Horizon 2013 P2P Re-imagined: No User Pain, but Real Compliance Gains, A Case Study
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The Mentor Network’s mission is to improve the lives of the people and communities they serve, and when they looked internally at their existing P2P process, they saw their own employees enduring a cumbersome and tedious user experience – or not enduring it and circumventing the system, leading to lower Spend Under Management and lost savings. Learn how Zycus and The Mentor Network are collaborating to re-imagine the next generation of P2P, with an innovation in “Guided Buying,” that reconciles the need for both increased ease-of-use and greater spend and process compliance. We’ll examine the business case and performance benchmarks driving The Mentor Network towards new levels of P2P performance.
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Horizon 2013 P2P Re-imagined: No User Pain, but Real Compliance Gains, A Case Study
- 2. P2P Re-Imagined No User Pain, but Real Compliance Gains Richard Waugh VP-Corporate Development Zycus Inc. Scott Fitzgerald Director - Procurement The Mentor Network
- 3. Agenda Benchmarking World-Class P2P Performance The P2P Process – The Happy Path Happy Path Detours P2P Re-Imagined: The Case for Guided Buying P2P Re-Imagined: Case Study - The Mentor Network
- 4. Benchmarking P2P Performance Efficiency P2P Efficiency World-Class P2P Transaction Cycles Peer Group 100% 90% 80% PO Based Invoice Approval 3 70% 15 60% 3.3 50% Ad-Hoc Req-to-PO 40% 2 30% 20% 1 Catalog Req-to-PO 10% 3.5 Hours 0% % POs % POs No Re- % Invoices Automated Work 1st Pass Match % Early Pay Discounts Taken % Spend With Line Item Visibility Cycle Time Days - Peer Group Cycle Time Days - World Class ~80% or More POs Automated, Early Pay Discounts Taken, and Line Item Spend Visibility for Top Performers 90%+ POs Processed and Invoices Matched On First Pass Transaction Cycle Times 40-80% Faster Source: Hackett Group Procurement Benchmarks
- 5. Benchmarking P2P Performance Effectiveness P2P Effectiveness Peer Group 3.00% World-Class % Indirect Cost Savings 6.69% 0.85% % Indirect Procurement Process Cost as % Spend Nearly 10X ROI 0.68% 0.018% % Early Payment Discounts as % Spend 0.13% 0.000% 1.000% 2.000% 3.000% 4.000% 5.000% World-Class Generates Nearly 3X More ROI at 20% Lower Process Cost Almost ¾ of Cost Savings is Cost Reduction vs. Cost Avoidance Source: Hackett Group Procurement Benchmarks 6.000% 7.000% 8.000%
- 6. P2P Process – The Happy Path Requisition Buy Transmit Catalog Auto Workflow “Touchless” PO xCML/EDI/Portal Pay Approve Invoice Receive EFT/P-Card Auto Match (3 or 2 Way) E-Invoice Goods Receipt
- 7. P2P Process – Happy Path Detours Top Performers - On Catalog The Guided Path Off-Catalog/On-Contract 77% Off-Catalog Spend for Top Performers 94% Off-Catalog Spend for Others 50% 40% 30% 20% 10% 0% Transactions 42% Transactions Spend % Negotiated Cost Reduction Lost Due to Maverick Buying The (Buyer) Guided Path Off-Catalog/Off-Contract 1.6% Top Quartile Significant Maverick Buy Potential 6x More Lost Savings for Worst Performers Bottom Quartile 3.9% World-Class Peer Group 4.6% Peer Group 9.6% Bottom Quartile 2.0% The Bread Crumb Path Higher Non-PO Indicates Less Control 1 in 5 are Non-PO for Even Top Performers World-Class Top Quartile 0.0% No PO Invoices Spend 23% 4.0% 6.0% 8.0% 10.0% % Non-PO Transactions 40% 30% 20% 10% 0% 38% 21% World-Class Peer Group World-Class Peer Group Source: Hackett Group Procurement Benchmarks
- 8. P2P Re-Imagined THE CASE FOR GUIDED BUYING Drive Compliant Spend and Process for Total Indirect Spend Steer Users to Approved Suppliers and Buy/Pay Channel Simplify User Experience to Increase Adoption Achieve World-Class P2P Performance Leverage Accurate Item-Level Spend Visibility
- 9. Guided Buying – Search What Users Want? Search One Stop Shop Auto-classifies search term and suggests relevant category to ensure proper categorization and relevant search results Multiple Search Options (Category, Key word, Supplier, Part #) View Item details with rich product images
- 10. Guided Buying – Selection What Users Want? Selection Filter results by price, supplier, manufacturer etc Steers users to preferred, approved vendors and highlights diverse, or green vendors & products. Compare products side-by-side with long descriptions, attach ments and specifications, ratin gs and reviews or certifications
- 11. Guided Buying – Navigation What Users Want? Navigation Menu of guided e-Forms for off-catalog requisitions instead of blank, free-form requisitions Guidance to find and order services or non-standard products not available in catalogs
- 12. Guided Buying – Specification What Users Want? Specification Remove guesswork and eliminate keystrokes for catalog AND “free form” requisitions Guided form, wizard interface to prompt for required attributes and specifications if “off-catalog” service or configurable product Eliminate back and forth with buyer which delays process for getting the required service or product
- 13. Guided Buying – Express Checkout Default accounting, category, shipping/billing from user profile Allow editing at line item level to update default values on exception basis or split accounting or delivery What Users Want? Express Checkout Auto-classify to correct category code, invoke category-specific workflow, map to GL account and default ship to/bill to from profile
