Understand the impact the POA & ASN has on the Perfect PO Kevin Wilson Q Data USA SESSION CODE: SC163

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2 Understand the impact the POA & ASN has on the Perfect PO Kevin Wilson Q Data USA SESSION CODE: SC163

3 LEARNING POINTS List 1-3 key points that attendees will take away from your session.

4 BEST PRACTICES Consuming the PO Acknowledgment Consuming the ASN fully Embracing automation - EDI

5 KEY LEARNINGS What does a Perfect PO mean? What does a Perfect PTP process look like? What EDI messages should you be using? How should the key messages be consumed in SAP? What should the players in the PTP process be responsible for and what should the system be responsible for?

6 What Are We Going to Focus On? Complete Accurate documentation The Perfect Order Procure To Pay (PTP) On Time Free from damage Get proactive Relevant Analytics Purchase Order (PO) Time to Insight Real-time alerting Cross Functional Visibility

7 Common Issues Found with the PTP Process Limited or inaccurate Key Performance Indicators (KPIs) No accountability or measurements in place Lack of proactive exception management Time to react is slow Outdated inaccurate master data People are injected in to the process to keep it going Manual processing No automation policy More people Lack of end-to-end process visibility Don t get the needed statuses on time Vendor contracts not aligned with customer process needs Customer and vendor are working in apposing directions

8 Characteristics of a Mature PTP Process Close to 100% perfect orders Minimal compliance errors Minimal supply chain process gaps Collapsed supply chain People, process, information, and system are aligned An accurate plan is in place and being followed End-to-end process visibility available to all stakeholders People are managing supplier data and relationships System has the business rules loaded System does the heavy lifting to determine the plan based on the data it receives as input Exceptions are managed in the system Vendors are held accountable for their performance

9 What Benefits Does Supply Chain Maturity Bring? What goals are we trying to achieve when we strive toward improving the maturity level of our Supply Chain process? Reduce the cost to execute the Supply Chain Improved customer service levels Ability to react faster to exceptions in the supply chain in order to catch imbalances in supply vs. demand. Complete end-to-end real-time visibility to the status of the supply chain process to all key stakeholders Collapse the supply chain cycle time Reduce the Cost of the Supply Chain while Maintaining or Increasing Service Levels

10 Describing the PTP Process Vendor Management Contract Order Management PO PO Acknowledgment Transportation ASN Receiving Goods Receipt Billing Invoice Receipt

11 Order Management Purchase Order (PO) Material and Quantity Price (Contract) Ship To Location Expected Delivery Date Purchase Order Acknowledgment Vendor agreement on: Price Material Quantity Delivery date

12 Transportation Advanced Ship Notice Vendor provides ASN at time of issuing goods Vendor ASN #, Customer PO # Labelled Packing Slip Delivery Date Ship To Location Carrier & Tracking # s Serial # s Packing Information

13 Receiving - Goods Receipt Inbound Delivery Vendor ASN #, Delivery Date Carrier & Tracking # s Serial # s Packing Information Dropship POs Statistical ASN No goods movement Goods Receipt Against inbound delivery

14 Billing Invoice Receipt Invoice Document 3 way match PO Invoice Goods Receipt Discrepancy process Accounts Payable

15 Issues Found in the PTP Process Each of the steps in the PTP process offer up their challenges

16 Issues Vendor Management Contract Contract not aligned with end-to-end PTP process Usually lopsided to buyer Less importance given to WH and AP functions Packing and Labelling No clear instructions Communications EDI not a requirement Measurements / KPIs Negotiation without statistics

17 Issues Order Management Purchase Order (PO) Manual communication Stale master data Vendor, Material/price Purchase Order Acknowledgment (POA) Not consumed Leads to downstream issues at WH and AP Drop ship orders! This is the time to affect change!

