(3)
Purchase
Order
Invoice
Receipt
(2)
Contract
(4)
Purchase
Order
Receipt
Purchase
Order
Invoice
Invoice Options
System Recurring
Supplier Submitted
Receipt Options
Dock Receipt
Desk Top Receipt
Maps to
Specific
Optimized
Transaction
Flow Path
3-Way Match
Exception Process
Least Efficient
Four Optimized Transaction Strategy Flow Paths
Pay
Pay
Pay
Requisition
Or System Triggered
Request
Invoice Options
Supplier Submitted
PO Flip
Pay
Enabled With Electronic Tools To Manage
Requisitioning, Business & Procurement Approvals, PO
Dispatch, eInvoicing, and Electronic Payments
| 23
PIDX Conference – April 2 , 2007 – Houston, TX
Sample “Buy-Pay Channels”Sample “Buy-Pay Channels”
1 = Recommendation
2 = Option
Pcard
Travel
Card
Supply
Bin or
Store
Room
User
Initiated
Special
Request
Web/email
Request
For Help
Market
Place
Item
Master
Auto
Recurring
Payment
Supplier
Provided
Invoice
One
Time
Standing
Order
PROFESSIONAL
SERVICES
Consulting and
Management Services
Business/strategic
consulting
2 1 2 1
Smaller, Niche Firms 2 1 2 1
IP Consulting 2 1 2 1
Corporate Memberships 2 1 2 1
Training & Education
Training Administration 1 1
eLearning 1 1
Training Delivery 2 1 1
Executive Development 2 1 1
Engineering Services 2 1 1
Environmental Services
Remediation 2 1 1
Consulting 2 1 1
Finance & Treasury
Auditors 1 1
Cash Management 2 1 1
Payroll, Tax & Accounting
Services
2 1 2 1
Risk 1 1
Professionally Facilitated Buy
Commercial
Cards
Catalog BuySelf Service
PO &
Receipt
(ERS)
PO
Receipt
Invoice
(3-Way)
Supplier
Owned &
Managed
Non PO w/MSA/SOW
(Invoice Only)
Descrpt. Based
PO
BUY CHANNEL METHODS & TOOLS
Commodity Mapping Recommendations
COMMODITY AND
SUB-COMMODITY LIST
click on + or - symbol
to expand/close commodity
listing sections
Invoice
Only
Pcard
Inventory
System
Managed
Supplier
Managed
Supporting RTP
Transaction Options
Self Managed Automated Buy
PO &
Invoice
PIDX Conference – April 2 , 2007 – Houston, TX
Sample “Buy-Pay Channels”Sample “Buy-Pay Channels”
1 = Recommendation
2 = Option
Pcard
Travel
Card
Supply
Bin or
Store
Room
User
Initiated
Special
Request
Web/email
Request
For Help
Market
Place
Item
Master
Auto
Recurring
Payment
Supplier
Provided
Invoice
One
Time
Standing
Order
PROFESSIONAL
SERVICES
Consulting and
Management Services
Business/strategic
consulting
2 1 2 1
Smaller, Niche Firms 2 1 2 1
IP Consulting 2 1 2 1
Corporate Memberships 2 1 2 1
Training & Education
Training Administration 1 1
eLearning 1 1
Training Delivery 2 1 1
Executive Development 2 1 1
Engineering Services 2 1 1
Environmental Services
Remediation 2 1 1
Consulting 2 1 1
Finance & Treasury
Auditors 1 1
Cash Management 2 1 1
Payroll, Tax & Accounting
Services
2 1 2 1
Risk 1 1
Professionally Facilitated Buy
Commercial
Cards
Catalog BuySelf Service
PO &
Receipt
(ERS)
PO
Receipt
Invoice
(3-Way)
Supplier
Owned &
Managed
Non PO w/MSA/SOW
(Invoice Only)
Descrpt. Based
PO
BUY CHANNEL METHODS & TOOLS
Commodity Mapping Recommendations
COMMODITY AND
SUB-COMMODITY LIST
click on + or - symbol
to expand/close commodity
listing sections
Invoice
Only
Pcard
Inventory
System
Managed
Supplier
Managed
Supporting RTP
Transaction Options
Self Managed Automated Buy
PO &
Invoice
| 24
PIDX Conference – April 2 , 2007 – Houston, TX
Leverage Electronic TransactionsLeverage Electronic Transactions
Electronic Invoice Receipt, Electronic Invoice Receipt,
EDI,XML, e-invoice From EDI,XML, e-invoice From
Strategic & High Transaction Strategic & High Transaction
Volume SuppliersVolume Suppliers
Evaluate Receipt Settlement Evaluate Receipt Settlement
for Contract Purchases for Contract Purchases
