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Automating the

Procure to Pay Process


“Garbage at the Speed of Light”
or
“Billion Dollar Company Syndrome”
Paul Cyphers
COLLABORATE 07
April 19, 2007
Overview of Presentation

u Automating Processes
u Suppliers
u Items and Catalogs
u Requisitions/Quotations
u Purchase Orders/Contracts
u Receiving
u Inventory
u Processing Invoices
u Accounting
u Reporting

© 2007 Solution Beacon, LLC. All Rights Reserved.


2
Automati
ng Busi
nessProcesses
Procure to Pay Process
Sourcing
Develop
Identify Obtain Item Perform Perform Approved Supplier Monitor
Establish Sourcing Decide
Start Contract Information Spend Lists Quotation Lists and Performance
Contracts Awardee
Sources from Manf . Analysis Process Contracts
A
B

Operational
Budgets

Identify Purchase Locate Material Lists Establish Select Route for Review Approved
Requirement Procurement Generate Requisition
Start Product Designs and Supplier Requisition and Approval
Lists Requisition
Catalog Specifications Catalogs Templates of Request

Purchasing
Establish Establish and Generate Transmit Generate
Establish Perform Purchasing Approve Purchasing Purchasing
Purchase Update Existing
Start Procurement Quotation Documents Purchasing Documents Analysis
Prices /Disc . Contracts and Contract
Sources Process Documents
Agreements

Yes No D
B
A Maintain Item Inventory
Updated Purchasing
Created Blanket Create Purchase Control
Master Purchasing Correction
Release Order
Information Information Process
Project Cost Control

Accounts Payable Specs


Yes

Complete Supplier
Supplier Request Supplier Matching Provides
Existing or Update Supplier Electronic Process
Form No Up -to and Approval Goods or
Duplicate Infromation Invoices Invoices
Date ? Process Service
C
Yes
C Hold and
Payment
Create Update Supplier Variance Process Receiving
No Register
Supplier Site Information Process
Invoice Information

Treasury
Cash Flow Disbursement
Remit to Update Payment Create
Report Correct ? Payment
Issue Register Cash
Information Information
Payment Management
Batch

Accounting

Commitment General Cost Budget


Budget Project Tax Reporting
Reports Fixed Asset Ledger Control
Information Accounting Accounting
Accounting Accounting
D

© 2007 Solution Beacon, LLC. All Rights Reserved.


4
Procurement Priorities

uStrategic lever for bottom line improvement


uAssess for insight and opportunities
uSource for cost savings
uEnable buyers and suppliers to turn contracts into
commerce
uTransact though management tools in order to
capture savings, compliance and efficiency
uManage continuous improvement in order to
maximize procurement performance

© 2007 Solution Beacon, LLC. All Rights Reserved.


5
Automation Opportunities

uBusiness Processes – Workflow, BPEL (10%)

uEnterprise Service Bus/Web Services (30%)

uBatch Processing and Interfaces (50%)

uAutomation Tools (100%)


l “Automate, Integrate and Accelerate”

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Tools for Automation

uBusiness Process Management Suite (BPMS)


l Business Process Modeling (BPM)
l Business Activity Monitoring (BAM/BPA)
uEnterprise Service Bus (ESB)
l Web services
l SQL Programs / Interfaces
uAutomation Tools
l Scheduling Tools
l Automation Tools

© 2007 Solution Beacon, LLC. All Rights Reserved.


7
Oracle Modules (Advanced Procurement)

u Sourcing – improves strategic sourcing


u iSupplier Portal – secure portal with supplier
u Supplier Network – electronic transaction service
u iProcurement – seamless ordering with web interface
u Purchasing – streamline processing along with compliance
u Approval Manager – enhanced approval process
u Procurement Contracts – creates and enforces contracts
u Service Procurement – control and oversight of services
u eCommerce Gateway – allows for electronic transfer
u Purchasing Intelligence – provides reports for compliance

© 2007 Solution Beacon, LLC. All Rights Reserved.


