the capgemini p2p channel selector • paul niehe (kpn ... · capgemini consulting select the right...

Capgemini Consulting

Select the right channel to company excellence

The Capgemini P2P Channel Selector• Paul Niehe (KPN)• Rob van der Kolk (Capgemini)

8 December 2006

2Capgemini Consulting In collaboration with

How to select and implement the right procurement channel


Many organisations struggle with similar P2P fulfilment channel selection questions

Which business drivers are recognisable in your situation?

Which Procurement channel should be used to derive the best insights in our external commitments?Should we use the supplier website or build our own catalogue?Which Procurement channel will support the reduction of the number of invoices?We are selecting this new supplier for this contract, what fulfilment strategy would be best?Which Procurement channel will support the management reporting best?Is this category suitable for a P-card?We’re implementing SAP, what SRM functionality should we implement for which commodities?Should we choose for more control or more efficiency for this contract?eProcurement seems to be expensive; how to decide when to invest in eProcurement?What would be the ROI when changing from currently used channels to new channels?

Which business drivers are recognisable in your situation?


Procurement channels9 main commodities40 commodities

152 sub-commodities

?

A step by step approach is required to identify the most appropriate, second best and non acceptable channels

A step by step approach is required to identify the most appropriate, second best and non acceptable channels

IT

ProfessionalServices

Facilities

Accomd.

Catering

HotelsMeeting facilities

Food, Beverages & TabaccoFood Vending MachinesCatering Supplies

Officeequipement

Duplication MachinesCash handling machinesAudio Visual Equipment

Office equipment maintenance

Consulting IT ConsultingStrategic Consulting

HR-ServicesOutplacement ServicesRecruitment ServicesTemporary Personnel Services

ITSoftwareHardware

Paper invoice

Scanned invoice

E-invoice(EDI)

P-card/Ghost card

T&E Card

Self billing

Invoice channels

?… etc

HRTraining &Education Courses & Seminars

Educational Appliances

Officesupplies

FinancialAuditingCollection Agencies

Purchase channels

Automatic generated PO

Non PO

Scheduled PO

Requisition channels

Catalogue(standard, punch-

out or form)

E-mail/Phone/FaxVerbal

Supplier website

Special Request

Inventory driven

Online contract or framework order

?Hands on PO

Selecting the most appropriate Procurement channel for a specific commodity is for every P2P implementation a challenge


Each P2P channel has different dynamics in terms of user friendliness, control & visibility and efficiency

The values of these dynamics are determined by the stakeholder expectationsThe values of these dynamics are determined by the stakeholder expectations


The P2P channel selection framework helps to choose the right procurement channel using commodity and channel characteristics

The P2P channel selection framework helps to choose the right procurement channel per commodity optimising efficiency, control, visibility and maintenance

The P2P channel selection framework helps to choose the right procurement channel per commodity optimising efficiency, control, visibility and maintenance

Deliverables

• Workshop planning• Category fact sheets• Face-to-face with category

managers• Interviews with CPO’s• Customised Channel Tool

Selection Framework

Starting up

Determine commodity

characteristics

Determine preferred P2P

channels1 Define Implementation

strategy 3

P2P Selection tool

Validation and on boarding workshop

Define channel characteristics

P2P project

Preparation 1st phaseworkshop

2nd phaseworkshop

Implementationstrategy

2

Deliverables

• Suggested preferred channel;

• Second best channel;

Deliverables

• Validated channels

• Broad acceptance

Deliverables

• Channel / Category matrix;• Considerations regarding

processes and systems per channel / category combination


KPN

Telephone, Internet and Television in the Netherlands

Mobile communication in the Netherlands, Belgium (BASE) and Germany (E-Plus)

Key figures (2005)• Operating revenues: EUR 11,936 m• Operating result: EUR 2,348 m• After-tax profit: EUR 1,454 m

Key numbers (at year-end 2005)• Number of fixed connections: 6.9 million, of

which 1.7 million ADSL• Mobile customers: 20.8 million


KPN wanted to maximise contract compliancy and found …

Due to an overall Purchase-to-Payment program, KPN is implementing a triangle consisting out of:

1. Implementing state of the art procurement processes / ordering channels

2. A No PO, No Payment – policy, together with maximisation of so called Hands Free Ordering

3. An integrated Procurement Database

All from the perspective of the overall goal of maximising KPN’s Contract Compliance

Purchasing in the quest for Company ExcellencePurchasing in the quest for Company Excellence


… a partner with a proven track record and an innovative approach in implementing P2P channels

In the quest for optimising the use of the predefined ordering channels

the Content of the Channel Selection Tool offered by Capgemini, together withthe Context of a workshop based program involving all stakeholders, together withthe detailed plan concerning how to move from the workshop towards implementation

made KPN decide to cooperate with Capgemini in this part of the P2P project


Commodities have characteristics that make them more or less suitable for a certain procurement channels

Product profile• Complexity• Standardization• Configurability• Service or product• Variations of the products