Invoice Imaging and Work Invoice Imaging and Work
Flow Management for Non-Flow Management for Non-
PO InvoicesPO Invoices
Supplier Portal to Enable Self Supplier Portal to Enable Self
Service, Supplier Invoice Service, Supplier Invoice
Entry, & Dynamic Discounting Entry, & Dynamic Discounting
Eliminate Infrequent, Low Eliminate Infrequent, Low
Value Transactions via PCardValue Transactions via PCard
4th Quartile vs. 1st Quartile
Total Cost of Finance as % of Revenue
1.82%
2.05%
1.81%
0.82%0.83%0.79%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Oracle PeopleSoft SAP
--122%122%
--129%129%
--150%150%
4th Quartile vs. 1st Quartile
Total Cost of Finance as % of Revenue
1.82%
2.05%
1.81%
0.82%0.83%0.79%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Oracle PeopleSoft SAP
--122%122%
--129%129%
--150%150%
Electronic Enablement Goes Far
Beyond ERP Implementation
PIDX Conference – April 2 , 2007 – Houston, TX
Leverage Electronic TransactionsLeverage Electronic Transactions
Electronic Invoice Receipt, Electronic Invoice Receipt,
EDI,XML, e-invoice From EDI,XML, e-invoice From
Strategic & High Transaction Strategic & High Transaction
Volume SuppliersVolume Suppliers
Evaluate Receipt Settlement Evaluate Receipt Settlement
for Contract Purchases for Contract Purchases
Invoice Imaging and Work Invoice Imaging and Work
Flow Management for Non-Flow Management for Non-
PO InvoicesPO Invoices
Supplier Portal to Enable Self Supplier Portal to Enable Self
Service, Supplier Invoice Service, Supplier Invoice
Entry, & Dynamic Discounting Entry, & Dynamic Discounting
Eliminate Infrequent, Low Eliminate Infrequent, Low
Value Transactions via PCardValue Transactions via PCard
4th Quartile vs. 1st Quartile
Total Cost of Finance as % of Revenue
1.82%
2.05%
1.81%
0.82%0.83%0.79%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Oracle PeopleSoft SAP
--122%122%
--129%129%
--150%150%
4th Quartile vs. 1st Quartile
Total Cost of Finance as % of Revenue
1.82%
2.05%
1.81%
0.82%0.83%0.79%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
Oracle PeopleSoft SAP
--122%122%
--129%129%
--150%150%
Electronic Enablement Goes Far
Beyond ERP Implementation
| 25
PIDX Conference – April 2 , 2007 – Houston, TX
Re-Engineer and Standardize Processes Across the Re-Engineer and Standardize Processes Across the
CompanyCompany
Redesign Processes to Redesign Processes to
Eliminate Low-Value Eliminate Low-Value
ActivityActivity
Structure Processes to Structure Processes to
Enhance Controls and Enhance Controls and
Information AccuracyInformation Accuracy
Adopt “Best Practices” Adopt “Best Practices”
Proven by World-Class Proven by World-Class
OrganizationsOrganizations
Implement Workflow Implement Workflow
ManagementManagement
Automate Remaining Automate Remaining
Activities where Feasible Activities where Feasible
Copyr ight © 2004 Answerthink, Inc.
Inputs Process Outputs
Supplier
Maintain
General
Ledger
Suppliers
Electronic Invoices
Paper Invoices
Purchase Orders
Direct Payments
Journal Entries
Management Reports
PO 1.0
Order Goods
and
Services
Accounts Payable
Process Paper and Electronic
Invoices
Match Invoices to Purchase
Orders and Receipts
Issue Payments
Procure-to-Pay Activities
Other Activities
Perform Record Retention
Activities
Perform Monthly Close
Provide Management Reports
Review and Improve Policies
and Procedures
Banks
Direct Payment Instructions
P-Card Payment Instructions
Receipt Information
MR 1.0
Receive
Goods and
Services
Process
T&E
Expenses
Corporate
Manage-
ment
T&E Expenses
Manage
Records
Paper Records
Copyr ight © 2004 Answerthink, Inc.
