Problem Solving AP Automation for No Touch Processing

Transcription

1 Orange County Convention Center Orlando, Florida June 3-5, 2014 Problem Solving AP Automation for No Touch Processing Marie Bourns Bourns, Inc.

2 Learning Points Problem Solving through: 1. Maximizing Standard Features for Common Issues 2. Customizing your Solution for Unique Issues 3. Continuous Improvement: Testing, Monitoring, and Training to Reach the Next Level Limited resources do not have to limit your results!

3 Bourns, Inc. Profile Bourns, Inc. Manufacturer of electronic components Markets served: Automotive, Consumer, Industrial, Communications 15 worldwide locations; headquartered in Riverside, CA 9 manufacturing plants, 6 sales/r&d centers Decentralized AP structure with processing in each plant 15 AP clerks worldwide/ 100,000 invoices per year 80%PO/20%Non-PO AP Automation Strategy Year 1: Implement an SAP add-on solution for only U.S. & Mexico locations as a pilot program Year 2: Global roll-out of the SAP add-on Year 3: Consolidate AP into 3 service centers, by geosphere

4 Return on Investment Our Year 1 Goal Greater efficiencies, producing cost savings, through: Process more than 60% of invoices touchless Reduced AP headcount by 2/3 rds Increase AP capacity to bring off-site processing in-house Create visibility of workflow and workload Remove 100% of paper and paper files Eliminate all lost discounts due to late payments Automation is the tool, not the end-goal

5 Agenda Overview of our Touchless Workflow Solving 9 Business Problems through: 1. Maximizing Standard Features for Common Issues 2. Customizing your Solution for Unique Issues 3. Continuous Improvement: Testing, Monitoring, and Training to Reach the Next Level Wrap up

6 Overview of No Touch Workflow Three Types of Invoices 1. With a PO; With a GR: Ex: material or supplies for production 2. With a PO; Without a GR: Ex: off-site tooling, contractual services, etc. 3. Without a PO: Ex: utilities, legal bills, etc.

7 Overview of No Touch Workflow, Cont. Our Definition of Touchless No AP involvement after verification of invoice data for SAP Invoice received to AP inbox Invoice read by OCR AP verifies data in OCR Invoice data sent into SAP SAP Workflow for 3 kinds of Invoices 3-way match b/w Invoice, PO, & GR OR routed to Requisitioner for approval if non-gr PO OR routed to Approver by custom table if non-po Exceptions routed to Buyer or Receiver Auto Posts!

8 Overview of No Touch Workflow, Cont. Approvals for Invoices 1. With a PO; With a GR: 3-way match required for auto-post Human approval not required since the PO was approved, and GR verifies we received the approved goods 2. With a PO; Without a GR: 2-way match + approval required for auto-post 3. Without a PO: An approval is sent to Requisitioner to verify receipt of goods/service Coding and approval required for auto-post A Table applies coding/splits and sends approval to Approver

9 Overview of No Touch Workflow, Cont. Invoice Workflow for PO invoice with GR STATUS 5 wait 1 hr or escalate near due date 1 HR Y GR? N Escalate Inv. lines ok? N Y POSTS PLANT RECEIVING Y To AP for resolving with Purchasing Y Invoice Workflow for invoice without GR Invoice routed to Requisitioner on PO, or Approver on the custom Table Approval? N To AP Y Y POSTS

10 Overview of No Touch Workflow, Cont. 70% 60% Our Percentage of Auto-Posts to Total Posts Original Goal: 60% 50% 40% 30% 20% 10% 0% 1/11 2/8 3/8 4/5 5/3 5/31 6/28 7/26 8/23 9/20 10/18 11/15 12/13 1/24 2/21

11 Best Practices 1. Human verification might be required for OCR the software can only do so much DO NOT allow bad data ( false positives ) into the Workflow 2. Approvals should be from whoever knows that we received the good/service Receiving, Requisitioner, or Cost Center Manager (delegation of authority is built into the process) What not to do: Our receiving used to do a GR on blanket orders, or for service POs. They had no idea what they were receiving 3. Keep the approval method simple (with no training needed) and time-bound (with reminders and escalations) Proof that it works: we used to lose up to $7,000/mo. of early-payment discounts due to lost invoices or late approvals in March we lost $2!