8
Suppli
ersand Empl oyees
“Data Generati
on”
Supplier Management

uSupplier Registration (iSupplier)


l Initial setup and contact updates
uEliminate Supplier Setup form by using BPEL to
execute process flow
l Provides immediate update process
uPeriodic updates using batch updates
uAllow for immediate updates
uUse of data hubs release 12 and TCA approach

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Business Process Execution Language

uAutomate data generation flow


uImmediate updates vs. nightly batch
updates
uEliminate Supplier form for both additions
and updates
uUpdate supplier information across multiple
systems
uNotify relevant parties when completed
uBuild rules into process
© 2007 Solution Beacon, LLC. All Rights Reserved.
11
Data Hubs

uProvides central data repository for master files


uProvides for sharing consistent information
between applications
uDesigned to work with APIs
uPart of Fusion Middleware
uCurrently for Customers and Items
uSuppliers part of Release 12 – TCA model

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Enhanced Supplier Management

uCloser and enhanced relationship with suppliers


uViewed as integral part of supply chain
uEnhanced sharing of information between entities
uSharing information more readily and electronically
uBuilt in supplier contracts and long term
relationships
uMaximized interaction with supplier
uElectronic communication – iSupplier

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Itemsand Catal
ogs
Item Master/
Product Lifecycle Management

uMaintaining item master is data maintenance


challenge and is ever increasing
uFront end of purchasing process
uData hub especially with PLM, enhanced Item
Master process
uGreat application for the use of BPEL
uSupply Chain focus on product lifecycle
l Extensive quoting and purchasing integration
uEssential for most modules in procurement suite

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Sourcing

uEnhanced procurement process


uUsually part of enhanced supply chain
uSeeded functionality and module in Oracle
uProvides lists of items and preferred suppliers
uDrives preferred supplier spending
uShould be tied to procurement contracts
uAutomation opportunity for efficiency
uRequires maintenance and attention

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Supplier Catalogs
uRequires item strategy
uSeeded functionality
uData from multiple sources
uCan simplify item master process
uCan be updated using EDI 832 (Catalog and Price)
uXML becoming preferred method
uSupplier maintained content
uiProcurement Punch-out
uSome organizations using supplier numbers only

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Requisi
ti
onsand Quotati ons
“Data Integrati
on”
Requisition Import

uSignificant automation feature


uImports requisition data from numerous sources
l Other modules, applications and data sources
uProvides for single source of data
l Eliminates duplicate entry
uAlternative to iProcurement
uProvides validation and standard format
uRemaining steps in process can be automated
and/or controlled as much as possible
© 2007 Solution Beacon, LLC. All Rights Reserved.
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RFQ and Quotations

uHistorically limited functionality


uImportant to requisition process, especially in three
bid environment with regulatory requirements
uMost companies using outside process, either
manual or development based
uCan be interfaced with EDI
uCan issue put through iSupplier
uNew enhancements with RFI, RFQ and Quote
uAutomation from quote to BPO to catalogs

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Self Service Purchasing

uiSupplier
uiProcurement
uiExpense, PCard integration
uiPayment
uXML Publisher
uBudgets
l Commitments
l Purchasing Spend
uProjects and HR integration
© 2007 Solution Beacon, LLC. All Rights Reserved.
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iProcurement

uSelf service requisitioning, simple or complex


l Other alternatives available
uServes wide range of users
uFinally viable as 11.5.10
uSupplier motivated to assist with integration
uCan be expensive based on licensing
uExtensive personalization
uEssential to driving automation
uKey to getting data right (i.e. account generator)

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Purchase Orders/Contracts
Quotation Process

uRequires management, extensive data entry


uSignificant source of data
uDependent on spend analysis
uBeginning of contract and automation process
uLinks into RFI and RFQ process
uHolds significant data for strategy and decisions
uCan be electronically imported
uUsed in both standard and blanket processes

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Standard Purchase Orders

uMost often used process, primarily manual


uCan AutoCreate from requisitions but still requires
review
uManual requisitions often input at this point
uCertain data fields can be updated through
automation
uOften requires second approval process
uOften requires many manual steps or workarounds
uRequires extensive down stream processing

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Automatic Blanket Release

uGreatest opportunity for automation


uRequires extensive setup initially
l Tied to item number and pricing (Advanced Pricing)
uProvides consistent downstream information
uAutomate the AutoCreate process
uWill combine multiple requisitions
uDoes not require approval process
uNeeds additional automation checks

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Services Procurement

u Long been problematic for Oracle Purchasing


u Advanced Procurement Suite
l Oracle Services
l Oracle Procurement Contracts
l Interfaces with existing modules
uProvides better system process
uEnforce Contracted Pricing with Embedded Terms
and Conditions, Contract Authoring
uControl and oversight for services spending