Inputs Process Outputs
Supplier
Maintain
General
Ledger
Suppliers
Electronic Invoices
Paper Invoices
Purchase Orders
Direct Payments
Journal Entries
Management Reports
PO 1.0
Order Goods
and
Services
Accounts Payable
Process Paper and Electronic
Invoices
Match Invoices to Purchase
Orders and Receipts
Issue Payments
Procure-to-Pay Activities
Other Activities
Perform Record Retention
Activities
Perform Monthly Close
Provide Management Reports
Review and Improve Policies
and Procedures
Banks
Direct Payment Instructions
P-Card Payment Instructions
Receipt Information
MR 1.0
Receive
Goods and
Services
Process
T&E
Expenses
Corporate
Manage-
ment
T&E Expenses
Manage
Records
Paper Records
AP 1.0 Process Invoices
S
u
p
p
lie
r
B
u
s
in
e
s
s
U
n
it
S
h
a
r
e
d
S
e
r
v
ic
e
C
e
n
t
e
r
No
Ye s
Ye s
No
Billing
Approved
AP 1.2
Perform
Matching
Process
Start
Receive
Goods or
Services
End
AP 1.1
Capture
Invoice Data
PO Invoice
Order
Goods or
Services
AP 1.3
Process
Exceptions
AP 1.4
Perform
Approval
Process
AP 1.0 Process Invoices
S
u
p
p
lie
r
B
u
s
in
e
s
s
U
n
it
S
h
a
r
e
d
S
e
r
v
ic
e
C
e
n
t
e
r
No
Ye s
Ye s
No
Billing
Approved
AP 1.2
Perform
Matching
Process
Start
Receive
Goods or
Services
End
AP 1.1
Capture
Invoice Data
PO Invoice
Order
Goods or
Services
AP 1.3
Process
Exceptions
AP 1.4
Perform
Approval
Process
AP 1.1 Capture Invoice Data
S
u
p
p
lie
r
S
h
a
r
e
d
S
e
r
v
ic
e
s
Yes
Ye s
No
Yes
No
IndexesInvoi ce
No
Yes
No
End
Interface
Errors
AP 1.1.12
Set Up
Recurring Inv
Te mplate
Recurring
Payment
Signed
Contract
AP
Module
Data Errors?
AP 1.1.11
Create Acctng
Distribution
Sets
AP 1.1.13
Create
Recurring
Invoice
AP 1.1.8
Capture
Invoice Data
Imaging
System
AP 1.1.10
Set Up
Recurring
Calendar
AP 1.1.4
Exception
Process
Bill
Customers
Start
AP 1.1.6
Correct Data
Start
Electronic
AP 1.1.5
Import Invoice
Lines
AP 1.1.9
Review
Contract
AP 1.1.2
Create
Control
Group
AP 1.1.1
Receive
Electronic
Invoice
AP 1.1.3
Update
Electronic
File
AP 1.1.7
Record
Retention
AP 1.1 Capture Invoice Data
S
u
p
p
lie
r
S
h
a
r
e
d
S
e
r
v
ic
e
s
Yes
Ye s
No
Yes
No
IndexesInvoi ce
No
Yes
No
End
Interface
Errors
AP 1.1.12
Set Up
Recurring Inv
Te mplate
Recurring
Payment
Signed
Contract
AP
Module
Data Errors?
