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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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Automati ng Busi nessProcesses
Procure to Pay Process Sourcing Identify Contract Sources
Start
Obtain Item Information from Manf .
Perform Spend Analysis
Develop Sourcing Lists
Establish Contracts
Perform Quotation Process
A
Monitor Performance
Approved Supplier Lists and Contracts
Decide Awardee
B
Operational
Start
Budgets
Identify Purchase Requirement
Locate Product Catalog
Establish Procurement Sources
Perform Quotation Process
Material Lists Designs and Specifications
Establish Supplier Catalogs
Select Requisition Templates
Procurement Lists
Generate Requisition
Route for Review and Approval of Request
Approved Requisition
Transmit Purchasing Documents
Generate Purchasing Analysis
Purchasing
Start
Establish Purchase Prices /Disc .
Establish and Update Contracts and Agreements
Generate Purchasing Documents
Existing Contract
Yes
Approve Purchasing Documents
D
No
B A
Maintain Item Master Information
Created Blanket Release
Create Purchase Order
Yes
Specs Existing or Duplicate
Inventory Control
Purchasing Correction Process
Project Cost Control
Accounts Payable Complete Supplier Request Form
Updated Purchasing Information
No
Supplier Up -to Date ?
Update Supplier Infromation
Electronic Invoices
Supplier Provides Goods or Service
Matching and Approval Process
Process Invoices
C Yes
Create Supplier
C Update Supplier Site Information
No
Hold and Variance Process
Payment Register
Receiving Process
Invoice Information
Treasury Remit to Information
Cash Flow Report
Update Payment Information
Correct ?
Create Payment Batch
Fixed Asset
General Ledger Accounting
Issue Payment
Disbursement Register
Cash Management
Accounting
Budget Information
Commitment Reports
Project Accounting
D
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Tax Accounting
Cost Control Accounting
Budget Reporting
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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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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Automation Opportunities uBusiness Processes – Workflow, BPEL
(10%)
uEnterprise Service Bus/Web Services
(30%)
uBatch Processing and Interfaces
(50%)
uAutomation Tools
(100%)
l “Automate, Integrate and Accelerate”
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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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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Suppl i ersand Empl oyees “Data Generati on”
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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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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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Itemsand Catal ogs
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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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Requi si ti onsand Quotati ons “Data Integrati on”
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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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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) © 2007 Solution Beacon, LLC. All Rights Reserved.
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Purchase Orders/Contracts
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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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Recei vi ng
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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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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
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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Processi ng Invoi ces
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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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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) © 2007 Solution Beacon, LLC. All Rights Reserved.
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Accounti ng “Data Reporti ng”
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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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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 © 2007 Solution Beacon, LLC. All Rights Reserved.
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Questions and Answers Thankyou! PaulCyphers pcyphers@ sol uti onbeacon. com www. sol uti onbeacon. com â RealSol uti onsfortheRealWorl d.
Vi si tOurBooth #339 to Regi sterfora W orl d Cl ass W eekend Tri p!
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