Transcript Your Business Objectives and Initiatives

Your Business Objectives and Initiatives
 Continuous & disciplined approach to cost
management
Cost Reduction
 Grow without huge increase in headcount
 Actionable visibility over company wide spend
Risk Management
 Adequate process documentation / audit trail
 Manage supplier and AP risk
Speed of Business
 Drive out cost quickly from newly acquired operations
 Ramp up new stores / operations quickly
This is a template…customize for your situation….
Establish Measurable Success Metrics
Value Driver
Current Baseline
Target KPI
Improve Spend under
Management
$200M addressable spend
40% under management
10% average savings
80% to 85% spend under
management
Reduce Budget
overspending
$200M addressable spend
1% “overspend”
50 to 75% reduction
Increase Savings from
early payment
discounts
$200M addressable spend
2% early payment discount
5% spend eligible for early payment discounts
10% to 15% spend eligible for
discounts
Reduce overpayment
to Suppliers
$200M addressable spend
0% of spend recovered from suppliers due to
erroneous payments
0.1% to 0.2% of spend
recovered from suppliers
Lower PO processing
cost
20,000 PO processed / year
$30 processing cost / PO
40 to 50% reduction
(Aberdeen benchmark: 50%
reduction)
Lower Invoice
processing cost
60,000 Invoices per year
$20 processing cost / Invoice (Aberdeen
benchmark of $15.61 for “middle 50%”)
$5-$6 per Invoice (Aberdeen
benchmark of $3.09 for bestin-class)
This is a template…customize for your situation….
Critical Metrics for Source to Pay
Source
Procure
• % of suppliers with
80% spend
• % of spend under
management (i.e.
buying at negotiated
prices and terms)
• Tail spend as % of
overall spend
• Contracted spend as a
% of overall spend
• % of spend through
preferred suppliers
• % of spend through
auctions and events
• # of active catalogs
• # of active contracts
• # of active suppliers
• Lost savings because
of contract noncompliance (%)
• % over / under budget
• Cost of processing PO
• PO processing cycle
time
• % of PO sent
electronically
Pay
• Early payment
discount capture (%)
• Cost of processing an
invoice
• Invoice processing
cycle time
• % of Invoices received
electronically
• % of incoming invoices
with inaccuracies
This is a template…customize for your situation….