- 14. Guided Buying – Visibility Budget*: Split across budgets Acme Aviation > Microchips What Users Want? $371K Overall consumption: Your consumption: $606,000 (61%) Details $ 1,500 $ 950 Visibility Preview workflow approval process Display graphical workflow process and dynamically update if cart changes trigger spend or category-specific approval thresholds Budget utilization feedback In-process approval status updates
- 15. Guided Buying – Mobility What Users Want? Mobility Provide feedback if rejected or comments if more information is needed for approval Review, approve or reject requisitions from e-mail on smart phone device without logging into e-Procurement application
- 16. The Mentor Network Case study
- 17. Building Relationships. Enhancing Lives. Founded in 1980, The MENTOR Network is a national network of local health and human services providers. We proudly serve people with intellectual and developmental disabilities, children with emotional and behavioral challenges, people with medically complex conditions, and individuals with brain and spinal cord injury. Our services are designed to help people facing a range of challenges lead full lives in the community and include:
- 18. Local Touch, National Reach With programs located throughout the country, we are able to provide personalized supports to individuals in the communities they call home. States with The MENTOR Network programs
- 19. Our Partners Partners of The MENTOR Network work together to provide a continuum of care and include:
- 20. Our Commitment We are dedicated to helping people of all abilities reach their full potential. To learn more about The MENTOR Network and how you can make a difference, visit us at: www.MakeaDifferenceatHome.com
- 21. About Background • No assigned commodities • 30 Contracts Under Mgmt • $200M Addressable Spend o $36M Spend Under Management (SUM) – 16% o $2.5M Savings • 24,000 Purchase Orders processed annually o 18,000 Requisitions • 528,818 Accounts Payable payment transactions annually • Yr1 Strategy • Reorganized staff by commodity, LOB • 90 Contracts Under Mgmt o New contract database • $200M Addressable Spend o Currently $58M Spend Under Management (SUM) – 29% o $3M Savings Target – Actual: $5M o Target incremental 45% SUM (25% Catalog and 20% offcatalog) 6,000 P-Cards Next Phase: P2P Replacement
- 22. First Generation P2P Challenges CURRENT ORACLE IPROCUREMENT ENVIRONMENT Server Based - Network access required Lacks Ease of Use- Formal Training Required, Not intuitive A structured feedback loop is not in place to generate valuable inputs to the category strategy reevaluation process. It has been estimated that about 20% of total spend is coded with incorrect GL accounting codes, resulting in inaccurate spend categorization. Long lead times (2 mos.) for catalog on-boarding -IT Resources Required Licenses based on company revenue Pain Points Contractors do not have access to Oracle There are no tools in place to actively monitor spend trending over time. Workflow changes require formal IT SERF The current spend analysis process does not include vendor name normalization prior to categorization. Quarterly business reviews appear to be focused on a review of statistical information rather than measuring supplier performance and value-add opportunities.
- 23. Mentor Network’s Shortlist Why Zycus? Ease-of-use/Guided Buying Others “Didn’t Get It” Partnership Collaboration and Executive Commitment Gartner “Leader” in Sourcing Suite – Future Expansion Focus
- 24. P2P Re-Imagined – Home Page View
- 25. Current Status • Phase I: “SoftLaunch” o 87 Users/Approvers from all LOB’s o 40 Suppliers – 3 punch-out catalogs o Payment Methods: Check, EFT, Card o Oracle Integration: • Payment feed to Oracle • Cost Center feed from Oracle o Full workflow o Custom Reporting • Full Rollout Q2 2014
Notes de l'éditeur
- Our Usability Use case starts where each user starts – by searching for what they need.I’ve heard more than one procurement leader summarize their P2P user requirements as follows: “Google Search and Amazon Shopping” – both familiar B2C models, and the analogy works – for the most part.Like Google, users want a single search and multiple options – including simple keywords. However, the Guided Buying Concept is actually closer to Amazon’s category-based search than Google keywords that could return 000’s of thousands of search results. At Amazon, users must pick a category or department to sort search results. As in the Guided Buying example shown here, Categorization is the key to more efficient, relevant searches.A keyword search for blade for example, could return search results from any number of categories that include the keyword anywhere in the description – anything from electrical plugs to cutting tools, servers or drives, even roller blades. By auto-classifying the user search term and presenting them with relevant categories, the user avoids extraneous search results that could be frustrating – or worse, could invite an impulse buy for those long sought after roller blades.
