Service Procurement process improvement in SAP 1
Objectives Assist the Client in managing an expanding contracted work force using a proven methodology. Provide a SAP based, web enabled software solution, that supports the Owner s and the Contractor s real time cost and work management. Achieve Visibility and Control throughout the process without the requirement for manual input and the excessive utilisation of administrative resources. Manage risk. Enable the Client to achieve measurable savings and fast R.O.I. 2
Vendor Invoice and Performance Management - Current Issues Service Entry Sheets (SES s) being created based on Vendor supplied invoice verses actual work performed and accepted. Invoice mismatches with Service Entry Sheet or missing Service Entry Sheets resulting in excessive administration time. Lack of supporting documentation for service invoices. Vendor invoice may not be based on actual work performed. Manual invoice processing. Duplication of data entry. 3
Vendor Invoice and Performance Management - Current Issues Large amount of accruals. Consistently missed Payment Terms resulting in inflated Vendor pricing over time. Little or no Vendor Performance capture and feedback. Poor Audit results due to inconsistent processes, inadequate Controls and Visibility. Unacceptable level of Risk 4
Services vs Materials 5
Services vs Materials Materials Solution More Savings for Less Costs Level of Control = Savings $ Services Level of Effort = Labor Costs
Vendor Invoice and Performance Management - Objective Transfer the responsibility to the Vendor for the data entry for Service Entry Sheet creation based on agreed rates. Electronic submission of supporting documentation. Timely cost accounting updates to significantly reduce the requirement for accruals. Payment based on electronic Vendor submissions that can only include approved Service Entry Sheets. Elimination of mismatched and routed invoices to enable automated invoicing (ERS). Capture Vendor performance statistics using key performance indicators. 7
Solution ACCM has a software solution called The Owners Perspective (TOP ), that streamlines the process of managing the Contractor s daily cost and work activities. TOP is seamlessly integrated into SAP and provides a common platform for both the Owner and Contractor to manage the work. Real time Web enabled and SAP Enterprise Portal compatible. Vendor submits daily cost and activity data for review. Supporting Documentation attached. Approved submittal generates automated creation of the SES. Facilitates Evaluated Receipt Settlement (ERS). Visibility to document progress and status. SAP Workflow and HR integrated. Captures and reports Vendor Performance. 8
TOP Process Flow 9
Workplace Provides a quick view and link to important work items awaiting action. Provides an early warning for those purchase orders which are approaching their financial limit, or forecasted to exceed their financial limit. Provides access to all of the functions and reports needed to manage the process. 10
Workplace 11
Vendor Entry Sheet Details the work performed and provides a breakdown of the cost, time and resources incurred. All costs are validated against service lines in the Purchase Order or Outline Agreement. The submitted Vendor Entry Sheet triggers a workflow to the Owner s Representative for review and approval. Approval of the Vendor Entry Sheet generates the Service Entry Sheet and associated accounting updates in SAP. 12
Vendor Entry Sheet - Initial Screen 13
Vendor Payment Request The Vendor enters a reference number to ensure payment reconciliation. Restricts the Vendor to including only those Vendor Entry Sheets that have been approved by the Owner. Eliminates the possibility of price mismatches. Removes the risk of duplicated payments. ERS Integrated. Enables conformance to the Vendor Billing cycle. Captures Performance ratings against predefined indicators. 14
Vendor Payment Request - Initial Screen 15
Standard Reporting The TOP software offers real time reporting to effectively manage the lifecycle of the Company s contracted services costs. Purchase Order Status - provides a high level view of active purchase orders selected including forecast costs. Vendor Entry Summary provides detailed information at the purchase order item level. Vendor Entry Status - provides the approval or rejected status of each VES entered plus costs and responsible party. Vendor Payment Request Status provides approval and payment status and links to the Vendor Payment Requests. Vendor Performance displays Vendor past performance records. 16
ACCM s Value Proposition The use of the ACCM methodology and TOP software can save a company using Contractors on a regular basis between 5 and 10 percent of annual Services spend. Savings are realized by: Pre-qualifying Vendors and leveraging the purchasing process through the use of RFQ s and Service Agreements. The process of managing the Vendor s daily activities and costs utilises the Hawthorne Effect. People perform better when they know they are being watched. Daily review of the Vendor s submittal in the form of a Vendor Entry Sheet catches errors in charges submitted and any discrepancy in the work performed. Transfers the responsibility of documenting the work performed to the Vendor. 17
ACCM s Value Proposition The Vendor Payment Request virtually eliminates manual loading/ scanning and matching of Vendor service invoices. Payment Requests flow from the Vendor to the Owner for review and approval. Once approved, the Service Entry Sheets are released for ERS removing the need for manual Accounts Payable processing. The Vendor is paid for only the approved work performed. The Owner obtains a real time view of the costs incurred as the work proceeds. This enables the Owner to manage and optimise cash flow and reduce the amount accrued. Performance evaluations are ongoing, reportable and visible to both the Owner and Vendor. 18
Contact and further Information Gary Kitchen Office: 07 3511 1165 Mobile: 04 1995 5057 Email: gary.kitchen@contractormgmt.com For more information go to our website at www.contractormgmt.com Or email your inquiry direct to us at info@contractormgmt.com 19