During part 1 of this blog series we looked at why going paperless is still a thing and in which areas benefits are still up for grabs. Within part 2, which you will hopefully stick around to read, we will outline the steps necessary to achieve a truly paperless procurement environment. And as you can probably guess, the focus sits within the realms of supplier enablement:
Costs to consider before embarking on your journey
Nobody likes surprises when it comes to additional costs, therefore it is important to highlight the most common areas of additional costs that some people miss.
- Higher volume suppliers are likely to want to automate invoice creation using EDI or XML. There will be a cost with this and some of this may be passed on to you (knowingly or otherwise).
- Portals offer easy-to-use PO-flip and invoice entry functionality for lower transaction volume suppliers. Transaction charges are levied by some portals, costs vary significantly depending on the charging model. It is recommended that a thorough understanding of these is gained before selecting a vendor. Other portals are of course free of charge.
- You will need either internal or external resources to complete the supplier enablement activities. A clear strategy, tested communications and a plan are required to minimise resource costs and to prioritise suppliers for enablement.
Whilst it’s not a walk in the park, it is possible to get a good chunk of your suppliers to invoice you electronically. We have seen with our own eyes some impressive results ranging from 70% to 90% e-invoices by invoice volume.
You’ll need to treat the initiative as a project to achieve such impressive stats, with senior sponsorship and a clear plan in place. Here are some of the things we have learned over the years:
We have covered this point first for a reason. If you don’t have sponsorship or a mandate from your executive team, you’re unlikely to succeed. There will be bumps along the road and you will need direction and support from your top team.
To put this in a practical example, some suppliers will push back when you ask them to move to e-invoicing. You will need that mandate and a solid relationship with the business to be able to hold firm and push back to the supplier that e-invoicing is a requirement. There will always be exceptions for mission critical, single source commodities –and I’ll come on to the processes and policies in the next paragraphs – but as a general rule you should confidently be able to tell the supplier that you will go elsewhere if they can’t comply with e-invoicing. To do this you need the support of the business and direction from your executives.
Once you have secured executive sponsorship, make sure you use it wisely and communicate the initiative across the business, so people know what you’re doing and why you’re doing it.
Policies should be created to define which suppliers should be enabled and what the procedures are if issues occur when enabling a supplier. Some of the typical questions asked when creating these policies are:
- All suppliers?
- Suppliers submitting over 4 invoices a year?
- Those traded with in the last 24 months or 12?
- What happens when they refuse?
- What if they demand payment to comply?
Without clear policies there is a risk that time is wasted enabling suppliers who should not be enabled. If an issue is escalated during the enablement process and no policies are in place, then the whole enablement process can be held up while a decision is made.
As we touched on above, not all suppliers want to move to e-invoicing and this can slow up progress in processing what is often a long list of suppliers that you want to enable. To better manage this we recommend setting up two teams.
The first team cover the process of contacting the supplier to sell e-invoicing and guiding the willing suppliers through the enablement process. The second team manage any issues that the first team encounter when selling e-invoicing or during the enablement process.
The two processes are different and require different skill sets. By segregating the work in this way you can use lower cost resources more efficiently in team one and more skilled trouble shooters in team two. The section below details how you might manage those issues efficiently.
A clear process and plan is required to effectively enable the different categories of suppliers. An important area often overlooked is an escalation process for when problems arise. Xoomworks have seen successful results with the following four escalation routes:
- Supplier is resistant to change – the trouble shooting team work with the business. They determine if the supplier should be handled as an exception or – if an alternative source of supply is available – cease to work with the resistant supplier and de-activate them in your system
- Contact details are not available or are incorrect – the trouble shooting team work with the business contact and master data team to determine the correct details and update them in your system, passing back to the enablement team once complete
- Lack of response from the supplier – if three contact attempts are unsuccessful, pass to the trouble shooters who will use the approach in either point one or two above
- The supplier raises a business question or issue – if the query can’t be handled by the enablement team, pass the query to the trouble shooting team who work with the relevant business or AP contract to resolve the query. It’s also useful to prepare and refine a list of FAQ’s that the enablement team have access to, to resolve queries instantly
Supplier Data Segregation
One size doesn’t fit all – meaning it will not be possible to enable all suppliers using the same e-invoicing method due to difference in supplier types. Providing options to your target suppliers provides the best chance of those suppliers adopting e-invoicing. For example, you can categorise your suppliers in to high, medium and low volume and propose an e-invoice method for each:
- High – full integration through cXML
- Medium – cXML or through a supplier network / portal
- Low – supplier network / portal
It’s advisable to review your master data prior to launching the enablement drive, with the aim of ensuring you have up-to-date supplier lists with correct contact details etc. You’ll need to balance the effort you put in to this though as you could spend months on this alone. By ensuring you have the escalation process described above you have two ways to manage bad data issues both proactively before you start and reactively once you’re off and running.
This is important as often, suppliers use account managers’ email addresses, personal emails or ones that are caught in junk filters meaning orders don’t get to the right people.
So there concludes part 2 of our blog, in part 3 we will explain how to engage Accounts Payable, Procurement and your suppliers all in harmony… yes, it can happen! We will then break down the KPI’s to measure for success along with a look at what do once you are live.