AP 1.1.11
Create Acctng
Distribution
Sets
AP 1.1.13
Create
Recurring
Invoice
AP 1.1.8
Capture
Invoice Data
Imaging
System
AP 1.1.10
Set Up
Recurring
Calendar
AP 1.1.4
Exception
Process
Bill
Customers
Start
AP 1.1.6
Correct Data
Start
Electronic
AP 1.1.5
Import Invoice
Lines
AP 1.1.9
Review
Contract
AP 1.1.2
Create
Control
Group
AP 1.1.1
Receive
Electronic
Invoice
AP 1.1.3
Update
Electronic
File
AP 1.1.7
Record
Retention
PIDX Conference – April 2 , 2007 – Houston, TX
Re-Engineer and Standardize Processes Across the Re-Engineer and Standardize Processes Across the
CompanyCompany
Redesign Processes to Redesign Processes to
Eliminate Low-Value Eliminate Low-Value
ActivityActivity
Structure Processes to Structure Processes to
Enhance Controls and Enhance Controls and
Information AccuracyInformation Accuracy
Adopt “Best Practices” Adopt “Best Practices”
Proven by World-Class Proven by World-Class
OrganizationsOrganizations
Implement Workflow Implement Workflow
ManagementManagement
Automate Remaining Automate Remaining
Activities where Feasible Activities where Feasible
Copyr ight © 2004 Answerthink, Inc.
Inputs Process Outputs
Supplier
Maintain
General
Ledger
Suppliers
Electronic Invoices
Paper Invoices
Purchase Orders
Direct Payments
Journal Entries
Management Reports
PO 1.0
Order Goods
and
Services
Accounts Payable
Process Paper and Electronic
Invoices
Match Invoices to Purchase
Orders and Receipts
Issue Payments
Procure-to-Pay Activities
Other Activities
Perform Record Retention
Activities
Perform Monthly Close
Provide Management Reports
Review and Improve Policies
and Procedures
Banks
Direct Payment Instructions
P-Card Payment Instructions
Receipt Information
MR 1.0
Receive
Goods and
Services
Process
T&E
Expenses
Corporate
Manage-
ment
T&E Expenses
Manage
Records
Paper Records
Copyr ight © 2004 Answerthink, Inc.
Inputs Process Outputs
Supplier
Maintain
General
Ledger
Suppliers
Electronic Invoices
Paper Invoices
Purchase Orders
Direct Payments
Journal Entries
Management Reports
PO 1.0
Order Goods
and
Services
Accounts Payable
Process Paper and Electronic
Invoices
Match Invoices to Purchase
Orders and Receipts
Issue Payments
Procure-to-Pay Activities
Other Activities
Perform Record Retention
Activities
Perform Monthly Close
Provide Management Reports
Review and Improve Policies
and Procedures
Banks
Direct Payment Instructions
P-Card Payment Instructions
Receipt Information
MR 1.0
Receive
Goods and
Services
Process
T&E
Expenses
Corporate
Manage-
ment
T&E Expenses
Manage
Records
Paper Records
AP 1.0 Process Invoices
S
u
p
p
lie
r
B
u
s
in
e
s
s
U
n
it
S
h
a
r
e
d
S
e
r
v
ic
e
C
e
n
t
e
r
No
Ye s
Ye s
No
Billing
Approved
AP 1.2
Perform
Matching
Process
Start
Receive
Goods or
Services
End
AP 1.1
Capture
Invoice Data
PO Invoice
Order
Goods or
Services
AP 1.3
Process
Exceptions
AP 1.4
Perform
Approval
Process
AP 1.0 Process Invoices
S
u
p
p
lie
r
B
u
s
in
e
s
s
U
n
it
S
h
a
r
e
d
S
e
r
v
ic
e
C
e
n
t
e
r
No
Ye s
Ye s
No
Billing
Approved
AP 1.2
Perform
Matching
Process
Start
Receive
Goods or
Services
End
AP 1.1
Capture
Invoice Data
PO Invoice
Order
Goods or
Services
AP 1.3
Process
Exceptions
AP 1.4
Perform
Approval
Process
AP 1.1 Capture Invoice Data
S
u
p
p
lie
r
S
h
a
r
e
d
S
e
r
v
ic
e
s
Yes
Ye s
No
Yes
No
IndexesInvoi ce
No
Yes
No
End
Interface
Errors
AP 1.1.12
Set Up
Recurring Inv
Te mplate
Recurring
Payment
Signed
Contract
AP
Module
Data Errors?
