In my last post, I talked about how winning hearts and minds on the plant floor was critical to the success of a procurement project I led for a global manufacturer. It was a big project and the first of my career. When I think about some of the people I admire in procurement - people who have been implementing for 20 or 30 years like Patrick Hopkins at Coca-Cola Bottling - I don’t feel like I can claim to be an expert based on one successful project.
What I can take credit for knowing it was critical to respect the manufacturing culture, visit the plants personally and get to know the people. But I have to be humble. The other key element of my success was the solution: Coupa.
I’d seen enough of failed projects to know I couldn’t just sit in corporate and mandate change. But no matter how many plants you visit and people you meet and how much change management you do, your initiative will fail if you don’t have the right tool. Coupa made it easy for someone with my then level of expertise to be successful.
The ‘spoonful of sugar’
Key goals for the project were to reduce the number of suppliers and rein in maverick spend. This would mean big change for people who had been buyingbased on long-standing relationships and were used to self-approval limits of $5,000. Coupa’s functionality was the spoonful of sugar that helped these changes go down.
Streamlined approvals are a good example. With the previous system, people had to log in to a VPN, connect to the network, and find the right transaction code to get to the screen where they could do their approval. That really was slowing people down, and speed is everything in manufacturing. I remember being at a plant where the guy who did approvals was on vacation, and they had to approve something and they to call a different plant to figure out how to do it. It wasn’t intuitive at all
By comparison, Coupa makes the approval process almost unnoticeable. You can click ‘approve’ in your email, even on your mobile phone, without logging into anything. Even though we aggressively added approvals, the process around them was so much easier that they actually started to happen.
Coupa is configurable, so you can change approval rules quickly. Obviously that’s not something you want everyone doing or to do all the time. But, when one plant exceeded their tools budget for the month, we were able to re-configure the approval for that month without calling IT. The plant got what they needed to keep the line running, fast and within the procurement process.
Getting people paid
Another thing Coupa helped with was getting people paid quickly, which is critical in manufacturing. Fast invoice turnaround is part of keeping the lines moving.
There are some commodities such as lumber and transportation that need to be paid ‘cash on the barrel,' or with payment terms much shorter than average. It's physically impossible to pay a paper invoice 'on the barrel,' as paper tends to get lost and stuck in in the system so it was a real challenge to pay within terms. Delays in payment would cause an issue with the supplier, such as discounts being revoked.
We implemented all of our PO invoicing through the Coupa Supplier Network or cXML. Through the network, suppliers could see what they needed to do to get paid. They could see payment terms and requirements. They could submit their invoice and have it match automatically and not need approvals because it was already on a PO. This was important not just for lumber and transportation but also for all the mom and pop shops that provide specialty items that keep the line running and depend on timely payment.
Of course Coupa didn’t reduce payment terms, but it allowed for a faster, more flexible process. That helped plants improve supplier relationships, treating them more as a partner rather than someone they had to beat up for terms.
Fast payment is important on the capital expenditures side too. Capital projects require progress payments, and vendors usually won’t start the project, or progress to the next phase, until they get paid.
Coupa also let the company partner with suppliers in some really cool ways. We had one parts supplier that typically did a monthly PO for $4,000, hoping it was right because they had no actual visibility into our supplies.
In Coupa, we were now able to get a lot more detail and accuracy for vendor-managed inventory on POs through their punchout. Now that same vendor could come into the plant, go through all the drawers, and push the buyer a shopping cart of 100 line items with the right quantities of each one..
In the manufacturing environment, it all boils down to having a procurement tool that’s fast, flexible and reliable. If you’re in corporate and someone doesn't get paid for a week or waits a week for an approval, they might not be happy about it, but they’ll probably get along. In a plant if you don't get something done for a week it means that things could be breaking, people’s safety could be at risk and the impact will be felt on the bottom line.
With just a handful of years on the job, I can’t claim to have figured out all the secrets to implementing a procurement system in manufacturing. I’m far from being an expert; what success I've had clearly isn’t due to my long experience. But that’s the exactly the point. Coupa made that kind of experience unnecessary. Coupa was a multiplier for the experience I did have, making it easy for me to be successful and appear a whole lot smarter.
Jon Goss is a solutions consultant for Coupa North America. He was previously a project manager in corporate procurement at Armstrong World Industries.
For any procurement initiative to win hearts and mindson the manufacturing floor, you have to have a deep understanding of the two most important priorities in a plant. The first is safety. The second is keeping the line running. You have to respect that, and approach your initiative accordingly, as I learned in my first job out of college, which was rolling out Coupa at a global manufacturer.
