eWorld Purchasing & Supply Conference
Day 2 - September 29th, 2010
12:00 to 12:30 PM Transformation, Spend Control & eProcurement – Putting Strategy into Action
Overview:
In this session we look at achieving efficiency gains and ROI with industry best practice in spend control and eProcurement.
Hear first-hand about emerging practice in spend control and eProcurement and how it can transform your procurement operations, improve efficiencies and deliver cash release savings.
The session will explore:
• Insights from the UK’s leading and most recent spend control projects
• Purchasing policy adherence and contract compliance
• Techniques to enhance procurement capacity and management of key supply markets
• Focus areas for planning future spend control initiatives
Speaker:
Joe Taylor, Director of Solutions, PROACTIS
2. Agenda
This session:
About PROACTIS
Spend Control and eProcurement
Processes involved
How to derive benefit
Summary
3.
4. PROACTIS in Brief
100% focused on Spend Control & eProcurement:
UK market leader
350+ clients:
Across all business sectors
2,000,000+ PROACTIS users in 70+ countries
Global presence:
Direct - UK and US
Partners - UK, US, the Netherlands, France, Belgium, Norway,
Germany, Spain, Portugal, Australia, South Africa and the Middle
East
6. About PROACTIS
Best-of-Breed eProcurement Vendors:
#1 for Unified purchasing/ eProcurement
#1 for Overall product score in use cases
#1 for Basic purchasing functionality
#1 for Public-sector functionality
7.
8. Current Climate
Headlines:
‘UK economic growth slows to
0.2%’
‘UK inflation rate rises to 3.4%’
‘UK unemployment increases to
2.5m’
‘UK borrowing hits record
£163.4bn’
Top line objectives/challenge:
Public sector -> do the same with less
Commercial sector -> protect margins
9. Spend Control and eProcurement?
Spend Control:
Process techniques to identify, capture and control
spend in a transparent manner
eProcurement:
Solutions that support procurement, buying and
accounts payable activities and streamline supplier
engagement
= decrease operating costs + improve efficiency
Awareness is growing > Market is growing
10.
11. How can this topic help?
Current Procurement ‘market’ intelligence:
Metric Bottom Top Performers
Performers
Overall invoice cycle time? 32.9 days 2.9 days
What proportion of spend is “under 0-30% 70%+
management”?
What savings from Sourcing 5% 17%+
activities?
35% 76%
What level of Contract compliance?
100-300% 700%
What is the Procurement ROI?
12. How can this topic help?
Areas to attack:
Source well, to secure savings and quality
Push employees to use ‘best value’ agreements
Ensure high level of “spend under management”
Increase visibility and impose the rule book for all spend
Establish ‘great’ supplier trading relationships
Automate Accounts Payable ncy
+E fficie
Remove paper C ash vings!
Sa
13.
14. Processes involved
Spend Control and eProcurement:
Purchase to Pay (P2P)
Purchasing
AP Automation
Sourcing and Tendering
16. Purchase to Pay
User Approvers Finance Internal
Match? Finance
Ledgers
Suppliers External
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27. Purchasing
Example situation: Commercial Sector
21% of spend without PO’s
75% of invoices sent out for troubleshooting
Accrual reporting – 8+ man days a month
5,000+ new suppliers per annum
28. Purchasing
Opportunity:
Single system for all purchasing activities
Policy compliance, transparency
Management of budgets, commitments
Accounting for spend automatically
High invoice match rates = low intervention
Purchase cards for low value spend
How are new suppliers brought on? Data? ncy
+E fficie
C ash vings!
Sa
29. Purchase to Pay
User Approvers Finance Internal
Match? Finance
Ledgers
Order output techniques
Order output techniques Invoice receipt techniques
Invoice receipt techniques
Suppliers External
Sourcing
Sourcing Enquirie
Enquirie
& Data
& Data s
s
Transactions: Supplier Data: New opportunities?: Supplier Enquiries:
•Orders •Supplier details •PQQ, ITT, RFQ, RFP, RFI, •Orders
•Invoices RFx
•Catalogues •Payments
•Tenders
•Status
•eAuctions
30. Sourcing and Tendering
What are we talking about?
You have identified a need
How do you go about securing a new line of supply?
Source a list of potential supply and evaluate to award
31. Sourcing and Tendering
What are we talking about?
You have identified a need
How do you go about securing a new line of supply?
Source a list of potential supply and evaluate to award
32. Sourcing and Tendering
What are we talking about?
You have identified a need
How do you go about securing a new line of supply?
enges
:
Chall requirement
Source a list of potential supply and evaluate toetaward
e the deal
M e best t process
Get th paren
trans effort
En sure a ministration
e ad ri s k
Reduc igate away
Mit crutiny
Sur vive s
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51. Sourcing
Example situation: Local Authority
Situation
Manual sourcing process, 10% coverage
8% of suppliers under contract
9% savings from sourcing activities
Aspiration:
Better, compliant and transparent evaluations
Find and use the best deals
52. Sourcing
Opportunity:
Increase number of sourcing activities – same staff
levels
Adopt standard online processes:
Submit responses
Evaluate sourcing events
Timeline, event monitoring
Clear visibility & ownership
But…once in place, will they be used? ncy
+E fficie
C ash vings!
Sa
53. Typical Projects
Aspirations and initial impetus:
Streamline and ensure transparency in sourcing and
tendering activities
Get control and transparency of contracts
Drive staff to ‘best value’ agreements to the organisation
Impose the rule book
Automate where no process exists
Automate Accounts Payable
54. Invoicing
Example situation: Commercial Sector
15 heads in Accounts Payable
5,500 invoices per FTE, per annum = 25 per day
Exceptions cycle time: 11 days
Average days to pay increasing: 29-33
Payment past due date: 17%
Only 20% of available settlement discounts taken
55. Invoicing
Opportunity:
Cut paper
Automate routing & approvals
Electronic payments
Self Service Supplier enquiries?
ncy
+E fficie
C ash vings!
Sa
56. How to Determine the Benefits?
Procurement Review & Spend Analysis:
Historic spend is analysed, e.g.:
By category
Top/strategic suppliers
Average invoice value by category, etc...
Identify benefits and propose strategy, e.g.:
Contract / category target savings
Consolidation Savings
Move low value orders to Purchasing Cards ncy
+E fficie
Identify key supplier risks C ash vings!
Sa
Which trading techniques remove cost?
Specific benefits and project phasing
57.
58. Practical things to do
Rationalise the supplier database:
• More is the Enemy of Better
• Fewer suppliers, fewer relationships, fewer enquiries,
etc.
Push costs out to suppliers:
• Answer their own queries
• Update their own details.
• Use electronic tools for RFP (tender) publication,
supplier bid submission, buyer bid evaluation and
supplier management processes
59. Practical things to do
Remember, one-size doesn’t fit all:
• Adopt electronic ordering/invoicing strategies
• There are lots of techniques – use the right tool for the
job
Eliminate error, make it easy:
• Drive staff to pre-negotiated contracts
• Automate so staff find what they need, best prices,
lowest risk
• Ensure compliance
60. Summary
PROACTIS Spend Control & eProcurement:
Better deals
More spend can be sourced
Electronic trading:
Cash savings
Fulfilment, mail, storage etc.
Settlement discounts
Process efficiency
Slicker process + less distraction = less staff
Single solution, simple adoption