Orange County Convention Center Orlando, Florida | June 3-5, 2014
Problem Solving AP Automation for
“No Touch” Processing
Marie Bourns
Bourns, Inc.
Problem Solving through:
1.
Maximizing Standard Features for Common
Issues
2.
Customizing your Solution for Unique Issues
3.
Continuous Improvement: Testing, Monitoring,
and Training to Reach the Next Level
Limited resources do not have to limit your results!
Bourns, Inc.
Manufacturer of electronic components
Markets served: Automotive, Consumer, Industrial, Communications
15 worldwide locations; headquartered in Riverside, CA
9 manufacturing plants, 6 sales/R&D centers
Decentralized AP structure with processing in each plant
15 AP clerks worldwide/≈100,000 invoices per year
80%PO/20%Non-PO
AP Automation Strategy
Year 1: Implement an SAP add-on solution for only U.S. & Mexico
locations as a “pilot program”
Year 2: Global roll-out of the SAP add-on
Year 3: Consolidate AP into 3 “service centers”, by geosphere
Our Year 1 Goal…
Greater efficiencies, producing cost savings, through:
Process more than 60% of invoices “touchless”
Reduced AP headcount by 2/3
rdsIncrease AP capacity to bring off-site processing in-house
Create visibility of workflow and workload
Remove 100% of paper and paper files
Eliminate all “lost discounts” due to late payments
Automation is the tool, not the end-goal
Overview of our “Touchless” Workflow
Solving 9 Business Problems through:
1.
Maximizing Standard Features for Common
Issues
2.
Customizing your Solution for Unique Issues
3.
Continuous Improvement: Testing, Monitoring,
and Training to Reach the Next Level
Wrap up
Three Types of Invoices
1.
With a PO; With a GR:
Ex: material or supplies for production
2.
With a PO; Without a GR:
Ex: off-site tooling, contractual services, etc.
3.
Without a PO:
Ex: utilities, legal bills, etc.
Our Definition of “Touchless”
No AP involvement after verification of invoice data for SAP
Overview of “No Touch” Workflow, Cont.
AP verifies data in OCR
Invoice data sent into SAP Invoice received to AP email inbox Invoice read by OCR 3-way match b/w Invoice, PO, & GR
OR routed to Requisitioner for approval if non-GR PO Exceptions routed to Buyer or Receiver
SAP Workflow for 3 kinds of Invoices Auto Posts! OR routed to Approver by custom table if non-PO
Approvals for Invoices…
1.
With a PO; With a GR:
3-way match required for auto-post
Human approval not required since the PO was approved, and GR verifies we received the approved goods
2.
With a PO; Without a GR:
2-way match + approval required for auto-post
An “approval email” is sent to Requisitioner to verify receipt of goods/service
3.
Without a PO:
Coding and approval required for auto-post
A Table applies coding/splits and sends “approval email” to Approver
Escalate
Invoice Workflow for PO invoice with GR
Invoice Workflow for invoice without GR
Overview of “No Touch” Workflow, Cont.
To AP for resolving with Purchasing Inv. lines ok? Y “STATUS 5” wait 1 hr or escalate
near due date
PLANT RECEIVING GR? N 1 HR Y N POSTS Y Y Invoice routed to Requisitioner on PO, or Approver on the custom Table Approval? Y N To AP Y POSTS
Overview of “No Touch” Workflow, Cont.
0% 10% 20% 30% 40% 50% 60% 70% 1/11 2/8 3/8 4/5 5/3 5/31 6/28 7/26 8/23 9/20 10/18 11/15 12/13 1/24 2/21Our Percentage of Auto-Posts to Total Posts
1.
Human verification
might
be required for OCR…the software
can only do so much
DO NOT allow bad data (“false positives”) into the Workflow
2.
Approvals should be from whoever knows that we received
the good/service… Receiving, Requisitioner, or Cost Center
Manager (delegation of authority is built into the process)
What not to do: Our receiving used to do a “GR” on blanket orders, or for service POs. They had no idea what they were “receiving”
3.