How important is safety in manufacturing? At the company where I worked, even in corporate settings the COO would start every meeting by pointing out the fire exits and potential hazards in the room, such as laptop cords running across the floor. Safety is that big a part of the culture, because if you don’t honor it at the highest levels of the company, you can’t expect people to honor it on the factory floor. And in manufacturing, that can translate to real-life injuries.
If someone doesn't have the safety equipment to do their job then, they're not supposed to do it. But because the second rule, “Keep the line running” is so ingrained it can be hard to strike the right balance. It might be tempting to, say, work the line without the right gloves. Procurement’s main job is to make sure factory workers always have what they need, so they never have to make choice like that.
Similarly, when undertaking a new procurementinitiative, you want to make sure they never have to choose between their twin priorities and supporting your initiative or you will not be successful. It’s not as though people will go out of their way to avoid corporate policy, but they also won’t go out of their way to adopt a new tool they didn’t ask for and that gets in the way of speed or efficiency.
Boots on the ground
To really win hearts and minds, you have to understand the culture, and then you have to get out and talk to people. Change is not something you can just peanut butter-spread out over your organization from your corporate office. It’s the hardest thing in the world to get someone to change something they’ve been doing for years, and there may be really good reasons why it’s done a certain way.
You have to hit the road and walk as many factory floors as you possibly can. Every individual plant is a different entity and the more you can learn about each one, the greater your chances of success. And you can’t just walk in from corporate and start telling people what to do. Come in with an open mind. Explain why you think your project is valuable. Ask people to work with you and give you their feedback. Be prepared to really listen.
What you learn will improve the project. For example, at one plant I worked with, the main buyer that does all of the purchasing is also the direct transportation manager for all of the trucks coming in. He has no time to support any extra processes so the only thing you can give him is something that makes his job easier and takes next to no effort to come up to speed on. If I stayed up in corporate, I might not have known he did that extra job. I’d just be looking at my data wondering why he wasn’t following the program.
Balance corporate and plant priorities
Look to balance the needs of the company with plant priorities. For example, we had preferred suppliers for maintenance, repair and operations (MRO). There are a lot of competitors in MRO, and every plant had their favorite so we were doing business with a couple dozen vendors. To get preferred pricing on a national agreement, we had to pick just a few, and of course, some plants weren’t happy with that.
We needed a way to promote buying on contract while still giving buyers the ability to purchase from other suppliers if they needed to for safety or to keep the line running. So, we did punchouts with our preferred suppliers and gave users access to buy from non-preferreds through a free form.
The free forms needed to go through a slightly longer approval process and as a result a lot of people stopped buying from non-preferreds. When you're at a point where everybody is doing two or three jobs, it really is faster and easier to buy in one place if you can, but they still had access if there was something they had to have that they just couldn’t get from a preferred supplier.
You also have to be flexible. For the project I worked on, there were a lot of locations that did 100% spot buys, with no automatic generation of purchase orders, and no automatic reordering.
We needed to approach those plants differently. For those that were doing a lot of spot buying, we moved them onto the new system to make buying easier. For ERP users, we took the purchase order that's already automatically flipped and pushed it into the new system so that we could do invoicing all in the same place. Both types of orders end up in the same place, without forcing everybody to use the same system.
You have to have a great tool that supports all of this, of course. But even with the best tool, if I had just walked in and said, “Use this tool,” it would have been much more difficult. I had an agenda and mandates from my leadership, but a pull approach rather than a push approach was a better way to get there.
It’s critical to visit the plants and get to know the local people and understand their challenges. Keep asking for their perspective until they figure out you’re not just a suit; you really do want to know what they think and you really are going to take their feedback into account as much as possible. Connect and win hearts and minds and first and everyone will win in the end.
Jon Goss is a solutions consultant for Coupa North America. He was previously a procurement project manager at Armstrong World Industries, responsible for rolling out Coupa globally.
Most small to medium-sized enterprises concluded a long time ago that financial process automation wouldn’t work for them. That's no longer true.
Large enterprises with deep pockets started down the road to P2P automation a long time ago, and have benefited from automating at least some parts, if not all of the process. For them, it made sense to invest in e-invoicing and workflow technologies that could cut these processes to size.
For companies under $250 million inrevenues though, the large capital outlays required, coupled with the prospect of long and expensive implementations and the difficulty of system transitions meant the adoption of such systems was a daunting prospect and unlikely to lead to a big return on investment. So, they've sat on the sidelines, laboring under manual processes with little of the visibility that could enable them to be more strategic.
