Supplier Relationship Management Initiatives are playing a critical role to drive Sustainable savings, operational efficiency and optimizing cash in many organizations especially in today's highly volatile commodity markets and risk-prone global supply chains. Yet many organizations do not realize the ROI and value that can result out of a best in class Supplier Relationship implementation that addresses all aspects of Spend categories including complex services. This session would focus on best practices that can be employed across the entire Procurement life-cycle including Invoice and Payment processes that help achieve quantifiable ROI and value.
20. #AribaLIVE
You
Online
Weighted Triangulation
Commodity Inference
Artificial
Intelligence*
Inference Engine
Source Data Hints
Supplier Name
Supplier Address
Expense Description
GL AccountMaterial Group
Part Description
GL Cost Center
other hints
Suppliers Analysis
Database
180 million Suppliers
Matching & Parentage
Enrichment:
Industry (SIC), Credit Rating,
Revenue, Diversity
Item Description
Analysis
Database
Text Reading
Learned Models
Your Company
Processes &
Mappings Database
Custom Mapping
Custom Rules (if, then)
Manual Approval
“a judicious mix of algorithms for different types of classification issues (e.g. supplier classification, others for different
categories of goods) with a lot of experience will generally produce better results.” - Forrester, April 2008
Spend Visibility
HOT
$3 Trillions
Classified so
far…
Taking this paradigm of a networked economy, from a B2B perspective, there’s lots of room to grow in the Networked Economy.Companies have spent billions of dollars in personnel, reengineering, and systems over the past two decades to improve their internal process and information flows within their four walls. These “Islands of Efficiency” are disconnected from the outside world and fall down where it matters most – when buying, selling, or exchanging cash with other businesses. For example:80% of POs, Invoices, and other transactions still take place offline…Additionally, Marketing Sherpa has reported a decrease of 50% in B2B marketing impact over the previous year as people utilize more consumer driven sources of information such as Google and blogs and not the marketing/sales materials produced by your companyAlso, Aberdeen Research reports that 5 – 9% of revenue is leaked due to contract compliance issues and other inefficienciesLots of paper…lots of people…and lots of inefficiency.All this inefficiency costs business $650 billions per year in missed sales opportunities, higher operating and supply chain costs, and slower cash flow cycles.
Faster quarterly closes…More with fewer people….Standardization of processes across divisions…
The Seller Collaboration Console is a new way for sellers to experience Ariba. In order to consumerize business commerce, we need to bring all aspects of the buyer/seller collaboration under one umbrella. So now instead of separate Ariba profiles and logins, you can access all your Ariba customer relationships through the Seller Collaboration Console. This includes:Leads, through Ariba DiscoveryProposals, through Ariba SourcingContracts, through Ariba Contract ManagerOrders & Invoices, through Ariba Network.All untilizing a shared profile and document repository
Discuss of Source-to-Settle ProcessSolutions that fit along continuumEnable collaborative commerce via Ariba Network
Sourcing extends beyond just automating RFQ’s and quotes. eSourcing has been in existence for more than 15 years and companies like Tata Motors, British Airways, have executed thousands of sourcing projects addressing billions of dollars in spend driving more than $200M in negotiated savings to the bottom line with reduction in transaction costs by 40%.However companies looking to tackle “Complex categories” beyond the “low hanging fruits” need to incorporate a Category management approach using collaborative tools paired with ready access to a networked community, decision support tools, knowledge management/ best practices and real-time market intelligence to drive optimal decisions pivoted against Price, Performance and Risk. In addition many organizations likeAs such an effective Sourcing solution offers: Achieve Sustainable Savings – Results and Enablement (Tata Motors, BA, Emerson) Seamless access to global suppliers to help drive savings (Winn-Dixie, Tupperware and OSU Medical center) Total Information Visibility (HP, BP) Performance Measurement (Sonoco, Pentair) Improved Collaboration and Risk Mitigation (BP, GD)
The first step in the Invoice Management process is Receipt & Capture [click]While there may be many different spend categories identified in the collaborative procurement use case (Example: indirect, direct, MRO, services), AP is ultimately responsible for processing all invoices. Some of these may be electronic, but most organizations still have a very high percent of paper invoices. Paper invoices cost more to process than electronic invoices, and are manually intensive and result in very inefficient processes. [click]It’s important to establish a benchmark with your prospect to determine the scope of the opportunity identified in the discovery process. Regarding paper invoices; recent benchmarks from the Hackett Group show that on average, 25% of invoices are electronic, which means that 75% of invoices are still paper! Best-in-class organizations are over 60% automated, and laggards only have about 7% of their invoices automated. [click]Cost per invoice can be complicated and controversial to measure across regions, industry verticals. I find a better measure for cost and efficiency is the number of invoices processed per full time equivalent (FTE) AP staff. On average, an AP staff FTE processes about 11K invoices annually. Best-in-class AP staff will process about 33K invoices annually, and laggards about 7K. [click]These benchmarks help you measure the opportunity. Then you can begin to map out what our solution for invoice receipt & capture might look like.Our primary objective is to help companies join the Networked Enterprise, and as you’ll see electronic invoices are THE document for strategic advantage when it comes process, discount, working capital, and compliance savings. But not all suppliers will participate right away, so we help companies looking for a scanning/OCR solution with Ariba Invoice Conversion Services. ICS is a fully outsourced, scalable service that streamlines paper invoice handling. Our “smart invoicing” solution allows customers to migrate paper invoice suppliers to electronic automatically by assigning network accounts to all suppliers, and notifying suppliers when they’ve hit a prescribed threshold where they should consider moving to e-Invoicing with Ariba.Ariba Invoice Automation allows buyers to reach a much higher percent of electronic invoices by enabling all suppliers regardless of their volume, location, or technical sophistication. Our “smart invoicing” approach drives greater efficiency because most errors and exceptions, especially for PO-invoices, are captured at the moment the supplier submits the invoice. So the buyer’s AP department only receives valid invoices. Additionally, the supplier portal included in this solution, provides suppliers real-time visibility into their invoice and payment status, thus eliminating costly inbound inquiry calls asking when the check is going to be in the mail.By helping companies get to 80% or more electronic, we can help reduce 50-60% of related AP staff cost. In fact, Caterpillar has achieved 90% electronic invoices globally with 98% in NAMER. This efficiency led to a 75% reduction in their AP headcount. 75%!! In many cases, AP staff is reassigned to higher value-add roles like working capital impact, discount capture, contract compliance, etc.