Keep the approval method simple (with no training needed)
and time-bound (with reminders and escalations)
Proof that it works: we used to lose up to $7,000/mo. of early-payment discounts due to lost invoices or late approvals… in March we lost $2!
Overview of our “Touchless” Workflow
Solving 9 Business Problems through:
1.
Maximizing Standard Features for Common
Issues
2.
Customizing your Solution for Unique Issues
3.
Continuous Improvement: Testing, Monitoring,
and Training to Reach the Next Level
Wrap up
Business problem 1: Invoice Lines
Verifying/entering invoice lines at OCR is labor intensive! Some of our invoices had 100+ line items
3-way match using invoice lines created many exceptions! System makes a match based on p/n, price, qty/UOM
Process solution:
For invoices that provide a Delivery Note#, eliminate the
invoice lines and…
1. Use the Delivery Note# as the “link” to the GR
2. Build lines on the invoice record using the GR lines
Called “GR based IV” (standard SAP feature)
100% of PO vendors for Mexican and Costa Rican plants are GR based IV
Gains in efficiency and accuracy!
Requirements:
Several months before “go-live”, identify “GR based IV”
suppliers, mark SAP vendor masters, and flush out old PO’s
Add to PO terms & conditions and “new supplier form” that a Delivery Note Number is required on invoice
Best Practices:
To eliminate exceptions, Verify and Receiving both adopt 3
rules for entering Delivery Note Numbers:
No Spaces, No special characters, No leading zeros
Must be a PERFECT match!
OCR’s Problem with Invoice Lines, Cont.
Ex: one DN# could be entered many ways… 00123-456, 00123456, 123-456, 00123 456, 123456
Business problem 2: Manual Routing & Coding
Internal payment requests are submitted/routed/entered
manually, and not on a standard template
Ex: rep commission payments, café catering services, royalties
Process solution:
Create a single request form in Excel that OCR reads like an
invoice
Employees email the requests to the standard AP inbox
Maintain vendors, coding, and approvers on custom table so
payment requests route and auto-post
No AP, no paper, no late payments!
Best Practices:
Built in DOA
If coding must be determined by Approver, case by case, leave it blank on the table so Approvers code each invoice
Requirements:
If the coding changes for a vendor:
Create a column on the table with unique identifiers for each set of coding. That identifier goes on the payment request, and into workflow
Or split invoices into different cost centers/GL accounts by percentages
Business problem 3: Inaccurate Freight Accounting
Non-PO freight expenses went into one bucket, and wereallocated to business units based on revenue% (not weight or volume). Some business units benefited, while others suffered
Process solution:
New cost centers created for inbound/outbound freight by
business unit
Coding done by each plant for their own freight invoices
Invoices for carriers used by single plant→ routed to that plant’s logistic person for coding
Invoices for carriers used by mulple plants → routed to central person who
forwards to the right plant for coding
No more complaints of unfair allocations!
Business problem 4: Lost Discounts
Early payment discounts were lost while waiting on the GR Ex: Receiving had no visibility of what was for discount or coming
due, and could not prioritize their receiving
Process solution:
Create a group SAP log-on for each Receiving team’s “missing
GR” queue
Create default layout variant that displays the “missing GR”
records in order of urgency to prioritize their receiving
Best Practice: Restrict permissions to only that one
transaction. All GR’s must still be entered in personal log-on
No lost discounts due to delayed GR!
Overview of our “Touchless” Workflow
Solving 9 Business Problems through:
1.
Maximizing Standard Features for Common
Issues
2.
Customizing your Solution for Unique Issues
3.