That’s changed, says a new report from PayStream Advisors, underwritten in part by Coupa. The new generation of cloud solutions are bringing P2P automation within reach of smaller enterprises.
It’s time to for SMEs to rethink the cost-benefit equation, says PayStream. While long-held concerns about affordability, scalability and time to implement may have been valid in the past, cloud software subscription models are lowering barriers to entry and making integration with ERP and other systems easy and fast.
Because these solutions are hosted, there’s no need for on-premise IT involvement - services are web-based and can be accessed from any device with internet connectivity, including mobile devices. Plus, software as a service developers are increasingly conscious of user experience, so systems are designed with ease of use in mind and can be picked up quickly. With these cost and implementation hurdles lowered, many of the same benefits of automation enjoyed by larger enterprises are now within reach of smaller ones. And they're worth reaching for.
It’s not even necessary to automate the whole process in one fell swoop; even partial automation can yield a positive return on investment, moving you along the road to future automation and perhaps even helping fund it. The important thing is to evaluate your business needs and pick a place to get started. PayStream offers these steps toward P2P automation maturity:
Front-End Document and Data Capture –Invoices are scanned upon receipt, and data is extracted. Validation rules established at the beginning of the process ensure that the data extracted is accurate, with more advanced systems putting the responsibility of exception and discrepancy correction back onto suppliers. This is a massive advance over back-end imaging and a vital step in the process of centralization and integration of processes.
Front-End Capture with Matching and Workflow – In a more advanced form, invoice automation solutions combine front-end document and data capture with matching and workflow capabilities to for invoice receipt and approval processing. These solutions automate more of the invoice receipt-to-pay cycle than stand-alone document and data capture solutions, and they enable AP departments to define how different types of invoices are processed and routed. Many of these solutions are mobile, with approvers are typically notified via email when invoices require their approval, and some software even allows for direct invoice approval from the emails.
Combining Electronic Invoicing with Imaging and Workflow – The most sophisticated invoice automation solutions combine front-end document imaging and data capture with e-invoicing and automated workflow. This lets organizations process all invoices—whether they are submitted in paper or electronic format—through a single, common method. In this scenario, suppliers are transitioned from paper to electronic invoice submission, usually through a stand-alone portal or a shared supplier network. Most solutions offer suppliers multiple options for submitting electronic invoices, such as direct integration with ERP and billing applications, flipping purchase orders into invoices, and web forms and templates that can be used to generate electronic invoices.
T&E Management – Organizations of all sizes can benefit from automating their travel and expense (T&E) processes. Automation provides complete end-to-end control of report submission, approval, reimbursement, reporting with data analysis, and integration into back end accounting systems. Having this integration provides more visibility into spend, with accurate accounting and detailed reporting for every transaction and expense category.
E-procurement – Electronic procurement solutions let organizations connect to vendor catalogs, generate requisitions, use workflow tools for approval processing, and deliver purchase orders to suppliers electronically, making paperless environments possible. Proactive technology adopters have learned that in many cases automation diminishes procure-to-pay cycle time from weeks to days, delivering a rapid return on investment. Adopters can not only achieve productivity gains and cost reductions, but also obtain traceable Sarbanes-Oxley audit trails.
SMEs are feeling the most pain - and losing the most revenue - due to the manual routing of invoices, so e-invoicing can be a great place to dip your corporate toes in the water for P2P transformation. Or, maybe e-procurement is the right place to start. Every organization will have different needs and resources; the point is, there are a wide variety of new solutions to choose from. The important thing is to pick a place and get started.
To learn more, get the full report, Automating P2P for Small to Medium Enterprises:
We’re feeling rather bold this week, with advice on how to do everything better. The brains at McKinsey have the C-suite covered, with advice for CEOs, CFOs and CIOs. For CIOs and IT pros in banking, we’ve got a little extra advice on services procurement just for you. We’d be remiss to leave out CPOs and procurement types; Tania Seary weighs in on how to be a great procurement boss.
Three ways CEOs can improve the supply chain - McKinsey
What can your supply chain do for you? Too many companies maintain a rudimentary supply chain, perhaps because they don’t realize the strategic advantage that a nimble, adaptable supply chain can confer. McKinsey’s Glatzer, Niemeyer and Rohren provide examples to help us visualize what a more strategic supply chain could look like, and tips on using the supply chain to maximum effect.
The CFO’s role in the pursuit of growth - McKinsey
CFOs need to step up their game when it comes to driving growth, according to a recent McKinsey survey. CFOs and non-CFOs alike identified finding new sources of growth as the most pressing of six growth-related challenges. Notably absent: strategic cost-cutting and process improvement, which while less sexy, does grow the bottom line.