Spend and price profile• % of spend• Absolute spend• Volatility of price• Routine / leverage / bottleneck /

strategic

Purchasing profile• Ad hoc or regular• Purchasing frequency• Number of sites specifics• Number of people ordering• Plannability• Inventory driven

Supply base profile• Number of suppliers in the

market• Number of approved suppliers• eReadiness of the supplier• Existing infrastructure

(catalogue/p-card)

Business and process specific data

• Regularly change of PO

• Necessity of a PO• Necessity of Goods

Receipt• Reporting requirements

Commodity characteristics

Selection Framework

Starting up

Determine commodity

characteristics



strategy 3

P2P Selection tool



P2P project

2

1


Selection Framework

Starting up

Determine commodity

characteristics



strategy 3

P2P Selection tool



P2P project

We slightly tailored our P2P channel selection tool for the project at KPN

2

1The graph provides a breakdown per P2P channel of the sub-category profiles that are influencing the choice of channel

The framework suggests the preferred and 2nd best P2P options

The user can then choose a P2P Channel (this may be different from what has been suggested)

The user should then enter the reasons for the P2P Channel theyhave selected

Category

Division / Business unit / Remark

ResultsThe suggested preferred channel for this sub-category is aThe second best channel to use for this sub-category is a

Which P2P Channel do you wish to select? If you do not agree with the preferred and/ or second best suggested P2P Channel, then please state the channel you suggest

(you can use the tab 3.1 Channel Definition to help you make your choice)

What are the reasons for your choice?

0

Punch-out catalogue

Printed Matter

Standard catalogue

Suggested Purchase to Pay Channel

0% 10% 20% 30% 40% 50% 60% 70% 80%

Standard catalogue

Form catalogue

Punch-out catalogue

Scheduled PO

Free form / special purchase

P-card / Ghost card no.

Vendor managed inventory

Blanket order call off

Category ProfileOrder ProfileSpend ProfileSupplier ProfileBusiness Issues

Category

Division / Business unit / Remark

ResultsThe suggested preferred channel for this sub-category is aThe second best channel to use for this sub-category is a

Which P2P Channel do you wish to select? If you do not agree with the preferred and/ or second best suggested P2P Channel, then please state the channel you suggest

(you can use the tab 3.1 Channel Definition to help you make your choice)

What are the reasons for your choice?

0

Punch-out catalogue

Printed Matter

Standard catalogue

Suggested Purchase to Pay Channel

0% 10% 20% 30% 40% 50% 60% 70% 80%

Standard catalogue

Form catalogue

Punch-out catalogue

Scheduled PO


P-card / Ghost card no.



Category ProfileOrder ProfileSpend ProfileSupplier ProfileBusiness Issues


Selection Framework

Starting up

Determine commodity

characteristics



strategy 3

P2P Selection tool



P2P project

A workshop with all stakeholders in advance using the outcome of the channel selection appeared to be crucial for further implementation

2

2The shared procurement dream

? Focused

? Efficient

? Harmonised processes

? User friendly tools

? Clear accountabilities

? Compliant

? Auditable

End- users

Strategic Buyers

Access to procurement is easy. Most orders can be placed with a few mouse clicks. Support is at hand when needed. I can easily check the status of my orders

I know exactly what the spend is for my suppliers and categories. This enables me to get the best results and to manage compliancy

I have full control over the achievements per category group. This enables me to focus at those initiatives that need our attention most

Procurement Management

Management

Finance

I am optimally supported in my purchase needs. Procurement enables me to focus on my primary functions. There is a healthy challenge for what we would like to purchase

I can control cost efficiently. I know exactly what our contractual commitments are.

I know exactly what is expected of my organisation. We receive orders in line with our agreements. Our invoices are paid on time due to the clarity of our processes.

Suppliers

The shared procurement dream

? Focused

? Efficient

? Harmonised processes

? User friendly tools

? Clear accountabilities

? Compliant

? Auditable

The shared procurement dream

► Focused

► Efficient

► Harmonised processes

► User friendly tools

► Clear accountabilities

► Compliant

► Auditable

End- users

Strategic Buyers





End- users

Strategic Buyers





Management

Finance




Suppliers

Management

Finance




Suppliers


Selection Framework

Starting up

Determine commodity

characteristics



strategy 3

P2P Selection tool



P2P project

An implementation strategy can be build based on the overall results

2

2


Selection Framework

Starting up

Determine commodity

characteristics



strategy 3

P2P Selection tool



P2P project

As an accelerator we use predefined implementation strategies per P2P channel.