13 OCR s Problem with Invoice Lines Business problem 1: Invoice Lines Verifying/entering invoice lines at OCR is labor intensive! Some of our invoices had 100+ line items 3-way match using invoice lines created many exceptions! System makes a match based on p/n, price, qty/uom Process solution: For invoices that provide a Delivery Note#, eliminate the invoice lines and 1. Use the Delivery Note# as the link to the GR 2. Build lines on the invoice record using the GR lines Called GR based IV (standard SAP feature) 100% of PO vendors for Mexican and Costa Rican plants are GR based IV Gains in efficiency and accuracy!

14 OCR s Problem with Invoice Lines, Cont. Requirements: Several months before go-live, identify GR based IV suppliers, mark SAP vendor masters, and flush out old PO s Add to PO terms & conditions and new supplier form that a Delivery Note Number is required on invoice Best Practices: To eliminate exceptions, Verify and Receiving both adopt 3 rules for entering Delivery Note Numbers: No Spaces, No special characters, No leading zeros Ex: one DN# could be entered many ways , , , , Must be a PERFECT match!

15 Custom Tables for Routing & Coding Business problem 2: Manual Routing & Coding Internal payment requests are submitted/routed/entered manually, and not on a standard template Ex: rep commission payments, café catering services, royalties Process solution: Create a single request form in Excel that OCR reads like an invoice Employees the requests to the standard AP inbox Maintain vendors, coding, and approvers on custom table so payment requests route and auto-post No AP, no paper, no late payments!

16 Custom Tables for Routing & Coding, Cont. Requirements: If the coding changes for a vendor: Create a column on the table with unique identifiers for each set of coding. That identifier goes on the payment request, and into workflow Or split invoices into different cost centers/gl accounts by percentages Best Practices: Built in DOA If coding must be determined by Approver, case by case, leave it blank on the table so Approvers code each invoice

17 The Problem with Allocations Business problem 3: Inaccurate Freight Accounting Non-PO freight expenses went into one bucket, and were allocated to business units based on revenue% (not weight or volume). Some business units benefited, while others suffered Process solution: New cost centers created for inbound/outbound freight by business unit Coding done by each plant for their own freight invoices Invoices for carriers used by single plant routed to that plant s logistic person for coding Invoices for carriers used by mul ple plants routed to central person who forwards to the right plant for coding No more complaints of unfair allocations!

18 Lost Discounts Business problem 4: Lost Discounts Early payment discounts were lost while waiting on the GR Ex: Receiving had no visibility of what was for discount or coming due, and could not prioritize their receiving Process solution: Create a group SAP log-on for each Receiving team s missing GR queue Create default layout variant that displays the missing GR records in order of urgency to prioritize their receiving Best Practice: Restrict permissions to only that one transaction. All GR s must still be entered in personal log-on No lost discounts due to delayed GR!

20 Auto-Check for GR after Approvals Business problem 5: No Check for GR after Approvals GR-based-IV records that can t find a GR have no lines (since Invoice lines come from the GR) and stop at AP Standard logic: Workflow sent Missing GR records without lines to AP. AP built lines manually and sent record to Receiving to resolve Missing GR issue Custom Fix: Check for GR and populate lines after Receiving s approval New logic: Workflow sends Missing GR records without lines to Receiving. Receiving does GR and approves record. New logic to check for GR after approval allows lines to populate. The record auto-posts No more adding lines at AP; more auto-posts!

21 Auto-fix for Out of Balance Business problem 6: Out of Balance GR-based-IV records that include price adders (such as precious metal charges), or rounding, would be Out of Balance Standard logic: Routed to AP to fix Custom Fix: AP Action List exceptions Count Balance not zero 74 Non-PO 14 PO Invoice Line Mismatch 13 Resubmit - Waiting for GR 10 AEI: Matching failed 9 Missing GR (escalations) 6 AEI: missing GR for a GRIV Lin 4 PO Misc Issues 4 Requisitioner Approval Required 2 Additional Approver Required >$ 2 Missing goods receipt posted 2 Utility Approval Required 1 Grand Total 141 New logic: Distribute the difference over lines, using a weighted scale, if under our SAP tolerances. Anything over the tolerance goes to AP for evaluation Eliminate unnecessary manual fixes!