McKinsey’s latest survey on business technology finds CIOs have little influence in shaping corporate strategy and confidence in IT’s ability to support growth and other business goals is waning. This is perhaps not surprising. The role of IT is in flux as many traditional IT tasks shift to off-premise cloud providers, leaving many wondering what their role should be. There's a crying for data management and analytic talent, says the report, so IT needs to sit up, take notice and get to work reinventing itself. And, it needs a seat at the table so it can understand and apply its capabilities to the evolving business context and regain strategic importance.
Five top tips: How to be a great procurement boss - Supply Management
With procurement talent in short supply, competition for proven professionals is fierce. Assuming you've got good people, it’s a lot easier to keep the talent you have than find new talent. The best way to retain talent is to be a great boss - a rare gift in itself. Tania Seary, founder of three procurement related businesses, shows how to be the kind of boss people love to work for and will keep working for.
Banking Procurement: It's Time To Think About Value - Procurement Leaders
Banks aren't known for being technological innovators, yet as bricks and mortar banking fades away, that's exactly what they must become - by providing a user friendly, customer centric, always-on mobile presence. The most successful banks in terms of leveraging mobile media outsource this function to a third party. As their less successful counterparts catch up, they’ll need to become savvier in the procurement of these services in order to retain their edge says Harry John, industry intelligence manager at Procurement Leaders.
If you’ve ever been part of implementing a new enterprise software system, you know how much work goes on prior to the purchase, identifying requirements, making a business case and determining what the return on investment is likely to be. Once the purchase is made, the real work of achieving the projected ROI begins.
Getting widespread user adoption – as close to 100% as possible -- is critical to meeting your projection. Even with the best software, there’s bound to be pushback from people accustomed to doing things the old way. Change is difficult; it’s natural and human to prefer doing things the way they’ve always done it - even if it’s slow and inefficient. Here are 11 field-tested strategies for getting widespread user adoption, and maybe even winning raving fans.
Not all of these steps are necessary for every project, and some may or may not be suited to your situation or company culture. Nor is this list exhaustive; you may need to get creative in finding solutions for unique challenges you’re facing. The important thing to remember is that once the system is purchased, adoption is job one, and 100% adoption isn’t going to happen on its own. Don’t leave it to chance. Be proactive and use these best practices as a starting point. If you come up with any great ideas that work, tell us about them. We’d love to add them to this list.
Kevin Turner is vice president, customer success at Coupa. He was previously director of eCommerce integrations for Dell.
It’s estimated that U.S. companies will spend $186 billion on travel and expenses in 2015, accounting for 10-12% of total budget and making it the biggest cost after payroll. Where is the money going? About 22% to meals, with the rest about equally spread out across flights, hotels, gas and miscellaneous items.
Perhaps a better question: Are all expense claims legitimate? With 59% of people surveyed reporting T&E policy violations on one in five expense submissions and 66% reporting having made risky expense claims, it’s clearly that the need for digital expense management goes beyond financial issues.
It’s time to fix T&E, and the first step is diagnosing the issues. We’ve compiled this handy infographic to help.
Master data management is critical to the success of any purchase-to-pay (P2P) or spend analytics initiative, since enhancing master data leads to the ability to make better decisions and drive sourcing and compliance benefits. While it is not often considered a fun and rewarding project like a P2P implementation, and thus often an overlooked piece of the puzzle, many of the benefits ascribed to P2P and spend analytics are the result of rigorous and proactive master data management. The quality of the input determines the quality of the results. It’s the classic “garbage in, garbage out” scenario.
There are typically two key master data components that serve as input into the P2P processes: vendor master data and item master data.
For vendor master data, “garbage in” is when you have missing or wrong data elements, such as payment terms, contact information, vendor tax identification numbers and PO transmission email. This results in multiple records with mismatching information as well as outdated vendor information.
For item master data, “garbage in” is duplication and inconsistency across data elements. This usually results from the lack of a well-defined taxonomy and further exacerbated by poor governance, yielding multiple versions of the same item, many of which then have differing or incomplete information.
The taxonomy chicken and egg
My colleague, Dipan Karumsi, has written in this space before about the importance of a well-defined taxonomy. It’s a bit of a chicken and egg argument because the lack of a defined taxonomy creates a lot of dirty data, however if you’ve had a poorly-defined taxonomy all along, you cannot just take your dirty data and put it into your new and improved taxonomy. You have to first cleanse the data, and then categorize it into your new taxonomy.
