take your supplier information process to the next level
TRANSCRIPT
CONFIDENTIAL 2015
LIVE WEBINAR
Speakers:
Jon Casher, Casher Associates, Inc.Josh Morrison, Lavante Inc.
June 23, 2015
Take Your Supplier Information Process to the NEXT LEVEL
WebEx Webinar Interface
Listen–only mode teleconference
Ask Questions• Question function in WebEx Webinar at the
bottom of your console• Submit questions privately• We will answer them during the presentation
as well as at the end
Listen through your computer or use the conference dial in #• Please use the dial in number provided
Ask Question Here!
Panelists
2
3
How to Earn Your CPE Credits
1. Must participate in all polling questions.
2. Attend the webinar for 50 minutes or more.
Introductions – The Panelists
4
Josh Morrison, Sr. Consultant, Lavante• Former F200 AP & Strategic Sourcing Senior Manager• Extensive background in Procure-to-Pay & Supply Chain Relationships• Expertise in Audit Controls, Compliance & Enterprise P2P Systems• Leading Process Improvement and Business Strategy Thought [email protected]://www.linkedin.com/in/joshmorrison
Jon Casher, President, Casher Associates• Founded Casher Associates,1976–System & back office automation• Co-founded RECAP, Inc. 1988–A/P audit recovery firm• Director of NASDAQ company, 2000-2006–Audit committee head• Current consulting focus on Finance, AP, AR, Treasury and P2P
[email protected]://www.linkedin.com/in/joncasher
Agenda
5
Take Your Supplier Information Process to the NEXT LEVEL
• Overview Discussion
• The Changing Business Landscape
• Understand Criticality – Why We Care
• Evolution of Supplier Information Management (SIM)
• Six Key Tenets
• Where to Start
• Conclusion
• Next Leadership Series Events
Overview Discussion
• Prerequisite– We’ve talked about vendor data criticality, detox, standardizations
• Today’s focus– Evolution of vendor master file management
– Supplier Information Management (SIM)o Cloud, controlled, secure, supplier self-service, real-time, data validation, fraud
mitigation, decision support and strategic KPI management
– Six Tenets: Defining what an optimized SIM process looks like
• Three Pillars Maturity Model– Program migration and management over time
– Graduate from the past, create learning and building blocks
6
The Best-In-Class SIM Process
7
• Duplicates
• Missing Data Points
• Inactive Accounts
• Inter-relationships
• Duplicates
• Missing Data Points
• Inactive Accounts
• Inter-relationships
SYSTEMS, GOVERNANCE, TRANSACTIONS, ANALYTICS, PEOPLE
BEST-IN-CLASS VENDOR MASTER FILE PROCESS
SANITIZE
• Naming Conventions
• Segregation of Duties
• Add/Change Workflows
• Profile Completion
• Naming Conventions
• Segregation of Duties
• Add/Change Workflows
• Profile Completion
STABILIZE
• Regulatory Compliance
• Validation at On-Boarding
• Fraud Protection
• Supplier Self-Service
• Regulatory Compliance
• Validation at On-Boarding
• Fraud Protection
• Supplier Self-Service
OPTIMIZE
The Three Pillars
Typical State• Large, Outdated
VMF• Few Controls• Low Automation• High Risk of Fraud,
Lost Profits
Sanitize• Duplicates Removed• Relationships
Identified• Validation Points• Aged Vendors Purged
Stabilize• Naming Conventions• Workflows• Complete Profiles• Segregation of Duties• Centralization• Reporting• Transparency
Optimize • On-Boarding• Fraud Protection• Supplier Self-
Service• Data Collection• Data Validation• Roles &
Permissions• GRC Controls• Integrated
Workflow• 3rd Party Validation• Enterprise
Collaboration
Supplier Information Process Maturity Model
Reactive
Define Measure Analyze Improve Control
8
Tactical Strategic
The Changing Business Landscape
9
AP & PO had separate systems & VMF
One vendor record created for each unique vendor address
Little focus on data quality & standards
Minimal governance, compliance, risk mgt, or spend mgt
Before 1990
New concerns about controls & quality of data
Emerging focus on regulatory compliance, primarily around 1099 tax reporting
Early articles about governance, risk management & leverage but few acted
Some AP Audit Recovery firms began to do vendor file cleanups and provide analytics and spend management reporting
1990-1995
FA and ERP systems began to enhance P2P functionality
Wide-spread system upgrades in 1998-1999 to address Y2K concerns
Frauds and Sarbanes-Oxley greatly increased pressure to improve controls and governance and perform some analytics
9/11 Anthrax scares raised awareness of regulatory compliance issues such as OFAC but compliance was low
1995-2005 Companies began to
realize that FA and ERP systems did not adequately address most of the six tenets
More began to focus on Procure-to-Pay as a more comprehensive view at financial operations