2

Raw material, office suppliesControl: LowVisibility: LowEfficiency: High

Vendors monitor and replenish inventoriesApproval is not on transaction levelInvoices have reference to a blanket order


Travel services, translation services, graphic design, recruitment selection services

Control: LowVisibility: MediumEfficiency: Medium

Agreements are made with suppliers for how much the business operation can order per week, month, quarter, or yearApproval is not on transaction levelInvoices have PO reference3-way invoice matching is possible


Catering supplies, flowers, non-standard giftsControl: LowVisibility: LowEfficiency: High

Card limits and items in scope are predeterminedApproval is not on transaction levelCosts are withdrawn directlyP-card

Maintenance, subscriptions, insurance, componentsControl: MediumVisibility: HighEfficiency: High

POs are generated (automatically) based on agreed schedulesApproval is not on transaction levelInvoices have PO reference2-way invoice matching is possibleScheduled PO

Marketing eventsControl: HighVisibility: HighEfficiency: Low

Free format requisitions processed by ProcurementApproval on transaction levelInvoices have PO reference3-way invoice matching is possible


Premier.Dell.com, My Account@DowControl: MediumVisibility: HighEfficiency: Medium (high with self-billing)

Static or dynamic catalogue items managed by supplier in supplier systemsApproval on transaction levelInvoices have PO reference3-way invoice matching is possible

Punch-out catalogue

Business cards, car rental, courses, courrier services Control: MediumVisibility: HighEfficiency: Medium (high with self-billing)

Dynamic catalogue itemsAdditional information is requiredApproval on transaction levelInvoices have PO reference 3-way invoice matching is possible

Form catalogue

Office furniture, standard softwareControl: HighVisibility: HighEfficiency: Medium (high with self-billing)

Static catalogue itemsApproval on transaction levelInvoices have PO reference3-way invoice matching is possible

Standard catalogue

ExampleDynamicsChannel descriptionChannel

Raw material, office suppliesControl: LowVisibility: LowEfficiency: High

Vendors monitor and replenish inventoriesApproval is not on transaction levelInvoices have reference to a blanket order


Travel services, translation services, graphic design, recruitment selection services

Control: LowVisibility: MediumEfficiency: Medium

Agreements are made with suppliers for how much the business operation can order per week, month, quarter, or yearApproval is not on transaction levelInvoices have PO reference3-way invoice matching is possible


Catering supplies, flowers, non-standard giftsControl: LowVisibility: LowEfficiency: High

Card limits and items in scope are predeterminedApproval is not on transaction levelCosts are withdrawn directlyP-card

Maintenance, subscriptions, insurance, componentsControl: MediumVisibility: HighEfficiency: High

POs are generated (automatically) based on agreed schedulesApproval is not on transaction levelInvoices have PO reference2-way invoice matching is possibleScheduled PO

Marketing eventsControl: HighVisibility: HighEfficiency: Low

Free format requisitions processed by ProcurementApproval on transaction levelInvoices have PO reference3-way invoice matching is possible


Premier.Dell.com, My Account@DowControl: MediumVisibility: HighEfficiency: Medium (high with self-billing)

Static or dynamic catalogue items managed by supplier in supplier systemsApproval on transaction levelInvoices have PO reference3-way invoice matching is possible

Punch-out catalogue

Business cards, car rental, courses, courrier services Control: MediumVisibility: HighEfficiency: Medium (high with self-billing)

Dynamic catalogue itemsAdditional information is requiredApproval on transaction levelInvoices have PO reference 3-way invoice matching is possible

Form catalogue

Office furniture, standard softwareControl: HighVisibility: HighEfficiency: Medium (high with self-billing)

Static catalogue itemsApproval on transaction levelInvoices have PO reference3-way invoice matching is possible

Standard catalogue

ExampleDynamicsChannel descriptionChannel3


Lessons learned from the project

Start implementing the first channel selection results as soon as they are final to keep momentum and show practical resultsUse a stakeholder map that is as broad as it can be!

• ‘Requesters’ from every department involved• ‘Logistical colleagues’ affected to a specific category• IT knowledge related to (ordering) systems involved

together with the business stakeholders and procurement peopleWhen taking the number of transactions, count only the purchasing requests that will be translated to purchase orders and not the request that will fulfilled from in-house stock.Last but not least: it’s very important that the department / group (e.g. Procurement) in charge of the analysis using the Channel Selector, and facilitating the workshops, is seen as an expert by the majority of the stakeholders


Results for KPN

Qualitative:A valuable – because companywide (for the first time) – discussion, and due to that, focus on transactional procurementDue to constructive discussions a solid basis for focus on relatively new ordering channelsDuring the workshops new insights were gained about the supply chain per (sub)category, resulting in the identification of quick wins on effectiveness and efficiency in the value chain.

Quantitative:Insight in best possible use / mix of ordering channels per subcategoryInsight in cost reduction possibilities due to implementing the chosen ordering channels per subcategoryInsight in ‘ease of implementation’ per subcategory, and due to that a first prioritisationExact future (when Channel Selection results are implemented) number of hands on and hands free orders

Capgemini Consulting

Thank you

Paul Niehe (KPN)Rob van der Kolk (Capgemini)

the capgemini p2p channel selector • paul niehe (kpn ... · capgemini consulting select the right...

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