AP 1.1.11
Create Acctng
Distribution
Sets
AP 1.1.13
Create
Recurring
Invoice
AP 1.1.8
Capture
Invoice Data
Imaging
System
AP 1.1.10
Set Up
Recurring
Calendar
AP 1.1.4
Exception
Process
Bill
Customers
Start
AP 1.1.6
Correct Data
Start
Electronic
AP 1.1.5
Import Invoice
Lines
AP 1.1.9
Review
Contract
AP 1.1.2
Create
Control
Group
AP 1.1.1
Receive
Electronic
Invoice
AP 1.1.3
Update
Electronic
File
AP 1.1.7
Record
Retention
AP 1.1 Capture Invoice Data
S
u
p
p
lie
r
S
h
a
r
e
d
S
e
r
v
ic
e
s
Yes
Ye s
No
Yes
No
IndexesInvoi ce
No
Yes
No
End
Interface
Errors
AP 1.1.12
Set Up
Recurring Inv
Te mplate
Recurring
Payment
Signed
Contract
AP
Module
Data Errors?
AP 1.1.11
Create Acctng
Distribution
Sets
AP 1.1.13
Create
Recurring
Invoice
AP 1.1.8
Capture
Invoice Data
Imaging
System
AP 1.1.10
Set Up
Recurring
Calendar
AP 1.1.4
Exception
Process
Bill
Customers
Start
AP 1.1.6
Correct Data
Start
Electronic
AP 1.1.5
Import Invoice
Lines
AP 1.1.9
Review
Contract
AP 1.1.2
Create
Control
Group
AP 1.1.1
Receive
Electronic
Invoice
AP 1.1.3
Update
Electronic
File
AP 1.1.7
Record
Retention
| 26
PIDX Conference – April 2 , 2007 – Houston, TX
Flatten Organizational StructuresFlatten Organizational Structures
Clearly Define Organizational Clearly Define Organizational
Responsibility and Responsibility and
Accountability Accountability
Consolidate Payables Consolidate Payables
Processing into a Global Processing into a Global
Shared Services OperationsShared Services Operations
Consolidate Strategic Consolidate Strategic
Sourcing in an Enterprise Sourcing in an Enterprise
Purchasing OrganizationPurchasing Organization
Establish Local Purchasing Establish Local Purchasing
Authority and Responsibility Authority and Responsibility
(closely held) (closely held)
Planning & Forecasting
Center of Excellence
Finance SSC Relationship Teams (Strategic Business Partners)Finance SSC Relationship Teams (Strategic Business Partners)
Business UnitBusiness UnitBusiness Unit
•Annual Operating Budget
•Capital Budget
•Forecasting / Outlook
Shared Service Centers
Contact Center
Constituents:
•Vendors
•Customers
•Employees /
•Managers,
Tools:
•Web Portals
•800 lines
SSC
Applications
Metrics
Tracking
Reporting/
Analytics
SSC Operating Model Characteristics
•Governance –Process Standards, Enterprise Policies and Procedures
•Service Levels –SLA’s, KPI’s, Performance Reporting
•Human Capital –Competency standards, team-based incentives
•End-to-End Process Management –process improvement focused
SSC Operating Model Characteristics
•Governance –Process Standards, Enterprise Policies and Procedures
•Service Levels –SLA’s, KPI’s, Performance Reporting
•Human Capital –Competency standards, team-based incentives
•End-to-End Process Management –process improvement focused
Business UnitBusiness Unit
Business Performance Reporting
•Business Scorecard
•Management Reporting
•Special analysis
Web
InteractiveBusiness Analysis
•Sales performance analysis
•Contract/customer/unit fluctuation analyses
•Actual capital spending vs. plan
•Ad hoc analysis
Transformation Management Office
•Program management
•Transformation planning, execution and
performance tracking
Transformation Management Office
•Program management
•Transformation planning, execution and
performance tracking
Finance Business Services
Cash Disbursements
Revenue Cycle
•Credit
•Customer Billing
•Collections
•Cash Application
•Accounts Payable
•Travel & Expense
•Freight Payables
Accounting / External Reporting
•General Accounting
•Inter-Company Accounting
•External Reporting
•Project Accounting
•Fixed Assets
Decision Support Services Transaction Processing Services
ERP
CFO
Organization
SHARED
SERVICES
Accounting &
External Rptg
Cost & Project
Accounting
Revenue Cycle
Support
Cash
Disbursements
Cash Mgmt
CORPORATE
CENTER
Treasury
Strategic
Planning
Ta x
BU CENTERS OF
EXCELLENCE
Business
Performance
Reporting
Business
Analysis
Outlook &
Forecast
Budgeting &
Planning
Customer Billing
