© 2011 Financial Operations Networks LLC

AP Automation Case Study: The Successes and the Challenges, Part II

Amy Fine Levi Strauss & Co.

Wednesday, April 13, 2011

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Company History

• May 20, 1873 – Levi Strauss and Jacob Davis receive a patent for the process of riveting pants and the blue jean is born • First factory opened in the South of Market area of San Francisco in 1880 • 1977 – Levi’s was the world’s largest jeans manufacturer • Today Levi’s jeans are sold in over 160 countries • Global Headquarters located in San Francisco, California www.TheAPNetwork.com Page 3

Brands

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Shared Service Center – Eugene Oregon 1999

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Shared Services Center

• Indirect Requisition-to-Check – RTC • Hire-to-Retire – HTR • Order-to-Cash – OTC • Record-to-Report – RTR www.TheAPNetwork.com Page 6

Indirect Requisition-to-Check

• Invoice Processing • GRIR Maintenance • Travel and Expense • Vendor Master • Indirect Procurement www.TheAPNetwork.com Page 7

Become a student of change. It is the only thing that will remain constant.

— Anthony J. D’Angelo www.TheAPNetwork.com Page 8

Invoice Processing

Utilize different accounting systems for each country: • Canada – Cedar Software • Mexico – SUN Systems • United States – SAP www.TheAPNetwork.com Page 9

SAP Purchasing Guidelines

• SAP Procurement Process • SAP Payment Request • Corporate Card www.TheAPNetwork.com Page 10

Uploads

• Advantage IQ – utilities for approximately 170 Retail Stores – 3 invoices a week compared to 170+ per month • Staples – office supplies – average 50 invoices a week • Serengeti – legal invoices 50 a week • IQ Navigator – contract labor – large volume • Granite – telephone – 215 invoices a month • Rental payments – 200 invoices a month www.TheAPNetwork.com Page 11

Uploads

(Cont’d.)

• Service Channel – retail store maintenance • OTM freight transactions that will not go through EDI • JP Morgan Central Bill • Weekly benefits • Continually asking…Can this be on an upload?

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EDI

• CASS – for FedEx and UPS (1,800 invoices a month) • Oracle Transportation Management – inbound freight from contractors (500 invoices a month) • Outbound freight – freight from distribution centers to customers (2,000 invoices a month) www.TheAPNetwork.com Page 13

Processors Were Spending Time:

• Entering invoices and payment requests from paper copies • Often found that no goods or service receipt had been done • Following up with requisitioners, often several times • Batching invoices at the end of the day so that they could be scanned • Responding to vendor and requisitioner payment inquiries www.TheAPNetwork.com Page 14

Manual Processing

• Currently have six invoice processors • Each can manually process between 600 and 1,200 invoices a month • About 52% percent of invoices had been making it through to payment the first time touched • Of the remaining 48%, 17% were duplicates and 31% had some type of problem www.TheAPNetwork.com Page 15

% of Non-Trade Invoices Paid on Time

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Front-End Imaging

• September of 2009 received approval to begin a front-end imaging project • Began RFP process in January 2010 • Reviewed four different vendors • Signed a contract with ReadSoft in June 2010 • Go live date was February 28, 2011 www.TheAPNetwork.com Page 17

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• Incoming mail goes directly to the Scan Room and are scanned into ReadSoft (IPA) • Incoming e-Invoices are uploaded into IPA • Invoices are separated into different categories and scanned into IPA • The program displays the interpreted fields that can be compared to the scanned image • The user makes the necessary corrections in verify so that correct categories are recognized www.TheAPNetwork.com Page 19

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• Invoice transfers to INVOICE COCKPIT by ReadSoft for processing • Invoices without errors flow through system • Invoices with errors will kick off a workflow • Invoices are paid according to terms in the vendor master www.TheAPNetwork.com Page 21

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• Payment requests are entered though IPA WEB CYCLE (ReadSoft) • Sent to an authorized approver through web-cycle • Reviewed by an invoice processor and flow through the system for payment www.TheAPNetwork.com Page 26

Initial feedback from requisitioners: • LOVE the new tool!

• It is intuitive and easy to use • Requires no training www.TheAPNetwork.com Page 27

Initial feedback from invoice processors: • No more paper clutter • Ability to electronically search for invoices • Have visibility to PO right away • Can enter invoice and save when partially complete • Automated workflow • Automated escalation of workflow www.TheAPNetwork.com Page 28

Initial feedback from invoice processors:

(Cont’d.)

• Image is easy to send • Audit trail of communications within the tool • Outlook email does not get full www.TheAPNetwork.com Page 29

Lessons learned: • Listen to ReadSoft about the timing of training • Test!

• Catch up on invoice backlog before going live www.TheAPNetwork.com Page 30

What’s next?

• Vendor portal for payment inquiries • Add more vendors to EDI • Create uploads where they make sense • Global SAP www.TheAPNetwork.com Page 31

Thank You!

© 2011 Financial Operations Networks LLC