18 Issues Transportation Advanced Ship Notice (ASN) Late delivery Surprise exceptions Incorrect ship to location No Tracking # s Incorrect or no Serial # s No packing information

19 Issues Receiving / Goods Receipt Inbound Delivery No delivery to receive against The goods beat the ASN! Goods Receipt Shortage/Overage Cumbersome receiving process Poorly packed Poorly labelled Misaligned inner pack quantities Repack

20 Issues Billing / Invoice Receipt Invoice Document 3 way match failure PO Invoice Goods Receipt AP are left to be held responsible for resolving discrepancies AP resolves all upstream issues Pricing, Quantity Lack of vendor scorecard analytics

21 Defining the Perfect Order 3 Dimensions Process People System Data Shipment Product

22 The Perfect Order Process Order steps are: Processed automatically Processed without exception Processed according to the planned execution time Orders: Meet the customer s expectations On time delivery Price and terms Match corresponding contract and master data Are paid within the terms period Status is visible to all players at all stages of the process Statistics form part of the KPI analysis data

23 The Perfect Order Shipment Shipments are: Accurate to the order On time Correct quantity Complete Communicated to customer Timely communication Electronically (EDI) Communication matches actual shipment detail Packaged correctly Labeled correctly Legible In support of customer process

24 The Perfect Order Product Products are: Good quality Damage Free Correctly labeled Legible Damage Free Comply with regulations: Comply with safety regulations Comply with social and environmental regulations Comply with legal terms and conditions

25 What does the Perfect Order look like? Focusing in on Transportation and Goods Receipt The Transactions / Document The Product / Goods The Players

26 Perfect Transportation The Documents Advanced Ship Notice (ASN - 856) EDI automation 856 must beat receipt Matches POA (855) detail Material Date Quantity Tracking #s Serial #s Packing information Include hierarchy

27 Perfect Goods Receipt The Documents Inbound Delivery (ASN 856) Matches PO schedule Timely accurate EDI communications Goods Receipt On time Correct quantity, Complete Matches ASN detail Packaged correctly Labelled correctly Legible In support of the process

28 Perfect Goods Receipt The Goods Products Good quality Damage free Correctly labeled Regulations Comply with safety regulations Comply with social and environmental regulations Comply with legal terms and conditions

29 Perfect Goods Receipt The Players Warehouse Efficient bulk receipt and put-away Inner packs match selling packs No need to re-package Barcode/RFID automation Tied in with contract and EDI data System EDI automation Exceptions SAP Workflow Inbound 856 errors Routed based on error Outbound 824 exceptions Visibility SAP Event Management Status Management WIMPO Time to action RFID/Barcode readers

30 Perfect Receiving / GR EDI Specifics SAP Event Management PTP Process Visibility - WIMPO 1. Vendor Ships product -> ASN -> DESADV IDoc -> Inbound Delivery 2. Discrepancy -> Workflow -> Custom IDoc -> 824 -> Vendor resolution 3. Physical receipt of the product -> Goods receipt

31 The Path to the Perfect Order 1. Business justification Determine how much an Imperfect order costs you Manual exception process Paperwork Lost sales Customer satisfaction 2. Decide $40.00 $30.00 $20.00 $10.00 This is a journey It s not going to be easy Key stakeholder commitment is required 3. Design with automation and reporting in mind EDI PTP process Workflow Exception handling Reporting visibility BW and SAP Event Management $- $37.45 Paper Cost of doing a PO via EDI vs. Paper EDI $23.83 Source: Wikipedia and Supply Chain Insights

32 The Path to the Perfect Order (cont.) 4. Normalize/standardize your PTP SAP process Use standard SAP transactions to match your process Use standard IDoc interfaces to match the standard process 5. Develop Vendor EDI specifications that match the business process Drop ship, timing, dates, Develop mapping templates for EDI <-> standard IDoc based on EDI specification 80% Publish EDI specifications to vendor portal % EDI Adoption for Purchase Order Source: Wikipedia and Supply Chain Insights 60% 40% 20% 0% 34% %

33 The Path to the Perfect Order (cont.) 6. Execute Vendor Negotiate timeframe for change Adjust SBA Contract Buyers/Procurement Own EDI process Own vendor portal Execute vendor on-boarding Manage supplier relationship and expectations

34 The Path to the Perfect Order (cont.) 7. Monitor and adjust Vendor Vendor Scorecard communication Buyers/Procurement Measure compliance Provide stakeholder visibility Audits

35 STAY INFORMED Follow the Q Data Team: Kevin Q Data USA, Whitepaper: Follow Resources Download White Papers Striving for the Perfect Order Moving toward the Perfect Order by automating your Procure To Pay Process

36 THANK YOU FOR PARTICIPATING Please provide feedback on this session by completing a short survey via the event mobile application. SESSION CODE: SC163 For ongoing education on this area of focus, visit