Continuous Improvement: Testing, Monitoring,
and Training to Reach the Next Level
Wrap up
Business problem 5: No Check for GR after Approvals
“GR-based-IV” records that can’t find a GR have no lines (sinceInvoice lines come from the GR) and stop at AP
Standard logic: Workflow sent “Missing GR” records without lines
to AP. AP built lines manually and sent record to Receiving to resolve “Missing GR” issue
Custom Fix:
“Check for GR” and populate lines after Receiving’s approval
New logic: Workflow sends “Missing GR” records without lines to
Receiving. Receiving does GR and approves record. New logic to “check for GR” after approval allows lines to populate. The record auto-posts
Auto-Check for GR after Approvals
Business problem 6: Out of Balance
“GR-based-IV” records that include priceadders (such as precious metal charges), or rounding, would be “Out of Balance”
Standard logic: Routed to AP to fix
Custom Fix:
Auto-fix for “Out of Balance”
AP Action List “exceptions” Count
Balance not zero 74
Non-PO 14
PO Invoice Line Mismatch 13 Resubmit - Waiting for GR 10 AEI: Matching failed 9 Missing GR (escalations) 6 AEI: missing GR for a GRIV Lin 4 PO Misc Issues 4 Requisitioner Approval Required 2 Additional Approver Required >$ 2 Missing goods receipt posted 2 Utility Approval Required 1
Grand Total 141
New logic: Distribute the difference over lines, using a weighted
scale, if under our SAP tolerances. Anything over the tolerance goes to AP for evaluation
Auto-fix for “Out of Balance”, Cont.
Requirements:
Must click “Estimated Pricing” flag on each PO line with
price adders
Best Practices:
Tolerance level chosen by Corporate Controller or CFO
Buyers must set price at the best estimate of invoiced price,
including the adder
Buyers must create PO’s with ONLY estimated pricing lines,
to prevent distributing the balance over a fixed-price item
Overview of our “Touchless” Workflow
Solving 9 Business Problems through:
1.
Maximizing Standard Features for Common
Issues
2.
Customizing your Solution for Unique Issues
3.
Continuous Improvement: Testing, Monitoring,
and Training to Reach the Next Level
Wrap up
Business problem 7: Testing Challenges
Testing for implementation, and for new transports took too
many people and too much time!
Original method: For every test, find a real-world PO in QAS with
the specific variable, and that has GR but no IR. Find matching paper invoice in files. Scan into OCR, and observe results in SAP.
1 test = 4+ hours (with 3-4 people involved)
Process solution:
New method: Create large, one-time POs in QAS for each variable.
Create invoice from Excel template. For each test, do GRs for small releases against each main PO, and observe results in QAS.
30 standard tests = 3 hours (with only 1 person)
Testing
Testing, Cont.
Requirements:
Create and maintain a list of
standard tests that must be preformed before every new update or bug fix
Update it to include new custom changes you make to ensure they do not get overwritten with
subsequent changes
Best Practice:
Code each test invoice to match the corresponding test on your
list for tracking/auditing purposes
Business problem 8: Plateaus
Our auto-post numbers leveled off prior to
reaching our goal
What wasn’t measured, wasn’t done
Solution:
Track AP’s “Action List” weekly to 1) identify
“low hanging fruit” and obvious
problems/bugs, and 2) monetize/prioritize the issues so you spend resources where it counts!
Monitoring
AP Action List “exceptions” Count
BAPI: Balance not zero 44
Missing GR (61, 62, 64's) 15
AEI: Matching failed - multiple lines 14
PO Invoice Line Mismatch 11
Non-PO 11
Accrue Tax 8
Requisitioner Approval Required 8
Resubmit - Need to Investigate 4
Auto-Post Failed 3
Below tolerance, balance distributed 3
No PO 3
Damaged / returned-Shipment 2
2-way PO Invoice - Coding 2
Resubmit - Out on Break 1
AEI: missing GR for a GRIV Lin 1
Invoice UOM <> PO UOM 1
Resubmit - Waiting for GR 1
PO Misc Issues 1
PO Quantity Variance 1
Grand Total 134
Provide all Purchasing, Receiving, and AP weekly measurables to
encourage teamwork and momentum in reaching goals
Receiving cares about lost discounts! Purchasing cares
Business problem 9: Reverting to Old Ways
AP clerks were not letting the system do the work for them
Solution:
Train AP to use “fresh eyes” and view their Action List as
exceptions, not standard work!
Regularly review their Action List with them and ask “why could this not auto-post? How can we fix that?”
AP must discover the opportunities and problems themselves
Let them be creative, self-sufficient, and driven
Tracking the human errors caused by Purchasing, Receiving, or AP will show you where more training or reminders are needed