One of the biggest challenges we see in our clients’ organizations is decentralized data management with no enterprise-wide governance. There may be multiple owners across business units or regions and data resides in numerous different systems. Additionally, conflicting policies lead to inconsistent processes around creation/updates of master data elements thereby complicating maintenance and increasing total cost of ownership.
Loading low quality vendor master data into your P2P system can result in a number of challenges, ranging from users selecting the wrong vendor when creating a requisition, to purchase orders being transmitted to an incorrect vendor email address, to payment delays to the vendor. Similarly, data inconsistencies in the item master make it difficult to roll out catalogs and aggregate enterprise-wide demand.
All of this is compounded in a global organization. Even something as basic as the definition of master data may vary from geography to geography. As each may treat master data differently, the processes associated with the setup and maintenance of that data may vary significantly.
First step: An as-is assessment
One of the first things we do with clients is conduct an as-is assessment to gain an understanding of their current state practices and unique requirements related to setting up, updating, and de-activating master data records.
A data quality assessment is conducted in parallel to gain insights into the consistency, completeness, and accuracy of the data. This information allows us to analyze the client organization’s maturity and decide whether a tool needs to be deployed to facilitate a data cleanse and enable master data governance. The choice is usually directly related to the size of the company and scale of the project.
If we are looking at a global implementation with a large number of records across different plants, geographies, and business units, we probably need an enabling tool. A tool-based approach also works best when there are multiple back-end systems. The tool then sits on top of all of them to standardize and control the flow of data into each one. For small to mid-tier companies where all of the data is housed in a single ERP, manual cleansing is a possibility.
Defining a target state
Regardless of whether or not a tool-enabled approach is selected, it is critical to define and implement a target state operating model that can maximize and maintain the quality of master data on an ongoing basis after the initial cleanse is completed. This entails enterprise-wide standardization with variations only to accommodate for specific language, legal, tax, and regulatory requirements across the multiple dimensions of process, governance, and organization.
Standardized data setup and maintenance processes across the enterprise help drive consistency in master data. Up front duplicate checking drives the creation and sustainment of a single, golden record based on the established taxonomy. Streamlined approval flows increase the possibility of timely sign-off from appropriate parties prior to setting up or updating a record.
Clearly defined policies and data standards along with metrics and reports to measure process performance, data quality and data usage allow for enterprise-wide governance of master data activities.
Setting up an organizational framework that includes a centralized governing body that provides strategic vision and direction as well as along with localized groups to support day-to-day master data quality needs helps establish clear ownership and stronger controls.
Taking the time to focus on master data management is critical to drive an optimal outcome from your P2P initiative. Greater accuracy and completeness of master data plays a significant role in obtaining P2P business case benefits resulting from increased spend visibility and enhanced compliance.
Yatin Anand is Director, Operations Advisory Services, at KPMG in Chicago. He focuses on business transformation across the supply chain within various industry sectors.
By now it’s a foregone conclusion that the future of computing is in the cloud. Most companies are now using cloud solutions of some kind, even if it’s only Dropbox or Google Docs. However, younger companies unburdened by legacy IT systems that have adopted all-cloud or cloud-first IT strategies are already reaping the benefits of leaner, more nimble and cost-effective operations.
It’s very hard to imagine a new company today buying on-premise software and investing in the IT infrastructure that goes with it. With the current churn rate of the S&P 500 approaching 75%, it’s clear that mature enterprises risk being eclipsed by upstarts unless they follow a path of relentless innovation and improvement. The cloud must play a strategic role, but mature enterprises need to approach it differently.
Rip and replace is not the answer
For these companies, investments in legacy on-premise solutions and the processes tied to them are too big to walk away from, so rip and replace is not a viable path to the cloud. In my previous post, I talked about how IT can assess their portfolio of solutions to identify medium risk, medium difficulty projects to start transitioning to the cloud.
Here we are in February, and the predictions for 2015 keep on coming. We just couldn’t resist these last two on expense management and the trend away from traditional ERP systems, two themes that are near and dear to our cloud-y little heart. After this we’re done – promise.
On to ideas for setting the wheels in motion to make some of these predictions come true: More supplier innovation, and building the role of CPO into a more strategic one, for starters.
All the hype of recent years around cloud, cloud, cloud has made everyone aware of the new concept of delivering software as a service. We are now at a once-in-a-generation inflection point where companies have realized that to remain competitive, sooner or later they will need to leave on premise infrastructure behind and shift a lot of IT to the cloud. Yet many remain daunted by the prospect and unsure of where to start.
We have been here before. As microcomputers became cheaper and more powerful throughout the ‘80s and ‘90s, the client-server architecture of the ‘60s and ‘70s gave way to fat clients – high functioning computers with less need to access a central server.