1. Sam Ahuja Chief Solutions Architect OPTURA sahuja@optura.net (480) 488-3040 x203 Best Practice Workflow Between Procurement and A/P Session Code: 4707 Chris Callahan, Procurement Sys Mgr Tim Thomas, VP Purchasing Jim Tunnell, CIO PILGRIMS PRIDE ccalahan@pilgrimspride.com (972) 290-2651

2. Examples of Efficiency Gains from A/P Initiatives ERS EDI P-Card Imaging & Workflow Focus of This Presentation: Best Practices in Imaging and Workflow

3. A/P Shared Services Common Challenges Need to:  Further improve internal productivity - reduce / redeploy resources  Reduce cost per invoice  Streamline communication between process participants (I.e. Purchasing, Receiving, Requisitioners, etc…)  Have accurate and timely recording of liabilities  Eliminate late payments, lost invoices, and duplicate payments  Decrease backlog  Automatically follow-up or escalate  Improve customer (business unit and vendor) service levels  Have quick, accurate access to data and documents

4. Best Practice Tenets: Centralizing Invoice Receipt Removing A/P from Manual Invoice Resolution / Follow-up Analyzing Process Data for Continuous Efficiency Gains Developing the Business Case for a Project Pilgrims Pride Case Study Agenda

5. Centralizing Invoice Receipt Vendor AVendor BVendor C Requisitioner Approvers Project Manager Receiver Buyer A/P Vendor AVendor BVendor C A/P Workflow Receiver Buyer Approver Vendors Send All Invoices Directly to A/P

6. Centralizing Invoice Receipt Paperless Imaging Fax Online Benefits Immediate visibility to total liabilities Improve internal efficiency Reduce duplicate payments by eliminating lost invoices eliminating receipt of same invoice multiple times automated duplicate checking Improve vendor service on-time payment quick status response Centralize control Centralizing Invoice Receipt

7. Nearly 7% of large companies (5,000 employees) report that more than 0.5% of invoices are paid twice. Nearly 3% of firms with 500 – 5,000 employees “border on the unacceptable” 0.5% of invoices paid twice. Duplicate Payments Source: IOMA’s A/P Department Benchmarks and Analysis 2003

8. Imaging Automatic Duplicate Check Automatic Parking Approval Workflow “Intelligent” SAP Inbox Pre-populated SAP Transaction P.O. Box Setup Doc. Prep. Scan In-house or Outsourced Scanning Best Practice: Early Imaging (“Early Archiving”) SAP OCR or Manual Indexing Fax Invoice

9. “Intelligent” SAP Inbox

10. Step 4: Pre-populated Transaction Transaction appears with indices pre- populated in red Pre-populated SAP Transaction

11. Best Practice Tenets: Centralizing Invoice Receipt Removing A/P from Manual Invoice Resolution / Follow-up Analyzing Process Data for Continuous Efficiency Gains Developing the Business Case for a Project Pilgrims Pride Case Study Agenda

12. Removing A/P from Manual Problem Invoice Resolution / Follow-up Create SAP Document (MIRO, FB60) Imaging Okay Post Invoice in SAP Exception Invoice Exception Workflow SUSPENDED Invoice PARKED Invoice BLOCKED Invoice

13. Removing A/P from Manual Problem Invoice Resolution / Follow-up Remove A/P from Manual Problem Invoice Resolution / Follow-up Identify All Exception Reasons Benefits Improve internal efficiency Focus A/P on more knowledge- based work such as analysis Capture early payment discounts Eliminate late payment charges Standardize business processes – build rules into the system e.g. let system verify signature authorities Negotiate better terms with vendors Pre-define Process Steps Keep Workflow Inside SAP Automatically escalate inaction

14. Moving from a low to a medium level of automation will cut the cost to process a vendor payment by 30% - 60%. Moving from a medium to a high level of automation will cut this cost by another 20% - 35%. Also, it will enable an A/P department to more than double the number of PO invoice payments made per A/P staffer. Increasing A/P Efficiency Source: IOMA’s A/P Department Benchmarks and Analysis 2003

15. Removing A/P from Manual Problem Invoice Resolution / Follow-up Create SAP Document (MIRO, FB60) Imaging Okay Post Invoice in SAP Exception Invoice Exception Workflow SUSPENDED Invoice PARKED Invoice BLOCKED Invoice

16. Removing A/P from Manual Problem Invoice Resolution / Follow-up Defined BLOCKED Invoices Sufficient information IS available to post invoice Invoice is posted SAP Blocks invoice automatically based on pre- configured tolerance (‘R’ block) Scenarios Price Variance Quantity Variance P.O. Exceeds Partial Receipt No G/R Date Variance Price-Quantity Variance

17. POG/RInv. Q P 4 4 2 $2,000 - Blocked Invoice Blocked Invoice Scenario

18. A/P Exception Handler Buyer Receiver A/P Processor Example Blocked Invoice Process Flow

19. See the demonstration during the ASUG presentation, or contact sahuja@optura.net to receive a copy of the files containing the demonstration via e-mail. Thanks.sahuja@optura.net Best Practice Workflow Demonstration

20. 1.No nuisance workflow is started if vendor sends invoice early 2.Dashboards allow for a quick, accurate decision Provide snapshot of problem SAP Documents + Invoice Image readily accessible Available options are based on the user’s role Actions are performed on behalf of user Comments can be entered History log of this workflow is accessible 3.Allow for ad-hoc capabilities within a structured process. 4.Background simulation of 3-way match Ensures corrective actions have taken place Workflow Best Practices

