Your Business Objectives and Initiatives

Continuous & disciplined approach to cost management

Grow without huge increase in headcountCost ReductionCost Reduction

Actionable visibility over company wide spend

Adequate process documentation / audit trail

Manage supplier and AP risk

Risk ManagementRisk Management

Drive out cost quickly from newly acquired operations

Ramp up new stores / operations quicklySpeed of BusinessSpeed of Business

This is a template…customize for your situation….

Establish Measurable Success Metrics

Value Driver Current Baseline Target KPI

Improve Spend under Management

$200M addressable spend40% under management10% average savings

80% to 85% spend under management

Reduce Budget overspending

$200M addressable spend1% “overspend”

50 to 75% reduction

Increase Savings from early payment discounts

$200M addressable spend2% early payment discount5% spend eligible for early payment discounts

10% to 15% spend eligible for discounts

Reduce overpayment to Suppliers

$200M addressable spend0% 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 best-in-class)

This is a template…customize for your situation….

Critical Metrics for Source to Pay

Source Procure Pay

• % of suppliers with 80% spend

• 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

• % of spend under management (i.e. buying at negotiated prices and terms)

• Lost savings because of contract non-compliance (%)

• % over / under budget

• Cost of processing PO

• PO processing cycle time

• % of PO sent electronically

• 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….