connuousimprovementisbrewing at’tim’hortons:’’sap… · connuousimprovementisbrewing...

Con$nuous Improvement is Brewing at Tim Hortons: SAP AP Op$miza$on

Extends Early Wins

Kellie Howard Tim Hortons

•  Tim Hortons Corporate Overview •  Phase 1: The Need for Change •  Phase 1: Solu>on Overview – Capture, Processing, and

Analy>cs •  Phase 2: Con>nuous Improvement as a Guiding Principle •  Phase 2: Solu>on Overview – Improved Throughput and

Vendor Portal •  Aggregate Project Benefits •  Wrap-‐up

Agenda

•  One of North America's largest, most successful publicly-‐traded restaurant companies

•  Restaurants in Canada, US, and UAE •  More than a great brand!

Business Profile: A $5.0B Diversified Mul$na$onal Food

and Beverage Company

3

Sandwiches, Wraps, Soups, and Chili

Coffee, Specialty, and Other Beverages

Snacks and Baked Goods

Overview as of 2010 year end:

$5.0 billion in system wide sales

1,863 employees

3,750 restaurants

~ 42% market share of the quick service restaurant market

•  Centralized: Primary team in Canada, limited processing in USA

•  18 FTE Resources – Scanning, Verifying, Pos>ng, Managing Excep>ons, Payments, Repor>ng & Management

•  Live on SAP for two years with a Process Tracking System (PTS), op>cal character recogni>on (OCR) sohware, and e-‐invoicing solu>on

Tim Hortons AP Organiza$on

Canada US Total Invoice Volume/Month 14,700 2,400 17,100 % Received Electronically 40% 24% 38% Scan Operators 2 0.25 2.25 AP Administrators 11 0.25 11.25 AP Supervisors/Managers 4 - 4




Agenda

•  Control –  Op>mized business process –  Centraliza>on and automa>on

•  Cycle Time and Efficiency –  Standardized process –  Process transac>ons correctly first >me, in a >mely manner

•  Visibility –  Real-‐>me invoice tracking –  Provide process metrics

•  Risk Mi>ga>on –  Standardized process –  Control over all invoice types

Tim Hortons’ AP Op$miza$on Ini$a$ve — Goals

•  Procurement –  Old purchasing system –  Legacy PO integra>on –  New PO standards

•  Finance – Monthly repor>ng and analy>cs

•  Treasury – Working capital management –  Cash discount possibili>es

Iden$fying Integra$on Opportuni$es

Value Crea$on in Accounts Payable




Agenda

•  Minimizes invoice impact –  Mail/Fax à Scanning or e-‐invoice –  All types of invoices – Non-‐PO, PO for Goods or Services

•  Efficiently routes and tracks the process –  Streamlines excep>on handling, workflow –  Instant invoice status tracking, document access –  Web-‐based approval tools

•  Sets business compliance standards –  Conforms pos>ngs and payments to internal and external standards

–  Analy>cs and KPIs to track efficiencies

The Right AP Op$miza$on Solu$on …

Three Primary Aspects of Solu$on

Within SAP:

•  Centralized and standardized: The engine of the AP process

Capture Op$ons at Tim Hortons

E-‐Invoice

Scan Paper

Receive Faxes

E-‐Mail

OCR

•  Paper, Fax, Email, Electronic Invoice – All possible

•  Op>cal Character Recogni>on (OCR) –  Header level capture only –  Valida>on vs. Vendor and PO extracts from SAP –  Business Rules, such as Tax determina>on, managed through OCR sohware and an Invoice Gateway into SAP

–  Presently 60% of invoices are paper and are processed through OCR

Capture Solu$on at Tim Hortons: OCR

•  e-‐Invoicing (Electronic Invoicing) –  Full Header and Line Item Detail received electronically from vendors

–  Valida>on vs. Vendor and PO real-‐>me RFC calls to SAP –  Business Rules, such as Tax determina>on, managed via electronic invoice and an Invoice Gateway into SAP

–  Presently 36% of invoices are received electronically of which ~40% post without human interven>on

Capture Solu$on at Tim Hortons: e-‐Invoicing

Vendor

PTS AP Within SAP

Processing Transac$ons

Hands-Free Posting

Visibility to all Invoices

Tracking of Work in Progress

Rules-Based Exception Handling

Approvals

Full Audit Log of All Actions

Secure Storage of

Invoice Image

Within SAP:

