Automating The Procure To Pay Process

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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.

2

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

Tax Accounting

Cost Control Accounting

Budget Reporting

4

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.

5

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”

© 2007 Solution Beacon, LLC. All Rights Reserved.

6

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

7

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.

8

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

10

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.

11

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

12

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

13

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.

15

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

16

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.

17

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.

19

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.

20

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.

21

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.

22

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

24

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.

25

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

26

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.

27

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.

29

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.

30

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

31

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

33

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

34

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.

36

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

37

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.

38

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

40

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

41

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.

42

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

43

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

© 2007 Solution Beacon, LLC. All Rights Reserved.

44

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.

45

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!

© 2007 Solution Beacon, LLC. All Rights Reserved.

46

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