The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 1 9/9/2016
Measure to Manage: Using Metrics to
Achieve Best-in-Class Performance
Facilitator: Elaine Stattler - APM, CPC
Editor APP2P and ARO2C Network
Panelists:
Chris Dritsas - Accounts Payable Manager
NSAM Financial Hub
Cameron, a Schlumberger Company
Kelly Coxon – APM, APPM, AIRP
Director, Procure to Pay
UPMC, Greater Pittsburgh Area
Derrick Skrycki - SSC Manager
Accounts Payable and Receivable
Shared Services Center
University of Michigan
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 2 9/9/2016
Why Metrics?
Without them:
– You are running your
business blindfolded
– It is harder to identify and
correct inefficiencies
With them:
– Leaders can understand
business health
– Customers are provided
transparency
– Staff are provided
empowerment
– Improvement opportunities
become apparent
– All parties are on the same
page
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 3 9/9/2016
What Metrics Can Do For You
Reviewing metrics can:
• Help determine whether your workload is growing or
shrinking
• Assist you in workforce and schedule planning
• Enable you to identify strengths and weaknesses your
processes
• Help you manage more effectively by enabling you to
prioritize and focus
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 4 9/9/2016
Case in Point: Stabilizing Performance
How the University of Michigan met its full-year 2016 goal of
stabilization…
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 5 9/9/2016
“Based on metrics – met FY 2016 goal of stabilization”
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How KPIs Lead to Continuous Improvement
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Relate KPIs to Improvement Goals
1) Be methodical when choosing and measuring KPIs to ensure the
metrics provide the desired result. The American Productivity and
Quality Center (APQC) recommends benchmarking and reporting on
the following key performance measures:
Cost effectiveness
Staff productivity
Process efficiency
Cycle time
2) All key performance indicators (KPIs) should relate to distinct
improvement goals and be directly aligned to the form, fit, and
function of the specific organization.
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 8 9/9/2016
Consider These Questions
3) To select effective KPIs, AP should pose these questions:
What metrics do we use now and what is the current baseline
against which we measure progress?
What is important to the AP function and the organization as a
whole in terms of completing strategic objectives?
What is important to our customers, both internal and external?
What can we measure to help identify areas of opportunity?
What measures can we identify consistently, repeatedly, and
systematically?
What is the final goal for each measurement and for how long
will measurement be needed?
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 9 9/9/2016
Take Corrective Actions 4) As AP's performance goals are met, corrective actions should be
implemented based on what is learned through measuring KPIs.
Good steps to help determine corrective actions include the
following:
Implement disciplined and robust reporting systems.
Identify team members and define responsibilities and authority.
Establish team goals and associated incentives.
Perform a root-cause analysis.
Document issues and concerns.
Solicit ideas from others in finance and other functional areas.
Define containment and counter measures to stop problems from
worsening.
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 10 9/9/2016
Report on Your Findings
On a monthly basis, compile and distribute an “AP Executive Reporting
Package” that includes the performance metrics deemed critical to the
business.
Provide a snapshot of your metrics by presenting current and past trending as
well as verbal commentary that elaborates on your findings and suggests areas
for improvement based on established industry benchmarks. The package
utilized by Cameron/Schlumberger includes the following metrics:
Cost per invoice (CPI): CPI is measured in two ways and is reported on a regional and
global basis. Metrics include analysis by way of operating costs per invoice as well as payroll
costs per invoice and are compared to industry benchmarks. Our Global Payroll CPI is
considered “Best in Class” based on the “CEB 2015 Benchmarking Methodology” study.
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 11 9/9/2016
Reporting, cont’d
Global invoice posting volumes: Global invoice posting volumes are measured by the
number of transactions processed on a monthly basis and include PO, Non-PO, P-card,
T&E, and Intercompany related items.
General invoice aging: General invoice aging is measured by analyzing our open/aged
invoices for each division based on scan date into our Vendor Invoice Management
system. Then we further categorize the open invoices into aging buckets (1-10 Days, 11-
20 Days, etc.)
Process Cycle time: For cycle time (receipt-to-post), we measure the validation and
processing steps required to post an invoice (PO & Non-PO) received either through e-
mail or paper in “calendar days”. This measurement excludes any automated processing
such as SUS/EDI.
On-time payment analysis: This is measured by calculating the difference between the
actual payment date vs. the date payment is due.
In addition to the analysis of these metrics, the reporting package features measures on automation trending, payment methods, blocked
invoices, # of invoices processed per FTE and updates on major accomplishments and initiatives within/affecting Accounts Payable.
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 12 9/9/2016
Case in Point: Resolving Help Desk Backlog
Challenge: Our Cameron AP help desk experienced a backlog in open incident tickets and
several were aged greater than 30 days. We performed a root-cause analysis, analyzed our
findings, developed best practices, and realigned our HelpDesk processes. This realignment
included the use of an automated system to help us generate, monitor, and report on incident
tickets.
Outcome: Within 5 weeks of the help desk realignment, our team achieved a significant
process turnaround and was able to meet the aggressive performance metrics that had been
established: 90 percent of open tickets were 0 to 5 days old, 5 percent were 6 to 10 days old
and 5 percent were aged > than 10 days. (Of the 90%...80% of those were aged 3 days or
less).
“Improving this metric was all in the way we realigned our process, consistently monitored/
reported on a daily basis, and made adjustments as needed.”
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 13 9/9/2016
Questions?
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 14 9/9/2016
Key Takeaway
Adopt the philosophy that “problems become opportunities when the right
people join together.” “Be the Bridge” in the following ways:
• Through staffing, to ensure you have the right people, in the right
place, at the right time, doing the right things.
• By leveraging technology to streamline work processes and create
synergies.
• By utilizing best practices through a continuous improvement platform.
• By establishing and fostering a positive work environment for all staff.
• By fostering and cultivating productive working relationships.
The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 15 9/9/2016
The Bottom Line
Metrics should be usable and actionable
The implementation and maintenance of KPIs need to be
systemic, interactive, and provide a framework where
issues, concerns, ideas, and other criteria are exchanged
and communicated effectively throughout finance and the
larger organization.