- Our Usability Use case starts where each user starts – by searching for what they need.I’ve heard more than one procurement leader summarize their P2P user requirements as follows: “Google Search and Amazon Shopping” – both familiar B2C models, and the analogy works – for the most part.Like Google, users want a single search and multiple options – including simple keywords. However, the Guided Buying Concept is actually closer to Amazon’s category-based search than Google keywords that could return 000’s of thousands of search results. At Amazon, users must pick a category or department to sort search results. As in the Guided Buying example shown here, Categorization is the key to more efficient, relevant searches.A keyword search for blade for example, could return search results from any number of categories that include the keyword anywhere in the description – anything from electrical plugs to cutting tools, servers or drives, even roller blades. By auto-classifying the user search term and presenting them with relevant categories, the user avoids extraneous search results that could be frustrating – or worse, could invite an impulse buy for those long sought after roller blades.
- Our Usability Use case starts where each user starts – by searching for what they need.I’ve heard more than one procurement leader summarize their P2P user requirements as follows: “Google Search and Amazon Shopping” – both familiar B2C models, and the analogy works – for the most part.Like Google, users want a single search and multiple options – including simple keywords. However, the Guided Buying Concept is actually closer to Amazon’s category-based search than Google keywords that could return 000’s of thousands of search results. At Amazon, users must pick a category or department to sort search results. As in the Guided Buying example shown here, Categorization is the key to more efficient, relevant searches.A keyword search for blade for example, could return search results from any number of categories that include the keyword anywhere in the description – anything from electrical plugs to cutting tools, servers or drives, even roller blades. By auto-classifying the user search term and presenting them with relevant categories, the user avoids extraneous search results that could be frustrating – or worse, could invite an impulse buy for those long sought after roller blades.
- Our Usability Use case starts where each user starts – by searching for what they need.I’ve heard more than one procurement leader summarize their P2P user requirements as follows: “Google Search and Amazon Shopping” – both familiar B2C models, and the analogy works – for the most part.Like Google, users want a single search and multiple options – including simple keywords. However, the Guided Buying Concept is actually closer to Amazon’s category-based search than Google keywords that could return 000’s of thousands of search results. At Amazon, users must pick a category or department to sort search results. As in the Guided Buying example shown here, Categorization is the key to more efficient, relevant searches.A keyword search for blade for example, could return search results from any number of categories that include the keyword anywhere in the description – anything from electrical plugs to cutting tools, servers or drives, even roller blades. By auto-classifying the user search term and presenting them with relevant categories, the user avoids extraneous search results that could be frustrating – or worse, could invite an impulse buy for those long sought after roller blades.
- Our Usability Use case starts where each user starts – by searching for what they need.I’ve heard more than one procurement leader summarize their P2P user requirements as follows: “Google Search and Amazon Shopping” – both familiar B2C models, and the analogy works – for the most part.Like Google, users want a single search and multiple options – including simple keywords. However, the Guided Buying Concept is actually closer to Amazon’s category-based search than Google keywords that could return 000’s of thousands of search results. At Amazon, users must pick a category or department to sort search results. As in the Guided Buying example shown here, Categorization is the key to more efficient, relevant searches.A keyword search for blade for example, could return search results from any number of categories that include the keyword anywhere in the description – anything from electrical plugs to cutting tools, servers or drives, even roller blades. By auto-classifying the user search term and presenting them with relevant categories, the user avoids extraneous search results that could be frustrating – or worse, could invite an impulse buy for those long sought after roller blades.
- Our Usability Use case starts where each user starts – by searching for what they need.I’ve heard more than one procurement leader summarize their P2P user requirements as follows: “Google Search and Amazon Shopping” – both familiar B2C models, and the analogy works – for the most part.Like Google, users want a single search and multiple options – including simple keywords. However, the Guided Buying Concept is actually closer to Amazon’s category-based search than Google keywords that could return 000’s of thousands of search results. At Amazon, users must pick a category or department to sort search results. As in the Guided Buying example shown here, Categorization is the key to more efficient, relevant searches.A keyword search for blade for example, could return search results from any number of categories that include the keyword anywhere in the description – anything from electrical plugs to cutting tools, servers or drives, even roller blades. By auto-classifying the user search term and presenting them with relevant categories, the user avoids extraneous search results that could be frustrating – or worse, could invite an impulse buy for those long sought after roller blades.
- Our Usability Use case starts where each user starts – by searching for what they need.I’ve heard more than one procurement leader summarize their P2P user requirements as follows: “Google Search and Amazon Shopping” – both familiar B2C models, and the analogy works – for the most part.Like Google, users want a single search and multiple options – including simple keywords. However, the Guided Buying Concept is actually closer to Amazon’s category-based search than Google keywords that could return 000’s of thousands of search results. At Amazon, users must pick a category or department to sort search results. As in the Guided Buying example shown here, Categorization is the key to more efficient, relevant searches.A keyword search for blade for example, could return search results from any number of categories that include the keyword anywhere in the description – anything from electrical plugs to cutting tools, servers or drives, even roller blades. By auto-classifying the user search term and presenting them with relevant categories, the user avoids extraneous search results that could be frustrating – or worse, could invite an impulse buy for those long sought after roller blades.