•  e-‐invoicing items post automa>cally if successful 3-‐way match •  Others are distributed to AP team via pre-‐defined business

rules

Ini$al Workflow

•  Leveraging SAP Business Workflow Engine delivers ease of use for managing approval hierarchies, authoriza>on levels, and subs>tu>on processing

•  SAP NetWeaver® plaoorm enables extension to Web for approvers •  Email no>fica>ons, reminders and escala>ons, or easy access direct

to Web page •  Complete coding, automated rou>ng, and auto-‐pos>ng capable

17

Simplifying Approvals

Transparency and Insight

Within SAP:

•  InfoCenter and key reports provide “ac>onable” analy>cs

•  Status and sub-‐status track the invoice throughout its life cycle

Status Codes

•  One stop shop for repor>ng and audit trail

InfoCenter and Repor$ng

AP Department has complete visibility to all invoices and can perform all normal AP activities via Actions

•  Date and Time Stamp + Status Codes = Precise Tracking Process Analyses

Cycle Time Analyses

Cycle Time

Spend Flexible Analyses

Status

Analy$cs to Sustain Con$nuous Improvement

Sta>s>cs

Performance

Status




Agenda

•  Processing invoices and payments •  Annual 1099 tax repor>ng •  Assis>ng in hedge effec>veness and recommending invoice

processes to support hedges •  Monitoring of GRIR (goods receipt / invoice receipt) and MRBR

(blocked invoices due to quan7ty or price differences) •  Counsel to internal stake holders •  Process improvements

–  Dashboard repor>ng –  Enhanced repor>ng allows for performance management and iden>fica>on of process pain points and opportuni>es

Fundamentals

•  Peak volume months up >35% over two year period

Analy$cs Essen$al to Con$nuous Improvement

13998 13103

16506

14701 14487 15919

15110 16337

18231

19400 20386

16954

6000

8000

10000

12000

14000

16000

18000

20000

22000

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Year to year comparison of total invoices received per calendar month 2009 2010 2011

Team focuses on year end and 1099 repor>ng obliga>ons during this

period

The AP team tries to schedule system upgrades and tes>ng, training, and vaca>ons during lower volume periods of the year. Many of team of 18 in AP plan

summer vaca>ons.

Internal •  PO Ini>a>on – introduced a significant culture change •  Non-‐PO workflow approval of invoices •  Timely working of MRBR •  Devolu>on of accoun>ng func>on External •  Process change – from paper to electronic •  Vendors billing the correct company

Organiza$onal Challenge to Improve

Change Management •  Discipline counts, don’t underestimate resistance •  Engage your vendors in the process from the beginning




Agenda

•  OCR Capture –  Solu>on is header capture only, so AP team must touch every paper

invoice –  Looking for improved recogni>on rates for eight fields presently

captured by OCR •  e-‐Invoicing Capture

–  Transac>ons are line level of detail, so they can process through with 3-‐way match and auto-‐post without any AP team involvement

–  Must get more vendors on e-‐invoicing plaoorm to take advantage of auto-‐post

•  Other func>ons within AP –  Escala>ons, Payments, Repor>ng, and Invoice Plans evaluated

Plan to Improve Throughput

•  Encouraging vs. manda>ng vendors to go to e-‐invoicing •  Par>cipa>on of Purchasing groups •  Evalua>ng pricing op>ons to reduce onboarding barriers •  Growth of e-‐invoicing (now receiving 35%-‐40% of invoices

electronically)

Increased Conversion to e-‐Invoicing

•  e-‐Invoice volume as percent of AP popula>on

Growth in e-‐Invoice Volume

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

P8 P9 P10 P11 P12 P1 P2 P3 P4 P5 P6 P7 P8 P9 10 11 12 P1 P2 P3 P4 P5 P6 P7 P8 P9 10 11 12

2009 2010 2011

26.6% P3 2010

40.3% P4 2011

e-Invoices decline as % with seasonal increase in marketing invoices processed through non-e-Invoicing channels.