Credit & Collection
Accounts Receivable
Cash Application
General Accounting
Inter-Company Acctg
Fixed Assets
External Reporting
Accounts Payable
Tr avel &
Entertainment
Freight Payments
Cost Analysis
Pricing and
Profitability
Analysis
Business
Performance
Analysis
Regulatory &
Compliance
Capital & Risk
Management
Investor
Relations
PIDX Conference – April 2 , 2007 – Houston, TX
Flatten Organizational StructuresFlatten Organizational Structures
Clearly Define Organizational Clearly Define Organizational
Responsibility and Responsibility and
Accountability Accountability
Consolidate Payables Consolidate Payables
Processing into a Global Processing into a Global
Shared Services OperationsShared Services Operations
Consolidate Strategic Consolidate Strategic
Sourcing in an Enterprise Sourcing in an Enterprise
Purchasing OrganizationPurchasing Organization
Establish Local Purchasing Establish Local Purchasing
Authority and Responsibility Authority and Responsibility
(closely held) (closely held)
Planning & Forecasting
Center of Excellence
Finance SSC Relationship Teams (Strategic Business Partners)Finance SSC Relationship Teams (Strategic Business Partners)
Business UnitBusiness UnitBusiness Unit
•Annual Operating Budget
•Capital Budget
•Forecasting / Outlook
Shared Service Centers
Contact Center
Constituents:
•Vendors
•Customers
•Employees /
•Managers,
Tools:
•Web Portals
•800 lines
SSC
Applications
Metrics
Tracking
Reporting/
Analytics
SSC Operating Model Characteristics
•Governance –Process Standards, Enterprise Policies and Procedures
•Service Levels –SLA’s, KPI’s, Performance Reporting
•Human Capital –Competency standards, team-based incentives
•End-to-End Process Management –process improvement focused
SSC Operating Model Characteristics
•Governance –Process Standards, Enterprise Policies and Procedures
•Service Levels –SLA’s, KPI’s, Performance Reporting
•Human Capital –Competency standards, team-based incentives
•End-to-End Process Management –process improvement focused
Business UnitBusiness Unit
Business Performance Reporting
•Business Scorecard
•Management Reporting
•Special analysis
Web
InteractiveBusiness Analysis
•Sales performance analysis
•Contract/customer/unit fluctuation analyses
•Actual capital spending vs. plan
•Ad hoc analysis
Transformation Management Office
•Program management
•Transformation planning, execution and
performance tracking
Transformation Management Office
•Program management
•Transformation planning, execution and
performance tracking
Finance Business Services
Cash Disbursements
Revenue Cycle
•Credit
•Customer Billing
•Collections
•Cash Application
•Accounts Payable
•Travel & Expense
•Freight Payables
Accounting / External Reporting
•General Accounting
•Inter-Company Accounting
•External Reporting
•Project Accounting
•Fixed Assets
Decision Support Services Transaction Processing Services
ERP
CFO
Organization
SHARED
SERVICES
Accounting &
External Rptg
Cost & Project
Accounting
Revenue Cycle
Support
Cash
Disbursements
Cash Mgmt
CORPORATE
CENTER
Treasury
Strategic
Planning
Ta x
BU CENTERS OF
EXCELLENCE
Business
Performance
Reporting
Business
Analysis
Outlook &
Forecast
Budgeting &
Planning
Customer Billing
Credit & Collection
Accounts Receivable
Cash Application
General Accounting
Inter-Company Acctg
Fixed Assets
External Reporting
Accounts Payable
Tr avel &
Entertainment
Freight Payments
Cost Analysis
Pricing and
Profitability
Analysis
Business
Performance
Analysis
Regulatory &
Compliance
Capital & Risk
Management
Investor
Relations
| 27
PIDX Conference – April 2 , 2007 – Houston, TX
Examples of Performance Drivers for World-Class Examples of Performance Drivers for World-Class
Purchasing Operations and Accounts PayablePurchasing Operations and Accounts Payable
EfficiencyEfficiency
Cost per Purchase OrderCost per Purchase Order
Cost per ReceiptCost per Receipt
Requisition to PO Cycle TimeRequisition to PO Cycle Time
FTEs per Billion $ in SpendFTEs per Billion $ in Spend
