Strategies for migrating suppliers from paper invoicing to true e-Invoicing. This session will discuss proven strategies for segmenting, targeting and onboarding suppliers for PO, contract, and non-PO invoice automation.
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Proven Strategies for Driving Suppliers Off Paper to eInvoicing
1. Proven Strategies for Driving Suppliers
Off Paper to E-Invoicing
June 4, 2013 â 15:00 â 16:00
Paola Parra-Filipe, FCC
Christine OâShea, Ariba
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Successful Supplier Enablement
RequiresâŚ
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Strong Leadership
Commitment
⢠Executive support and oversight
⢠Established program charter
⢠Regular Steering Committee meetings and quarterly reviews
Focus On Program
Goals/ROI
⢠Documented goals and success metrics
⢠Program scorecard regularly reviewed through Steering Committee
⢠Ongoing benchmarking and continuous improvement focus
Foundational
Pillars
Enablement Lead /
Team
⢠Dedicated team that manages enablement process
⢠Team members understand sellers and internal stakeholders and are change
agents within the organization
Supporting
Infrastructure
Supplier Flight Plan
⢠Flight Plan for supplier onboarding: Pilot, Waves, and Timing
⢠Comprehensive analysis based on ROI and probability of successfully transacting
across the Ariba Network
Communication Plan
⢠Internal communication plan educating org. and driving adoption
⢠External communication plan for suppliers focused on compliance (see below)
and Ariba Network benefits
Compliance
Management
⢠Agreed upon approach to ensure sellers participate in initiative
⢠EDICT with: Expectations, Deadlines, Incentives, Consequences, and
Togetherness Messages
Dynamic
Elements:
Review and
Update
Regularly
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Focus on Program Goals/ROI
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Objective Metric Best in Class
Process
Efficiency
% of Addressable spend that is automated 80%
% of Electronic Invoices 67%
Invoices per FTE 33,000
% of Invoice Exceptions 12%
Days to Approve Invoices 4.1
Touchless Invoice Processing 85%
Compliance
Contract Leakage Savings 0.46%
% of Spend Under Management 55%
Cash
Management
Discount Capture 0.20%
Working Capital 0.27%
Source:The Hackett Group, Aberdeen, Ariba
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Internal Communication
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Strategic
Operational
Individual
⢠Business strategy, expected value and benefits
⢠Program timeline and measures of success
⢠Critical success factors
⢠Specific operational changes resulting from the initiative
⢠Process, technology and people objectives
⢠Consideration of local operations and impact
⢠Team accountability and involvement
⢠Actions to be taken to prepare stakeholders
⢠Impact on individual and team goals and objectives
⢠Individual job and career benefits:âWhatâs in it for me?â
⢠Specific job requirement changes/impact on roles & responsibilities
5
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Segmenting Suppliers for Targeted
Communication Methods
Require different
communication
approaches and strategies
for the successful
enablement
on the Ariba Network
Strategic Suppliers
(A)
(E.g. Suppliers contributing
more than 3,000 Invoices
p.a.)
Core Suppliers
(B)
(E.g. Suppliers contributing
more than 900 Invoices p.a.) General Suppliers
(C)
(E.g. Suppliers contributing
less than 900 Invoices p.a.)
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Supplier Summits
⢠Supplier Summits are high-touch enablement sessions for targeted suppliers
whose engagement is critical to the success of an enablement program
Š 2013 Ariba, Inc. All rights reserved.7
⢠Summits can be face-to-face or virtual
but the emphasis is always on change
management - delivering a
personalized message to ensure that
the audience feels involved,
understands the need for change and
is ready to act
⢠Events should be hosted by the buying
organization to ensure that suppliers
recognize the significance of the
enablement program
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Compliance Policy: âIssue an EDICTâ
⢠Expectation: Inform suppliers of the project and what you
want them to do
⢠Deadline: Set a deadline date for enablement
⢠Incentive: Provide an incentive for participation
⢠Consequence: Establish realistic and executable
consequences for Non-Compliance
⢠Togetherness: Assure your suppliers that these changes
are mutually beneficial; You are in this together.
Š 2013 Ariba, Inc. All rights reserved.8
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Executing Supplier Enablement
Validation of
Buyer
Relationship
Registration
on Ariba
Network
Configuration
of AN Account
Publishing of
Catalogs
Management of
Technical
Integration
Ensure First
Successful
Transaction
Š 2013 Ariba, Inc. All rights reserved.9
Single Point of Contact for Suppliers
Ensure successful enablement onto the Ariba Network from
First Contact to First Transaction
SE Lead Managing and Reporting On Progress
11. Proven Strategies for Driving Suppliers
Off Paper to E-Invoicing
FCC Experience
June 4, 2013 â 15:00 â 16:00
Š 2013 Ariba, Inc. All rights reserved.
Servicios Ciudadanos
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Introduction: FCC Group
FCC is one of the main European groups in Construction and
Citizen Services.
Highly diversified activity:
Âť Construction of big infrastructures, building and industrial,
Âť Environmental services and full water cycle management,
Âť Power generation from renewable resources,
Âť Cement, concrete and derivatives production,
Âť Urban equipment, logistics and others.
Š 2013 Ariba, Inc. All rights reserved.12
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Introduction: FCC Group
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International presence:
Over 50 countries worldwide.
Over 50% of turnover from international markets outside Spain, mainly Europe and USA.
Revenue:
11.152 millions.
Employees:
86.000 employees.
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Initial Situation: 2010
Three years ago FCC started the transformation of the procurement function
and, as one of the actions, FCC decided the use of Ariba as a Service model
in order to implement an electronic end-to-end process.