21. 5.Unit of work: Line item to header-level consolidation Header-level dashboard for A/P 6.Clean up inbox automatically Correcting PO, GR, or Invoice from outside workflow automatically clears inbox items 7.Controlled override of next “agent” 8.Parking Reasons: Flexible routing by parking reason e.g. Non-PO Invoice Approvals Auto-park invoices for approval Auto-post in background or route to A/P for QA Auto detect posting period change Controlled routing of errors such as blocked vendor Workflow Best Practices

22. Removing A/P from Manual Problem Invoice Resolution / Follow-up Create SAP Document (MIRO, FB60) Imaging Okay Post Invoice in SAP Exception Invoice Exception Workflow SUSPENDED Invoice PARKED Invoice BLOCKED Invoice

23. Removing A/P from Manual Problem Invoice Resolution / Follow-up Defined PARKED Invoices Scenarios Sufficient information is NOT available to post invoice Invoice is manually or automatically Parked “Parking Reason” is selected Non-PO Invoice Approval Required Service Approval Required Unable to Match PO Lines PO is Closed or Not Released Freight Charge Analysis Special Tax Treatment (Wrong tax code from PO) Unit of Measure mismatch Invoice and P.O. currency are different Invoice and P.O. vendor name or # are different Vendor Master Maintenance Request more information from Vendor

24. Parked Invoice Parked Invoice Scenario “Unable to Match PO Lines” Example: PO contains only one line-item for $2000 Invoice arrives with one line-item for $2000, but also a second line item for $1500.

25. Example Parked Invoice Process Flow A/P Exception Handler External Vendor Buyer A/P Processor

26. See the demonstration during the ASUG presentation, or contact sahuja@optura.net to receive a copy of the files containing the demonstration via e-mail. Thanks.sahuja@optura.net Best Practice Workflow Demonstration

27. 1.Keep the A/P Processors’ Inbox clean – touch each invoice only once 2.Parking Reasons: Flexible routing by parking reason 3.e.g. Non-PO Invoice Approvals Have vendor specify routing info Auto-park invoices for approval Allow for separate coding (account assignment) step Allow for ad-hoc approval routing Allow for parallel approvals by multiple cost centers Auto-post in background or route to A/P for QA Auto detect posting period change Controlled routing of errors such as blocked vendor Workflow Best Practices

28. Removing A/P from Manual Problem Invoice Resolution / Follow-up Create SAP Document (MIRO, FB60) Imaging Okay Post Invoice in SAP Exception Invoice Exception Workflow SUSPENDED Invoice PARKED Invoice BLOCKED Invoice

29. Removing A/P from Manual Problem Invoice Resolution / Follow-up Defined SUSPENDED Invoices Scenarios Unable to even park an invoice No SAP document is created “Suspension Reason” is selected Image is routed for resolution New Vendor Master Required Service Entry Required Rescan Required Contact Vendor Unable to Match PO Lines Currency Mismatch Special Tax Treatment Required Freight Mismatch Unit of Measure mismatch Vendor Master Maintenance Required

30. See the demonstration during the ASUG presentation, or contact sahuja@optura.net to receive a copy of the files containing the demonstration via e-mail. Thanks.sahuja@optura.net Best Practice Workflow Demonstration

31. Best Practices: Centralizing Invoice Receipt Removing A/P from Manual Invoice Resolution / Follow-up Analyzing Process Data for Continuous Efficiency Gains Developing the Business Case for a Project Pilgrims Pride Case Study Agenda

32. Analyzing Process Data for Continuous Efficiency Gains Analyze Process Data for Continuous Efficiency Gains Analyze Process Data for Continuous Efficiency Gains Eliminate Bottlenecks Benefits Identify common exception reasons, and problem vendors Analyze process cycle time to identify process bottlenecks. Which regions / roles / individuals take the longest time to process? Share metrics with internal stakeholders and perform root cause analysis Analyze trends over time – problem occurrences and the $ value of those occurrences. Use Online Audit Trail Use actual workflow data from SAP

33. See the demonstration during the ASUG presentation, or contact sahuja@optura.net to receive a copy of the files containing the demonstration via e-mail. Thanks.sahuja@optura.net Best Practice Workflow Reporting Demonstration

34. Best Practices: Centralizing Invoice Receipt Removing A/P from Manual Invoice Resolution / Follow-up Analyzing Process Data for Continuous Efficiency Gains Developing the Business Case for a Project Pilgrims Pride Case Study Agenda

35. Developing the Business Case for a Project Hard Savings 1.Reduce/redeploy A/P resources 2.Reduce duplicate payment 3.Reduce Late payments 4.Capture more early payment discounts Soft Savings 1.Improved productivity for Buyers, Requisitioners, Receivers… 2.Visibility to total liabilities 3.Improved customer service 4.A/P focuses on more knowledge work rather than chasing problems 5.Online audit-trail 6.Eliminate paper e-mail sahuja@optura.net for ROI spreadsheetsahuja@optura.net

36. Best Practices: Centralizing Invoice Receipt Removing A/P from Manual Invoice Resolution / Follow-up Analyzing Process Data for Continuous Efficiency Gains Developing the Business Case for a Project Pilgrims Pride Case Study Agenda

37. PILGRIMS PRIDE Case Study Click on the presentation above

38. Sam Ahuja Chief Solutions Architect OPTURA sahuja@optura.net (480) 488-3040 x203 Best Practice Workflow Between Procurement and A/P Session Code: 4707 Chris Callahan, Procurement Sys Mgr Tim Thomas, VP Purchasing Jim Tunnell, CIO PILGRIMS PRIDE ccalahan@pilgrimspride.com (972) 290-2651