% of Purchase Transactions Made via % of Purchase Transactions Made via
Electronic Catalogues Electronic Catalogues
% of POs Generated Electronically % of POs Generated Electronically
% of Receipts Recorded Through Bar % of Receipts Recorded Through Bar
Code Scanning Code Scanning
EffectivenessEffectiveness
% of Deliveries Considered Late% of Deliveries Considered Late
Ability to View Spend DataAbility to View Spend Data
% of Spend from Approved Suppliers% of Spend from Approved Suppliers
Extent Policies and Procedures Extent Policies and Procedures
StandardizedStandardized
EfficiencyEfficiency
Cost per Invoice Line ItemCost per Invoice Line Item
Disbursements per FTEDisbursements per FTE
AP FTEs per Billion $ RevenueAP FTEs per Billion $ Revenue
Invoice Processing Cycle TimeInvoice Processing Cycle Time
% of Purchase Transactions Settled via % of Purchase Transactions Settled via
ERSERS
% of Invoices Received Electronically% of Invoices Received Electronically
% of Payments made Electronically% of Payments made Electronically
EffectivenessEffectiveness
First Pass Match RateFirst Pass Match Rate
% of Invoices Rejected% of Invoices Rejected
% of PO-Based Invoices with Mismatches% of PO-Based Invoices with Mismatches
% Suppliers Comprising Top 80% Volume% Suppliers Comprising Top 80% Volume
Extent Policies and Procedures are Extent Policies and Procedures are
StandardizedStandardized
Purchasing Operations Accounts Payable
PIDX Conference – April 2 , 2007 – Houston, TX
Examples of Performance Drivers for World-Class Examples of Performance Drivers for World-Class
Purchasing Operations and Accounts PayablePurchasing Operations and Accounts Payable
EfficiencyEfficiency
Cost per Purchase OrderCost per Purchase Order
Cost per ReceiptCost per Receipt
Requisition to PO Cycle TimeRequisition to PO Cycle Time
FTEs per Billion $ in SpendFTEs per Billion $ in Spend
% of Purchase Transactions Made via % of Purchase Transactions Made via
Electronic Catalogues Electronic Catalogues
% of POs Generated Electronically % of POs Generated Electronically
% of Receipts Recorded Through Bar % of Receipts Recorded Through Bar
Code Scanning Code Scanning
EffectivenessEffectiveness
% of Deliveries Considered Late% of Deliveries Considered Late
Ability to View Spend DataAbility to View Spend Data
% of Spend from Approved Suppliers% of Spend from Approved Suppliers
Extent Policies and Procedures Extent Policies and Procedures
StandardizedStandardized
EfficiencyEfficiency
Cost per Invoice Line ItemCost per Invoice Line Item
Disbursements per FTEDisbursements per FTE
AP FTEs per Billion $ RevenueAP FTEs per Billion $ Revenue
Invoice Processing Cycle TimeInvoice Processing Cycle Time
% of Purchase Transactions Settled via % of Purchase Transactions Settled via
ERSERS
% of Invoices Received Electronically% of Invoices Received Electronically
% of Payments made Electronically% of Payments made Electronically
EffectivenessEffectiveness
First Pass Match RateFirst Pass Match Rate
% of Invoices Rejected% of Invoices Rejected
% of PO-Based Invoices with Mismatches% of PO-Based Invoices with Mismatches
% Suppliers Comprising Top 80% Volume% Suppliers Comprising Top 80% Volume
Extent Policies and Procedures are Extent Policies and Procedures are
StandardizedStandardized
Purchasing Operations Accounts Payable
| 28
PIDX Conference – April 2 , 2007 – Houston, TX
Questions and AnswersQuestions and Answers
The Only Bad Questions Are The Only Bad Questions Are
Those Which Un-AskedThose Which Un-Asked
We Will Attempt to Respond To We Will Attempt to Respond To
All Questions All Questions
PIDX Conference – April 2 , 2007 – Houston, TX
Questions and AnswersQuestions and Answers
The Only Bad Questions Are The Only Bad Questions Are
Those Which Un-AskedThose Which Un-Asked
We Will Attempt to Respond To We Will Attempt to Respond To
All Questions All Questions
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