Efficient and Streamlined Incoming Invoice Processing

SAP invoice management by Open Text

Oct 2012

Rob Kortooms

Global Solutions Delivery

MSD animal Health

2

Agenda

• Introduction speaker

• MSD Animal Health

• Invoice management Business Requirements

• Solution direction

• Pilot Implementation DE

• Rollout NL

• Template Optimization Project (TOP)

• Roll out USA (third party)

• Lessons learned

3

MSD Animal Health

Human

Health

Animal

Health

Consumer

Care

4

Strong Animal Health Business

• With about $3.0 billion in sales a global leading and one of the fastest

growing AH companies

• Offices in more than 50 countries, marketing activities in over 140

countries

• Today a leading vaccine company and a leader in all major species

segments except companion animals

5

AT VIENNA DE BURGWEDEL DE FRIESOYTHE DE KOELN DE NEUFAHRN DE SCHWABENHEIM DE UNTERSCHLEISSHEIM ES MADRID ES SALAMANCA

US BATON ROUGE US CHARLOTTE US DESOTO US ELKHORN US MILLSBORO US OMAHA US SUMMIT US WORTHINGTON

Embedded / Full Atlas: 16 Manufacturing sites 11 Commercial operations 9 R&D sites 1 Shared Service locations 21 Warehouses

FR ANGERS FR BEAUCOUZÉ FR IGOVILLE FR TOURVILLE GB HAREFIELD / NEWBURY GB MILTON KEYNES HU BUDAPEST NL BOXMEER NL DE BILT

Connected / Atlas lite: 3 Manufacturing sites 43 Commercial operations

Atlas: embedded in 27 locations in 8 countries

6

Invoice management Business Requirements

• Scan bulk of invoices with OCR (Optical Character Recognition).

• Automatic Creation of the Invoice document (finance posting) in the SAP

system.

• Allow processing of all types of invoices (PO and NPO) for both paper

and electronic invoices

• Electronic /workflow approval process with SOD and MSD approval

matrix Compliance

• Automatic archiving and retrieval of all scanned images

• Solution must be fully integrated with the current SAP ATLAS system

• Able to support both single operated companies and clusters of

companies using a Shared Services Center scenario

7

SAP Invoice Management by Open Text

Comment Trigger workflows Post invoices

Invoice Recognition

Collaboration & Monitoring

Invoice Completion

Invoice Verification

OCR Option for

SAP Invoice

Management ERP (FI/AP)

Payment

SAP Invoice Management

Prüfung und

Vervollständigung

UMWANDLUNG

VERIFY AND

COMPLETE

EXCEPTION

HANDLING APPROVE

Automated reconciliation and posting

TRANSFORM PAY

OCR

Validation

Inbox (incoming mail / fax)

PREPARE

SAP Archiving by

Open Text*

* or another SAP ArchiveLink-certified repository

Scanning

Archiving

8

SAP Vendor Invoice Management – Components

Workstation

• Software OpenText Enterprise Scan 10.0.0

Kofax Virtual ReScan

SAP GUI

• Scanner Fujitsu fi-6670

SAP servers

• OpenText VIM 6.0 Support Package 2

Archive server

• OpenText Archive Server 9.7.1

Text recognition server

• OpenText Invoice Capture Center 6.0 Support Package 2

9

Invoice Verification Scenario’s

PO related - 3-way match (with Goods Receipt)

PO related - 2-way match (without Goods Receipt)

Non-PO related

Goods

Receipt

Purchase

Order Invoice Payment GPO

Approval Purchase

Order Invoice Payment “SPO”

Approval Invoice Payment NPO

Logistics

Invoice

Verification

PO Invoices

Conventional

Invoice

Verification

NPO Invoices

Posting

Posting

Posting

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Invoice Verification General Process - 1 S

can

ne

r

Approval?

Accounts

Payable

Scan

Invoice

Check

Index Data

Check

Duplicate

Invoice

Release

Invoice

Post

Invoice

Appro

ver

Approve

Invoice

Y

N

OAWD

Indexer

Buyer

/

Receiv

er Handle

Price/QTY

Discrepancy

11

Invoice Verification General Process - 2 S

can

ne

r

Approval?

Accounts

Payable

Scan

Invoice

Check

Index Data

Check

Duplicate

Invoice

Release

Invoice

Post

Invoice

Appro

ver

Approve

Invoice

Y

N

OAWD

Indexer

Buyer

/

Receiv

er Handle

Price/QTY

Discrepancy

Duplicate check is done in

background based on same

Vendor, Reference

Manual or Auto Posting

Can be defined for PO

and/or NPO invoices.

Manual or Auto Release.

Can be defined per

Company Code.

Price discrepancies are handled by Buyer

QTY discrepancies are handled by Receiver

Both roles are defined by Purchasing Group

SPO Invoices are approved by Requisitioner in PO

NPO Invoices are approved by users assigned

in Chart of Authority (COA Table) by Cost Center,

Internal Order or G/L Account.

Index data is leading!