22 Auto-fix for Out of Balance, Cont. Requirements: Must click Estimated Pricing flag on each PO line with price adders Best Practices: Tolerance level chosen by Corporate Controller or CFO Buyers must set price at the best estimate of invoiced price, including the adder Buyers must create PO s with ONLY estimated pricing lines, to prevent distributing the balance over a fixed-price item Perform regular audits of all estimated price PO lines

24 Testing Business problem 7: Testing Challenges Testing for implementation, and for new transports took too many people and too much time! Original method: For every test, find a real-world PO in QAS with the specific variable, and that has GR but no IR. Find matching paper invoice in files. Scan into OCR, and observe results in SAP. Process solution: 1 test = 4+ hours (with 3-4 people involved) New method: Create large, one-time POs in QAS for each variable. Create invoice from Excel template. For each test, do GRs for small releases against each main PO, and observe results in QAS. 30 standard tests = 3 hours (with only 1 person) Pre-Built Test Data = No IT needed!

25 Testing, Cont. Requirements: Create and maintain a list of standard tests that must be preformed before every new update or bug fix Update it to include new custom changes you make to ensure they do not get overwritten with subsequent changes Best Practice: Code each test invoice to match the corresponding test on your list for tracking/auditing purposes Ex: invoice number = Q3updateTest1

26 Monitoring Business problem 8: Plateaus Our auto-post numbers leveled off prior to reaching our goal What wasn t measured, wasn t done Solution: Track AP s Action List weekly to 1) identify low hanging fruit and obvious problems/bugs, and 2) monetize/prioritize the issues so you spend resources where it counts! AP Action List exceptions Count BAPI: Balance not zero 44 Missing GR (61, 62, 64's) 15 AEI: Matching failed - multiple lines 14 PO Invoice Line Mismatch 11 Non-PO 11 Accrue Tax 8 Requisitioner Approval Required 8 Resubmit - Need to Investigate 4 Auto-Post Failed 3 Below tolerance, balance distributed 3 No PO 3 Damaged / returned-shipment 2 2-way PO Invoice - Coding 2 Resubmit - Out on Break 1 AEI: missing GR for a GRIV Lin 1 Invoice UOM <> PO UOM 1 Resubmit - Waiting for GR 1 PO Misc Issues 1 PO Quantity Variance 1 Grand Total 134 Provide all Purchasing, Receiving, and AP weekly measurables to encourage teamwork and momentum in reaching goals Receiving cares about lost discounts! Purchasing cares about AP Auto-posts!

27 Training Business problem 9: Reverting to Old Ways AP clerks were not letting the system do the work for them Solution: Train AP to use fresh eyes and view their Action List as exceptions, not standard work! Regularly review their Action List with them and ask why could this not auto-post? How can we fix that? AP must discover the opportunities and problems themselves Let them be creative, self-sufficient, and driven Tracking the human errors caused by Purchasing, Receiving, or AP will show you where more training or reminders are needed Motivate behavioral change by being Big Brother

29 KEY LEARNINGS Start with a pilot program (implementing in one entity or location) to problem solve issues, and decide on direction Perfect and standardize and your testing before Implementation Think creatively on what problems can be resolved with simple process changes, and which ones require custom changes but keep it simple! AP should perform the tasks that require critical thinking. If there is no added value, then program the system to work it and auto-post (when benefits exceed cost) Someone has to forever be Big Brother for continuous improvement and permanent changes

30 FOLLOW US

31 THANK YOU THANK YOU FOR PARTICIPATING Please provide feedback on this session by completing a short survey via the event mobile application. SESSION CODE: 0904 For ongoing education on this area of focus, visit