Software-as-a-Service (SaaS) cloud solutions began to provide flexible alternatives to shortcomings of FA and ERP systems
Portals allowing suppliers to retrieve invoice and payment status information became available
2005-2010 Companies realized
that on-boarding suppliers was a significant barrier to e-invoicing, payment, and other supplier programs
Leading firms identified SIM as key to a controlled, efficient and effective P2P process
Use of vendor portals and SIM has grown explosively
New and changing domestic and international tax and regulatory laws and mandates
2010-Today
“Before we know where we are going, we have to know where we have been”
Facing Modern Challenges
The Times they are a Changin’
• New and changing regulations, increased focus on compliance– Tax (1099,FATCA/W-8), exclusions (OFAC,SAM,OIG), updates
(Cuba, Russia), conflict minerals, Sunshine Act, privacy
• New international & domestic mandates for e-invoice/payment– US is laggard, will have to catch up w/ S. America & Europe– SupplierPay: supply chain finance, slow to ramp– State requirements: sales tax and withholding in many states
require e-pmt.; municipalities will hop on same bandwagon– Main driver is tax evasion and fraud
• Record retention and destruction– IRS rules are from 90’s and earlier
• Cyber security, fraud/risk mitigation• Increasing speed/globalization of business
10
Future of AP Top 5 – 2010 vs. 2015
2010 Future of AP Top 5• Increased attention on accurate supplier information management• More focus on a supplier network• Increased levels of automation in AP• Increased buyer/supplier collaboration• Finance and Procurement cooperating more closely
2015 Future of AP Top 5• An End-to-End Network Centered P2P Solution • More Value from the Vendor File• A Path for Supplier Self Service• Growing Importance of Commerce Networks• Unlocking New Value Streams
11
Key Understandings for Tomorrow
Knowledge is Power
• Data is key– Good data empowers world class organizations
– Bad data is expensive and risky
• Supplier data continues to become more important– Supplier self-service and integrated validation capabilities
– Quality will improve significantly
• Elevated focus on SIM and P2P Automation– Foundation for driving improved controls and governance
– Critical to regulatory and corporate compliance
– Essential in tactical and strategic KPI’s
• Supplier/Customer Information Ecosystem– Adaptability, agility, scalability
– Collaborative, cooperative, aligned
12
Understand Criticality
Why We Care
• Stakeholders and decision support
• P2P cycle impact
• Evolution of industries, data, and responsibilities
• Create the right processes
13
VMF Impacts on Enterprise Decisions
Decision Support ScenariosScenario 1 Purchasing needs to have accurate expiry information to manage supplier contracts for Legal
Scenario 2 Strategic Sourcing needs to analyze supplier spend and usage data to reduce costs for HR benefits
Scenario 3 Executive Mgt. needs to report diversity and charitable contributions to support Compliance and Tax as well as Sales initiatives with Customers
Scenario 4 Operations needs to find a new service provider for security services to protect their Employees and engages AP or Purchasing
Many Others….
14
Impacted Areas
VMF Impacts on P2P Functions & Processes
15
The Supplier Affect
Agreements
• Document Retention• Terms & Expiry• Deliverables Management• Notifications• Service Levels
• Contract Compliance• Business Segment Alignment• Pricing & Specifications• Statement of Work/Effort• Change Collaboration & Management
Systems
• Vendor Master File• Data Collection & Validation• Approvals & Workflows• Notifications• Regional & Local Considerations
• Accurate Capture of Agreement Terms• Accurate Capture of Pricing & Attributes• Supplier Collaboration• Updates & Change Management• Supplier Self-Service
Transactions
• Purchase Orders• Order Confirmations• Hosted Shopping (Punch-Out)• Shipments & Receipts• Invoices
• Payments• Bank Reconciliations• Discrepancy Management• Quality & Errors• Contract Compliance
Analytics
• Effectiveness & Quality• Efficiency & Throughput• Service Levels• Risk & Fraud Mitigation• Regulatory Compliance
• Benchmarking & Scorecards• Growth & Development Strategies• Trending & Forecasting• Value Chain Partner Alignment• Corporate & Social Responsibility
Relationships
• Quality• Service Levels• Errors• Defects & Returns• Strategic Alignment
• Growth & Development Partners• Preferred Supplier/Customer Designation• Operational Continuity• Risk & Fraud Mitigation• Cash & Working Capital
Suppliers & Supplier Relationships
Evolution of Supplier Information Management (SIM)
What is SIM?