12

DE Project

1st Implementation of VIM in Shared Service Center

Schwabenheim on 20th December 2010 – ESC 9.7.1, ICC 5.2 SP4, VIM 5.2 SP3

– Full technical implementation by external party

– 6 Accounts payable employees scanning 40.000 invoices / year

– Many issues (technical and functional); 1 person dedicated support VIM

– Upgrade to VIM 5.2 SP4 with HF6 in April 2011 to solve some main

functional issues (posting date, large invoices (> 15 pages), visibility of

approver comments)

13

NL Project

2nd Implementation of VIM in Shared Service Center

Boxmeer on 7th June 2011 (phase 1) – Phased implementation by MSD-AH (Own IT dep & PM)

– Own authorization concept designed and developed in VIM

– Own bank account check designed and developed in VIM

– Started with 5 accounts payable employees scanning 1.000 invoices /

month

– End up with 9 accounts payable employees scanning 40.000 invoices /

year (including phase 2)

14

Status after DE & NL implementation

After go-live still helpdesk tickets and SAP messages at

Open Text.

Template Improvement Project (15 Aug – 15 Oct 2011)

• Process optimization to gain efficiency

• Resolving main helpdesk tickets / changes to improve functionality

International roll-out of improved template

(from 15 Oct 2011 onwards)

15

Template Optimization Project

Business process workshop 25th-26th August 2011

• NL & DE

Accomplishments

• Improved processing (manual and automatic posting)

• Enhanced reporting

• Extended Chart Of Authority

• Efficient processing, skip validation step

• VIM 5.2 SP 5 & 6

• Original developments replaced by Open Text customizing

Seamless Go-live 9th Nov 2011

16

USA Project

Full USA implementation on 13th Jan 2012 – ICC 6.0 SP2, VIM 6.0 SP2

– Scanning Mexico, File transfer to SAP, AP Processing India, approval

USA, Posting India

– Full technical implementation by MSD AH

– 8 Accounts payable employees scanning 55.000 invoices / year

– Invoices only PDF

– External Scanning and AP party

17

VIM Process USA

SBS Atlas

SFTP

ZIM_GET_IINVOICES ICC

MERCK

SFTP

server

PI

Select Company code

0800

0789

SFTP

Atlas

Filename Determines

Company code

18

VIM Implementations Timeline

– VIM in Shared Service Center Schwabenheim on 20th December 2010

– Shared Service Center Boxmeer on 7th June 2011 (phase 1)

– Template Improvement Project (15 Aug – 15 Oct 2011)

– Full VIM USA implementation on 13th Jan 2012

– VIM UK 16th April 2012

– Vim France 9th May 2012

– VIM Spain 18th June 2012

– VIM Austria 27th August

– VIM part of FI template and will be part of Rollin’s in Italy & Australia.

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Lessons learned / Recommendations

• Business process design leading

• Early involvement of It department

• Business input leading for approval workflow

• Business Change management leading

• SAP invoice management in 5.2 SP3 was not

mature. Significantly improved in in 6.0 SP2, but still

room for improvement (e.g. multiple account

assignment on index screen, subsequent debit /

credit indicator, …).

Recommendation

• Design your template and implement baseline

configuration with your company’s localization

requirements .

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Improvement

• Visible efficiency on invoice handling and payment of

Invoices.

• Central processing and storage of invoice data

Traceable digital approval flows, No more invoices

floating around in your company (automated and digital

signature process via the WF approval).

• Promoted harmonized and standardized invoice

processing within the organization.

21

Appendix

- Template process flows at MSD AH

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Check Index Data

Add / Change / Delete Index data

Start Approval Workflow

Mandatory fields can be defined

by DP document type.

23

Check Duplicate Invoice

VIM Duplicate check based on:

- Vendor Number

- Reference Number

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Approve NPO Invoice

Only possible for Requester (1st Approver)

to change G/L Account, Cost Center, etc…

25

Approve SPO Invoice - 1

26

Approve SPO Invoice - 2

Only Requisitioner (in CAPITAL letters) is able to approve SPO Invoices

Approval Limits can be set per company (currently EUR 1.500)

27

Post NPO Invoice Manually - 1

Transaction FB60 is called.

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Post NPO Invoice Manually - 2

Text is copied from 1st index line data

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Post GPO/SPO Invoice Manually - 1

Transaction MIRO is called.

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Post GPO/SPO Invoice Manually - 2

Text is copied from 1st index line data

Amount and Quantity is copied from index line data

31

Unable to Auto Post

Check the error log why auto post failed

32

Handle Price / QTY Discrepancy

Quantity discrepancies are handled by Receiver

Price discrepancies are handled by Buyer

33

Release NPO Invoice

NPO Invoices are blocked for payment by default.

It is possible to have this payment block automatically

removed by Company Code.

34

Release GPO/SPO Invoice

Only GPO / SPO Invoices with Price or Quantity

Discrepancies are blocked for payment

This block is removed automatically in MRBR Batch Job

when the Receiver or Buyer confirms Pay as Invoiced