Measure to Manage: Using Metrics to Achieve Best-in-Class Performance

Transcription

1 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: 1

2 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: 2

3 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: 3

4 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: 4

5 Based on metrics met FY 2016 goal of stabilization The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 5

6 How KPIs Lead to Continuous Improvement The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 6

7 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: 7

8 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: 8

9 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: 9

10 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: 10

11 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, 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: 11

12 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: 12

13 Questions? The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 13

14 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: 14

15 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. The Accounts Payable & Procure-To-Pay Conference & Expo is produced by: 15