• SIM Defined: – Governance, controls, SOD’s, compliance, streamline, normalize,
scalable, configurable, agile– Supplier self-service– Dynamic supplier onboarding– Progression:
o Manual > Automatedo Controlled > Cloud-Based, Real-Time, Validationso Fixed > Agile, Scalable, Normalized
• Who does it impact and how?– AP: Payment timing and accuracy– Procurement/Sourcing: Spend management, strategic relationships– Tax: Accurate tax withholding and reporting– GRC (Legal, Internal Audit, Risk): Compliance
16
2015 Hackett Report
17
Best Practices for SIM
Create a Lasting SIM Program
• Focus on master data– Allow ability to opt in complimentary services for
downstream transactions, reporting, and analysis
– Adoption of Hub Concept
• Consider the entire process– End-to-end, configurability, self-service, real-time, supports
multiple stakeholders and SOD’s, adds value for suppliers, enables e-commerce, e-sourcing, e-document management
• Role of a SIM solution should be to– Facilitate all other dependent functions– Provide a strategic lever for organizational initiatives– Solicit and collect, validate, store, manage over time
18
Four-Step Approach
19
• SUPPLIERS
• SYSTEMS
• GOVERNANCE
• TRANSACTIONS
• ANALYTICS
• PEOPLE
20
Dynamic Supplier Onboarding
• Simple process that integrates with your ERP system• Define Strategy for
– Walk Up Supplier Credentialing
– New Supplier Invite
– Existing Supplier global data requests
• Configurable Multi-Parametric Workflow and Notifications– By Location
– By Supplier Type
– By User Type
– By Time
– By Status
– By Supplier Scorecard
• Room to grow – Configurable & Expandable Data Controls
– Document Repository
– Configurable Internal / External Workflow
– Integrated Communication Engine
– Full Reporting
– Audit Trail
“The only constant is change itself”
21
Managing for Success
Make Sure You
• Account for both new and existing suppliers
• Create change notifications and alerts
• Leverage SIM for strategic management and visibility
• Engage and educate internal and external stakeholders
Third Party Validation
Supplier On-Boarding
Vendor Self-Service
WorkflowInternal / External
Profit Recovery
Supplier Information ManagementVendor Communication
Analytics & Reporting
Internal ControlsSOX Compliance
Payment Visibility
ACH Payments Conversion
P Card Distribution
Six Key Tenets
What does an Optimized SIM Process Look Like?
1. Reaching a Stable Environment
2. Comprehensive Compliance
3. Supplier Collaboration
4. Change Management
5. Analytics & Spend Management
6. Strategic Leverage
22
Reaching a Stable Environment
Sanitize & Stabilize
• Standardization, normalization– Processes, data values, field types, SOD’s, workflows
• Identify gaps, inconsistencies, inefficiencies– Look for opportunities for improvement and cost savings
• Perform VMF cleanse– Duplications, inactive, incomplete, trends for process
improvement and risk mitigation
• Create new controls– File and field security, data normalization,
standard processes and workflows, audits
23
Comprehensive Compliance
Governance & Controls
• Sarbanes-Oxley– SOD’s, Audit Trail, Normalized Processes
• GRC Challenges– Overcome Barriers to Compliance
o Lack of Awareness of Regulatory Compliance and Reporting Requirementso Technical Limitations of ERP and Financial Accounting software
– Need to Manage Vendor Risk– Policy, Contract, Regulatory– International, Domestic, State– Tax withholding and reporting– Privacy (HIPPA, PII)– Sunshine (HCP)
• Get It All!– Capture & validate: payment, regulatory, risk, diversity, insurance,
certifications, expiration, GL coding, categorization, demographics
24
Supplier Collaboration
Success is Built Upon Great Partnerships
• Strategic supplier management– SRM, Sourcing, negotiations, supply chain operations/finance, preferred status
• Defining rules of engagement– T&C’s, code of ethics, policies, NDA, conflict
• Keeping information current– Contacts, names, addresses, banking, W9’s, W8’s, COI’s, contracts
• Leveraging automation– Outreach, communication, workflows, entire supplier base, self-
service, SLA’s
• Adding supplier value– Diversity (minority, small business), single-source, non-prohibitive
25
Change Management
Keeping Up with the Times
• Supplier information is always changing
– Identify critical data points
– Define methods of updating and validating
– Generate change alerts and notifications
• Standardize handling and approvals
– On-boarding, changes, inactivation, etc.