41.9% P12 2011

6.2% P12 2009

•  Growth in EFT / ACH payments vs. cheques •  Enhanced scanning recogni>on through data base

enhancements and integra>on with vendor master •  Introduc>on of approval escala>on in Process Tracking

System (PTS) –  Reduces administra>on –  Expedites approval to ensure vendors are paid according to terms

•  Invoice plans for vehicle leases

Improved Efficiency

•  Greater volume, fewer resources

Invoice Volume and Staff Levels

Staffing level are 22% lower than at SAP

go-live in August 2009 (net reduction of 5)

Y/O/Y growth in three month average

invoice volume up by 25.3% vs. same

period in 2009

70%

80%

90%

100%

110%

120%

130%

P7 P8 P9 P10 P11 P12 P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12 P1 P2 P3 P4 P5 P6 P7 P8 P9 P10 P11 P12

FY09 FY10 FY11

staffing levels Invoice volume growth - 3 mo. average

Managed increased volume & reduced

staff levels with

improved processes

& technology deployment

Invoice count ↑25% since go-‐live. During same period AP team ↓ 22% through ayri>on or re-‐assignment.

•  Enhanced visibility for vendors = reduced call volume •  Convert non-‐discount vendors to discount through dynamic

discoun>ng = improved boyom line •  Assist vendors with access to cash •  Earn incremental discounts

Vendor Portal and Dynamic Discoun$ng

•  Configurable portal solu>on to fit the needs of Tim Hortons

Vendor Portal Components

Discount Management

Web Invoice Submit

Dispute Management

Supplier Self-‐Service

•  Vendor has several op>ons upon logging in

Vendor Portal Main Landing Page

Submit non-PO Invoice

See Statuses of all Invoices

Request Early Payment

Communicate with Tim

Hortons on Specific Invoice or General

Topics

Request changes to Address and Bank Account Information

-‐  Online Status -‐  Document Download

-‐  Address and Bank Changes

•  Eliminate vendor phone calls with online invoice status available to them 24/7

Status of All Invoices for Vendor

-‐  Online Status -‐  Document Download

-‐  Address and Bank Changes

•  Vendor can list all invoices that have been submiyed to them or only a subset

Vendor Portal — PO Flip

PO Flip / e-‐Invoices

•  Sliding scale with prorated discounts •  The earlier the payment, the higher the discount

Realize Significant Savings from Dynamic Discoun$ng

Dynamic Discoun>ng

•  Vendor can request an early payment and agrees to cash discount amount

Vendor Portal Offers Processing Op$ons

Dynamic Discoun>ng

•  Portal enables 2-‐way communica>on with vendor

Message Center within SAP

Communica>on Audit Trail

•  Cross border ACH •  EDI •  ERS (evaluated receipt seylement) •  Vendor portal

–  PO Flip (allow for vendors to agree to PO details then turn the PO into an invoice – automa>c match of PO to invoice terms)

•  Enhancements to PTS –  PDF reader

•  Reduced cheque frequency –  EFTs to remain 2x per week but cheques 1x per week

•  Duplicate payment and vendor credit audit

Looking to the Future




Agenda

•  Cost-‐reduc$on opportuni$es –  Paper storage –  Personnel –  Processing efficiencies

•  Reduced risk to organiza$on –  Improved transparency to transac>ons –  Enhanced duplicate invoice controls –  Structured approval workflows –  Status codes facilitate enhanced repor>ng

•  Cash flow op$miza$on –  Early payment cash discounts –  Dynamic discoun>ng opportuni>es

Cost Containment

•  Duplicate invoice and payment controls (SAP, third-‐party consultant, and ACL)

•  Approval controls –  PO and Non-‐PO approvals require system sign in vs. signatures

•  Enhanced vendor master controls •  Enhanced tracking of invoices, vendor, internal performance

Enhanced Controls

•  e-‐Invoicing –  Elimina>on of waste – Win/Win with vendors: One vendor thanked us for encouraging them to go on e-‐invoicing as it added valued to their opera>ons

•  Imaging –  24 x 7 access to the invoice anywhere in the world –  Supports actual vs. budget vs. commitments repor>ng

•  Vendor Portal and Dynamic Discoun>ng –  Boyom line contribu>on –  Enhanced communica>on with vendors and other departments

Driving Innova$on




Agenda

•  Senior management sponsorship focus on the project is key •  Integra$on of the project with larger system migra>on was

useful •  Training OCR to recognize vendors and invoices requires a

great deal of >me •  Change management — Discipline counts, don’t

underes>mate resistance •  Inventory key work drivers and design incremental value you

would like to achieve through a reengineered process •  Engage your vendors throughout the change process •  Report to stakeholders: Provide ongoing analy>cs that

support your progress

7 Key Points to Take Home

How to contact me: Kellie Howard

[email protected]

connuousimprovementisbrewing at’tim’hortons:’’sap… · connuousimprovementisbrewing...

Documents