NIP implementation in K2

20/03/2014

Franois-Xavier Lepoutre

Introduction Current SOP

Document reading key:

In the next slides:

Current state of the SOP (on

paper and in practice) is on the
left
Implementation specificities are
on the right.
Adaptation proposals are over
green background.

Implementation strategy in K2
Implementation

Current state

Proposal:
a. Iterative approach for digitalization:

What is NIP according to current

SOP?
Start from a purchase request

Have a signed Purchase Order

document

Follow with sub-processes: CAF,

receive goods, request payment

From request to PO

1. Start with a Purchase Requisition

process
Start with a request
Finish on a PO
2. Work on sub-workflows linking to
this one afterwards.

Why?
.
Formalization from paper-based
process to IT system requires more
details:

SOP Legal
SOP Payment
SOP Delivery

Master data to gather

No manual workaround possible
(bypass steps, etc)

Current state needs

comments from Ranti

Identification of NIP phases

Current state

On paper:

No clear phases
defined in the
process.
In theory, one NIP
team.

Implementation

Proposal:
a. Identifications of phases within NIP
process based on team in charge:

In practice, separate
people for separate
tasks within NIP scope:

1 person
supervising the
team (Name)
1 person
coordinating the NIP
requests (Monica)
1 person sorting
incoming NIP
requests (Name?)
2 persons finding
product and
suppliers (Names?)
2 persons inputting
PO (Names?)

Phase

Purpose

Team in
charge

Create
request

Create and submit

purchase request

N/A
(Reques
tor)

Validate
the
purpose

Make sure the

request is in line
with budget,
strategy, policy, etc.

N/A
(Approv
er)

Find
product
and
supplier

Find and select the

product and the
supplier for the RO.

Purchasi
ng

Issue PO

Perform any admin

tasks necessary to
issue PO.

Accounti
ng

Followup with
supplier

Contact supplier,
send and get back
signed PO, followup with requestor
on next steps.

Purchasi
ng

Why?

Overall level of detail needs to be greater,

so easier to discuss.

Focus on 1. Create request

Implementation

Current state

On paper:

a.

No clear definition of what requires to start a NIP

process.

b.

In practice:

NIP request form is also used to process

payment requests for employees and/or BCs.
Incoming forms are redirected to different
teams as soon as they come to NIP team.
Inputs and outputs are different.
Two different modules in ERP: Purchase
Requisition in AP and Payment
Requisition in GL.

Proposals:

Use NIP process only for purchase of goods and

services.
Process payments in a Payment request process,
based on approved policy (from sales or HR) or
issued PO.

Transition:
.

Suggested choice for transition: define a manual

process for few people (one in HR and a couple in
Sales) who create requests for payments.
Alternative choice: Same process for everyone,
implement a patch in K2 workflow to handle them,
move people afterwards when the new process is
created.

Focus on 2. Validate purpose (1/2)

Implementation

Current state

On paper:

One step of approval for purpose by head of division of

requestor.
No defined list or clear definition of approvers.
Finance manager checks all ROs at the end of the process

Proposals:
a.
b.
c.
d.

Why?
.

In practice:

Some head of divisions give authority to some managers to

sign for ROs up to a certain amount:
Ben: Nina up to Rp. 20M
Thibault: direct reports up to Rp. 10-20M
Finance manager (Nina) trusts a few other managers to sign
for ROs in their cost center (Alban, Nicolas, Grace, Sang,
Ria, Lily Loanda) whatever the amount.

All ROs are approved by business depending on cost

center rather than requestors head of division.
Formalize delegation of authority by setting 2 levels of
approval depending on the amount.
Standardize $2,000 as the limit for first-level approval.
Remove Finance Manager purpose check after
business approval is given.

Exceptions cannot work in an automated system, need

to define a generic rule.
Duplicate check which cannot lead to refusal is
ineffective.

Benefits:
.
.
.

Better distribution of load.

Empowering people on their responsibilities.
Free time from Finance Manager.

Focus on 2. Validate purpose (2/2)

Implementation

Current state

On paper:

No defined list or clear definition of approvers.

Division / department list currently work in progress by HR.

Proposals (choose one):

a.

Follow HR organization

Description

In practice:

Managers in green are trusted by Finance to sign for ROs in

their cost center.

Advantages:

Clearer handling of budgeting and costs.

Ability to pre-select automatically what cost center the purchase
will go on, based on who is the requestor.
Easier to socialize

Drawbacks:

First level of approval is head of department

Second level of approval is head of division

Any change in departments organization would have an impact on

cost centers.

Needs:

Define what is a department (e.g. division headed by an excom,

including several departments).
Review current list of departments according to this definition.
Make sure no cost center is used by 2 departments. That may
require split of cost centers.

b.

Appoint PIC per cost center

Description

First level of approval is PIC1

Second level of approval is PIC2

Advantages:

Drawbacks

Quickest solution to implement

Need to maintain a separate list of approvers.
Unclear validation roles.
Choice will systematically have to be given to requestor to select
cost center and validation.
Delegation of authority is not promoted within the company.

Needs:

Clarify who are the PIC for each cost center. Can only have two
PIC per cost center (plus backups): one for first level of approval,
one for second.

Focus on 3. Find product and supplier

Implementation

Current state

On paper:

Proposals:
a.

Finance manager approves.

Tax check before bargain and before final
quotation is selected.
Head of division approves again if new quotation
is selected.

b.
c.
d.
e.

Why?
.

In practice:

Finance manager checks that NIP team has

collected sufficient number of quotations for
specific type of products.
Tax check after final quotation is selected.
Reconfirmation is done by head of department
instead of head of division.

Head of division approves the purchase is within

strategy, policy and budget, it is requestor role to
make sure the product corresponds to the need.
Parallel tasks allow saving time.

Benefits:
.
.

Check for sufficient number of quotations is done by

purchasing team (eventually supervisor), instead of
finance manager.
Enforce tax check for all quotations before final
quotation is selected.
Replace head of division reconfirmation by requestor
reconfirmation.
Reconfirmation is done before selection of quotation.
IT check and tax check are done in parallel, before
selection of quotation.

Free some load from head of division.

Free some load from finance manager.

Focus on 3. Find product and supplier

Focus on 4. Issue PO
Implementation

Current state

On paper:

Proposals:
a.

NIP team inputs data in Axapta and issues PO.

Accounting manager approves.

b.

Why?
.

In practice:

Data input and PO printing is done by

accounting team, not purchasing team.
Vendor creation has to be done if it does not
exist in Axapta.
Accounting manager only checks that NIP
supervisor has signed, and that the account is
correct.

Accounting checks only that G/L account is entered

properly, rather than also checking NIP supervisor
signature.
Accounting has to input PO number in the system for
traceability between RO and PO.
In an automated system, no bypass possible: no
request can arrive to the PO issuance step if they did
not go through the whole process validation process.
Because there is no more stapled paper, link has to
be made between the electronic RO and the paper
PO.

Benefits:
.

Free some load from accounting manager.