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Recei
ving
Self Service Receiving

u Limited automation opportunities


u Necessary requirement for control
u SOX misconceptions
u Performed in different ways
l iProcurement
l iSupplier/SAN
l EDI/ASN
uImpacts to matching and accrual processes
uCan be automated through receiving API

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Hand Held Receiving

uAutomation of receiving using symbol technology


uUse programmable hand-helds
uPerform more than one transactions
uUse for multiple transaction sets
uUse for multiple modules
l Inventory transactions
l Fixed Assets
l Physical Inventories
uHave a backup plan

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Evaluated Receipt Settlement

uQuick pay for only those items received


l “Pay on Receipt”
uSupplier negotiated receiving process
l Requires trust and proper data exchange
l Designed for high volume
uTied to contracts
uSupercedes the matching process
uRequires minimal setup by supplier

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Inventory
Inventory Transactions

uHand Held Transactions (Eliminate manual)


l Inventory moves
l Issues and receipt
uAutomate multiple step processes
uExecute replenishment programs
uMaster carton and RFID transactions
l Cross Docking

© 2007 Solution Beacon, LLC. All Rights Reserved.


33
Inventory Counting

uCycle Counting
uPhysical Inventories
uSerialized Transactions
uLocator Transactions
uSpot Checks
uFixed Assets

© 2007 Solution Beacon, LLC. All Rights Reserved.


34
Processi
ng Invoi
ces
Invoice Import

uCan be highly automated


l From scanning to straight through processing
l Dependent on suppliers capabilities
uExtensively used for PCards and Expenses
uCan be done as an EDI transaction – 810
l Best done after EDI PO transaction set – 850
uAlternative ways for smaller vendors
uRequired by larger vendors
uCan be controlled using invoice approval workflow

© 2007 Solution Beacon, LLC. All Rights Reserved.


36
Pay on Receipt

uQuick pay based on receiving


uMust be contractual
uAssociated with Advance Ship Notice
l EDI 865
l iSupplier
uWell Established Process
uMust have reconciliation process

© 2007 Solution Beacon, LLC. All Rights Reserved.


37
Invoice Approvals

uStandard Practice
l Copies made and passed for signature (Non-POs)
uBest Practice
l Accounts Payable receives all invoices, entered into
system
l Controlled within system
uInvoice Approval Workflow
uApproval Manager enhances the process
uTime to process is the significant metric (>10 days)

© 2007 Solution Beacon, LLC. All Rights Reserved.


38
Accounting
“Data Reporti
ng”
Project Accounting

uMaterial transactions to projects


l Drop ships
l Expenses
uRequisitions capturing project information
uServices contracts tied to project performance
uTaxable versus non-taxable transactions
uUse-tax
uExtensive contracts tied to purchasing process

© 2007 Solution Beacon, LLC. All Rights Reserved.


40
Fixed Assets

uCapitalized Transactions
l Receiving services and freight after the fact
uTied to asset accounting
l Account Generator
uIn and out of service
uAsset move transactions
uAsset inventories
uCoupled with other asset applications

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Accrual Accounting

uMost ignored process in the procure to pay cycle


uRequires complete understanding of system
uRequires defined process
l Receiving
l Month End
l Reconciliation
uOften requires custom reports
uNeeds to be managed upstream
uOften done outside system

© 2007 Solution Beacon, LLC. All Rights Reserved.


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Month End Close

uGreat opportunity for automation


uRequires synchronization between AP and PO
uNeed to check multiple parameters
l Period Close
l Pending Transactions
l Invoice Sweep
l Invoice Holds
uBeginning of Close Process

© 2007 Solution Beacon, LLC. All Rights Reserved.


43
Reporting

uRun Standard Set of Reports


uXML Publisher
uBudget Reporting (New Feature)
uDiscoverer reports
l Commitment reports
l Budget Reports
l Purchasing Spend
l Spend Analysis

© 2007 Solution Beacon, LLC. All Rights Reserved.


44
Action Plan

uMap Business Process


uEstablish Priorities for automation
uDecide on which protocol to use
uPrepare implementation plan
uExecute in a logical sequence
uDon’t try to do it all
uMake sure it works and obtains desired
results
© 2007 Solution Beacon, LLC. All Rights Reserved.
45
Questions and Answers

Thankyou!
PaulCyphers
pcyphers@ sol
uti
onbeacon.
com

www.
sol
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onbeacon.
com

RealSol
uti
onsfortheRealWorl
d.â

Vi
sitOurBooth #339
to Regi
sterfora
W orld Class
W eekend Tri p!

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