• Communication for internal and external stakeholders
– Dashboards, KPI’s, visibility
• Effective capture and implementation of changes
• Audit trail and accountability
• Don’t leave change up to chance
26
Analytics & Spend Management
Generate Supplier Intelligence
• Related parties– Parent-child, subsidiary, holding, affiliate, same owners, multiple names,
franchisees, factoring and assignment
• Spend consolidation
– Price and terms negotiations, Strategic Sourcing, normalizations
• Service levels/SRM
• Working Capital and Supply Chain Finance
• Process efficiency and accuracy; process improvement
27
“If you can’t measure something, you can’t understand it. If you can’t understand it, you can’t
control it. If you can’t control it, you can’t improve it.”
Strategic Leverage
The Power of Supplier Information
• Fraud detection and prevention
• Strategic Suppler Relationship Management (SRM)
• Create value chain partners, improve working capital
• Improve accuracy of business transactions
• Document solicitation and retention
• (W9, W8, COI, Diversity)
• Accurate metrics and analyses
• Spend management
• Sourcing strategies
• Exclusion list management
28
Where to Start
29
Typical State• Large, Outdated
VMF• Few Controls• Low Automation• High Risk of Fraud,
Lost Profits
Sanitize• Duplicates Removed• Relationships
Identified• Validation Points• Aged Vendors Purged
Stabilize• Naming Conventions• Workflows• Complete Profiles• Segregation of Duties• Centralization• Reporting• Transparency
Optimize • On-Boarding• Fraud Protection• Supplier Self-
Service• Data Collection• Data Validation• Roles &
Permissions• GRC Controls• Integrated
Workflow• 3rd Party Validation• Enterprise
Collaboration
Reactive
Define Measure Analyze Improve Control
29
Tactical Strategic
Conclusion
Data, systems, processes, strategies, and people; it all fits together...
30
SIM - On-boarding, Self-Service, Cloud, Validations, Real-Time, Collaborative, Agile, ScalableVMF- Data Controls, Process Norms, Visibility+Accountability, Security, Single-SourceP2P - Systems Agreements, Transactions, Analytics, Relationships Stakeholders - AP, Procurement, Sourcing, Legal, Tax, GRC, Internal AuditStrategic Initiatives - Strategic Sourcing, Fraud, Risk Mitigation, Working Capital, Growth+Expansion, Comprehensive Tactical Efforts - Taxes, Regulatory|Corporate|Contract Compliance, Timely, Accurate TransactionsFoundational - Supply|Value Chain, People+Partners, Customers, Markets
Next Thought Leadership Events
31
"Secrets You Need to Know About your Vendor Master File." March 26, 2015 - 11am PST
"Detox Your Vendor File." April 30, 2015 - 11am PST
"Take your Supplier Information Process to the NEXT LEVEL" June 23, 2015 - 11am PST
“Managing Compliance and Risk Today and Into Tomorrow" End of JulyJosh Morrison will join Steven Mercatante Esq., Principal and Founder of
TIR Consulting, LLC, to discuss what all organizations need to know about regulatory and compliance changes in the national and international landscape. This essential session will provide information you must know to protect your business, its partners, and its people as you help to navigate it through more complex industries and markets.
Thank You – Q/A
32
Josh Morrison, Sr. Consultant, Lavante• Former F200 AP & Strategic Sourcing Senior Manager• Extensive background in Procure-to-Pay & Supply Chain Relationships• Expertise in Audit Controls, Compliance & Enterprise P2P Systems• Leading Process Improvement and Business Strategy Thought [email protected]://www.linkedin.com/in/joshmorrison
Jon Casher, President, Casher Associates• Founded Casher Associates,1976–System & back office automation• Co-founded RECAP, Inc. 1988–A/P audit recovery firm• Director of NASDAQ company, 2000-2006–Audit committee head• Current consulting focus on Finance, AP, AR, Treasury and P2P
[email protected]://www.linkedin.com/in/joncasher