Putting Strategy Into Action Joe Taylor, Director of Solutions, PROACTIS
Transformation, Spend Control & eProcurement – Putting Strategy into Action
May 15, 2015
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
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
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Transcript
Putting Strategy Into Action
Joe Taylor, Director of Solutions, PROACTIS
This session:About PROACTISSpend Control and eProcurementProcesses involvedHow to derive benefitSummary
Agenda
100% focused on Spend Control & eProcurement:UK market leader350+ clients:
Across all business sectors2,000,000+ PROACTIS users in 70+ countries
Global presence:Direct - UK and USPartners - UK, US, the Netherlands, France, Belgium, Norway, Germany, Spain, Portugal, Australia, South Africa and the MiddleEast
PROACTIS in Brief
Organisations we have helped
Commercial PublicNot for Profit
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
About PROACTIS
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’
Current Climate
Top line objectives/challenge:Public sector -> do the same with lessCommercial sector -> protect margins
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 efficiencyAwareness is growing > Market is growing
Spend Control and eProcurement?
Metric Bottom Performers
Top Performers
Overall invoice cycle time?
What proportion of spend is “under management”?
What savings from Sourcing activities?
What level of Contract compliance?
What is the Procurement ROI?
32.9 days
0-30%
5%
35%
100-300%
2.9 days
70%+
17%+
76%
700%
How can this topic help?
Current Procurement ‘market’ intelligence:
Areas to attack:Source well, to secure savings and qualityPush 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 relationshipsAutomate Accounts PayableRemove paper
How can this topic help?
Cash + Efficiency
Savings!
Spend Control and eProcurement:Purchase to Pay (P2P)
PurchasingAP Automation
Sourcing and Tendering
Processes involved
ExternalExternal
InternalInternal
Purchase to Pay
ExternalExternalSuppliersSuppliers
InternalInternal
Purchase to PayUser Approvers Finance
Finance LedgersFinance Ledgers
Match?
Example situation: Commercial Sector21% of spend without PO’s75% of invoices sent out for troubleshootingAccrual reporting – 8+ man days a month5,000+ new suppliers per annum
Purchasing
Opportunity:Single system for all purchasing activitiesPolicy compliance, transparencyManagement of budgets, commitmentsAccounting for spend automaticallyHigh invoice match rates = low interventionPurchase cards for low value spend
How are new suppliers brought on? Data?
Purchasing
Cash + Efficiency
Savings!
ExternalExternalSuppliersSuppliers
InternalInternal
Purchase to PayUser Approvers
Finance LedgersFinance Ledgers
Match?
Transactions:•Orders
•Invoices
Order output techniquesOrder output techniques Invoice receipt techniquesInvoice receipt techniques
Finance
Supplier Data:•Supplier details
•Catalogues
Supplier Enquiries:•Orders
•Payments
•Status
New opportunities?:•PQQ, ITT, RFQ, RFP, RFI, RFx
•Tenders
•eAuctions
Sourcing & Data
Sourcing & Data
Enquiries
Enquiries
Sourcing and Tendering
What are we talking about?You have identified a needHow do you go about securing a new line of supply?
Source a list of potential supply and evaluate to award
What are we talking about?You have identified a needHow do you go about securing a new line of supply?
Source a list of potential supply and evaluate to award
Sourcing and Tendering
What are we talking about?You have identified a needHow do you go about securing a new line of supply?
Source a list of potential supply and evaluate to award
Sourcing and Tendering
Challenges:
Meet the requirement
Get the best deal
Ensure a transparent process
Reduce administration effort
Mitigate away risk
Survive scrutiny
Example situation: Local AuthoritySituation
Manual sourcing process, 10% coverage8% of suppliers under contract9% savings from sourcing activities
Aspiration:Better, compliant and transparent evaluationsFind and use the best deals
Sourcing
Opportunity:Increase number of sourcing activities – same staff levelsAdopt standard online processes:
Submit responsesEvaluate sourcing eventsTimeline, event monitoring
Clear visibility & ownership
But…once in place, will they be used?
Sourcing
Cash + Efficiency
Savings!
Aspirations and initial impetus:Streamline and ensure transparency in sourcing and tendering activitiesGet control and transparency of contractsDrive staff to ‘best value’ agreements to the organisationImpose the rule bookAutomate where no process existsAutomate Accounts Payable
Typical Projects
Example situation: Commercial Sector15 heads in Accounts Payable5,500 invoices per FTE, per annum = 25 per dayExceptions cycle time: 11 daysAverage days to pay increasing: 29-33Payment past due date: 17%Only 20% of available settlement discounts taken
Invoicing
Opportunity:Cut paperAutomate routing & approvalsElectronic payments
Self Service Supplier enquiries?
Invoicing
Cash + Efficiency
Savings!
Procurement Review & Spend Analysis:Historic spend is analysed, e.g.:
By categoryTop/strategic suppliersAverage invoice value by category, etc...
Identify benefits and propose strategy, e.g.:Contract / category target savingsConsolidation SavingsMove low value orders to Purchasing CardsIdentify key supplier risksWhich trading techniques remove cost?Specific benefits and project phasing
How to Determine the Benefits?
Cash + Efficiency
Savings!
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
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
jobEliminate error, make it easy:
• Drive staff to pre-negotiated contracts• Automate so staff find what they need, best prices,
lowest risk• Ensure compliance
Practical things to do
PROACTIS Spend Control & eProcurement:Better deals
More spend can be sourced
Electronic trading:Cash savings
Fulfilment, mail, storage etc.Settlement discounts
Process efficiencySlicker process + less distraction = less staff
Single solution, simple adoption
Summary
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