Previously to the Ariba implementation, all our invoices were paper invoices.
The main challenges we faced were:
⢠Low implementation of the electronic invoice in the construction sector
⢠Low use of technological tools and great resistance to change
Within the transformation of the procurement function, FCC Group tries to
extend the use of the electronic invoice
Š 2013 Ariba, Inc. All rights reserved.14
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Challenges & Solutions
The deployment strategy followed was:
⢠Gradual deployment with low impact on the organization
⢠Simultaneously with the Purchasing Model: eInvoice only was used for purchases
under the new Purchasing Model
⢠For our internal user, it was set mandatory through the FCC Internal Rules
⢠To manage the resistance, paper invoices that should be electronic are rejected
⢠Before participating in a new negotiation process, our supplier must accept a
clause in the event terms and conditions which indicates that the awarded supplier
must invoice electronically
After a first phase of deployment, FCC decided to encourage the use of the
eInvoice beyond purchases negotiated under the Purchasing Model:
⢠Generalize the electronic invoice, at a faster rate than the model: because of the
advantages for FCC
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Implementation Process
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2012
9
20112010nov/dec 2009
Electronic Negotiation (17 Feb ).
Electronic PO (1 April).
Interface with SAP and Electronic Invoice (17 July).
23 people 30 people 37 people
Internal Rules approved by the Steering Committee (Threshold: 5 millions âŹ)
1 million ⏠From 0,75 to 0,25 M⏠From 0,5 to 0,1 MâŹ
Ariba
Team
Model
Approved
Internal Rules
Selection
Ariba
selected
PLs managers appointment Construction Purchases Integrated
Electronic Invoice Internal Rule (all PO greater than a threshold must be done electronically in Ariba)
> 100.000 ⏠> 50.000 âŹ
42 people
1.000 M ⏠In Purchase Orders
From 0,25 to 0,1 MâŹ
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eCommerce Solution
Electronic end-to-end process:
⢠Supporting the Sourcing and procurement chains
⢠Integrated with SAP for accounting and payment
Š 2013 Ariba, Inc. All rights reserved.17
FCC Users
3.600
ARIBA
SAP
Accounting and Payment
Sourcing
Contract
Purchase Order
Receipt
Invoice
FCC Suppliers
5.000
ARIBA
NETWORK
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Challenges & Solutions
The main issues were:
⢠Small and medium suppliers:
resistance was due to fear and lack
of knowledge about the e-Invoice
⢠Large suppliers: resistance were
due to these companies often
have their own electronic invoicing
tool and do not want to use the
client tool
Š 2013 Ariba, Inc. All rights reserved.18
The actions taken:
⢠Provide enough information about
the legality of the electronic invoice
and inform them of the Ariba
process in detail
⢠Collaborate with these suppliers at
the connection of their systems with
Ariba Network
Once they have started using Ariba Network, our suppliers are satisfied
with the functionality, being better rated and more helpful for our small
and medium suppliers.
Additionally, this barrier has been overcome because we provide direct support
from FCC to the suppliers for the use of Ariba Network.
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Challenges & Solutions
However, the greatest resistance to the electronic invoice comes not from
our suppliers but from internal users. The electronic process changes the
way of working:
⢠The purchase order becomes the communication tool with the supplier and not just
an accounting record to associate the invoices
⢠The request and its approval necessarily have to be done before the invoice and
with enough detail to be invoiced (FCC do not accept Ariba Network invoices
without PO)
These resistances are overcome by:
⢠The mandatory compliance for users established by the Internal Rules
⢠Plans for communication at all organizational levels and
⢠Training and support of users using the own staff of Purchasing Department
⢠The gradualness of the process helps to overcome the resistances more easily
Š 2013 Ariba, Inc. All rights reserved.19
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Benefits Realized
The main benefits obtained with the electronic invoice are:
⢠Assure compliance to awarding terms: electronic process up to the invoice
⢠Cost reduction by the electronic processes: Efficiency and productivity increase
⢠Removal of mistakes in the manual processing of orders and invoices
⢠Immediacy in communication
⢠Elimination of paper handling and use
⢠Favorable treatment in Spanish legislation for the electronic invoice over
conventional paper invoice
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eInvoice in FCC
Š 2013 Ariba, Inc. All rights reserved.21
56,317
0
10,000
20,000
30,000
40,000
50,000
60,000
Jan-11 Jul-11 Jan-12 Jul-12 Jan-13
Number
650 MâŹ
0
100
200
300
400
500
600
700
Jan-11 Jul-11 Jan-12 Jul-12 Jan-13
Amount
0
5000
10000
15000
20000
25000
30000
35000
2010 2011 2012 2013
Number
0
50
100
150
200
250
300
350
400
2010 2011 2012 2013
Amount (MâŹ)
The use of electronic invoicing in FCC has increased exponentially in recent
years, and in 2013 is expected to double the number of electronic invoices received
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Key Insights
For FCC, the electronic invoice is providing great benefits, and we believe
that part of the success of our deployment is because of:
⢠The training and support for internal user and supplier is given by FCC, that not
only provides support on the use of the tool but also in the functional
process, knowing both the Purchasing Model and the treatment of FCC for
certain products and services
⢠Users are responsible for the compliance with the electronic process, as
established by Internal Rules
The next steps for FCC are to continue expanding the use of the
electronic invoice.
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Hinweis der Redaktion
Discount capture - ($2M for every $1B)Working Capital - ($2.7M for every $1B per day of improvement of DPO, DSO, DIO)