Global Standardization of Terms Makes Kimberly-Clark’s P2P Team a Winner at SSOW European Awards

Kimberly-Clark Wins 2014 SSON Excellence Award for Value Creation With 500+ different payment terms in place across four global regions, Kimberly-Clark's P2P process was suffering from complexity on a massive scale. Find out how they came together globally to fix their problem. Read the winning application below. Sponsor: Betty Kenyon, Global A/P Process Owner Global Project Lead: Kelly Ufi, Procurement Team Leader Global Analyst: Dawn Powell, Senior Consultant, Global A/P Representatives from the Global Payment Terms project accept the CFO Leadership Award on behalf of the entire project team. Pictured (left to right): Heather McKinney (GP2P Process Owner), Matt Boughton (GP2P), Dawn Powell (Global A/P Analyst), Kelly Ufi (Project Lead), Kirsty Batchelor (Global Master Data), Cynthia Dautrich (CPO), Federico Chaiman (Latin America IT Business Partner), Mark Buthman (CFO), Betty Kenyon (Global A/P Process Owner). Introduction Kimberly-Clark is a global enterprise with 58,000 employees in 36 countries. The company’s accounts payable team processes 3.5 million invoices annually, representing an estimated US $16.7 billion in spending. Four ERP systems are in use – one for each global region: Asia-Pacific, Europe, Latin America and North America. Challenge and Strategy Kimberly-Clark recognized the need to standardize their global processes to focus on becoming a world-class organization. One of the first challenges they decided to tackle was standardizing the company’s vendor payment terms. It was essential that Kimberly-Clark improve the company’s ability to negotiate terms with global vendors. Different terms were used in all four regions, with more than 500 term variations companywide. After some benchmarking, it became apparent that it was time to reduce the complexity and move to a single, focused list of payment terms that would apply to all regions. A cross-functional Global Payment Terms Project Team was formed, involving members from Accounts Payable, Procurement, IT, Transportation, Communications, HR and Master Data from across the four regions. The team was led by a global Project Lead and a global Data Analyst. As the project team began its work, members knew they needed access to SAP data in order to define the present state and craft a plan to achieve the desired results. But they faced significant barriers: There was no consistency in coding across the company’s four ERP platforms. No associate had access to regional SAP boxes other than their own. Historical "spend by term" data from each ERP platform could only be exported as an Excel file that was millions of lines long and impossible to analyze. There were no IT resources readily available to support the project. Since a comparison and analysis using traditional methods was virtually impossible, the team began to explore other ways to address the dilemma and uncover the information it needed to deliver value-based results. Improvement Methodology Kimberly-Clark’s Accounts Payable team had recently implemented APEX Analytix FirstStrike® to help them protect against duplicate payments both efficiently and cost-effectively. This meant they were able to takelarge and unwieldy data from multiple payment platforms and transform it into actionable information. Data is pulled from each ERP platform, normalized and consolidated for analysis. As a result, the Kimberly-Clark A/P team recognized the ability of the tool to produce a variety of reports and data globally to manage the business and produce continual improvement. FirstStrike was selected as the best solution to overcome the barriers faced in accessing payment terms data isolated in the company’s four ERP platforms, and thus extending the value of the investment the company had made in the solution. Once the team determined their approach and decided on the information they needed, it took less than two minutes to pull a report of three years historical spend by term, using consolidated data that spanned all four regions. Team members could see the current terms used across each region and how frequently they were being used. Armed with the information thus uncovered, the team agreed to a list of "global terms." Each region’s participants had an equal voice in what terms made it to this final list, and the team challenged each other in order to keep this new list as small as possible. The project leaders worked with procurement buyers and with leadership to validate the need for every term added to the list. This new global list achieved a three-part objective: It drastically reduced the number of terms used, at the same time minimizing the amount of vendor renegotiation needed as the company eliminated previously used terms; and most importantly, it aligned the four global regions for the first time around a single goal that everyone supported, paving the way for future projects of this nature. As an implementation plan for the conversion was developed, the team generated a report that grouped vendors into three categories for appropriate action: Group 1: Vendors where the old terms and new terms were the same. These vendors were simply converted to the new terms without any notification of the vendor or the Kimberly-Clark buyer. Group 2: Vendors where the old terms were within plus or minus five days of the new terms. This list was passed to the company’s buyers for approval prior to implementation. Group 3: Vendors where the old term did not match an equivalent new term. This group would require renegotiation for alignment with the new global terms. One of the more difficult challenges was to find a comparable global term for suppliers with less common "monthly" terms (like 15th of the month). The team used the FirstStrike "Vendor Days to Pay" analysis to determine the most comparable net term based on a vendor’s previous payment history. Other specialized reports were used to identify legacy POs to convert to the new standard terms. To evaluate progress globally and ensure ongoing compliance, the team runs a monthly spend report by term and by region. By analyzing exceptions, the team knows where to direct its attention and how to maximize the ongoing value they return to the business. Other important facts about the implementation team and timeline: The team: A total of 19 individuals were part of the Global Payment Terms team, including a global analyst, global project manager, four regional subject matter experts from procurement and A/P, four regional IT business partners, two experts on vendor master data, a global communications specialist and two human resources representatives, one for T&E terms and the other for HR-related invoices. They worked closely with regional procurement and finance leads. No consultants or outside hiring were involved. The timeframe: Work began in earnest in February 2013 on what was expected to be a three-year project. March and April were spent gathering facts. In the month of May, the team began making decisions and planning implementation. The IT portion followed in the third quarter. The first compliance monitoring went live in August. Today, approximately 87% of the project is completed, with an expectation of 100% converted by June 2015, well ahead of schedule. Overcoming the Complexity of Change One of the main obstacles the team encountered involved the approval processes in place in the various regions. Most required multiple levels of approval in order to make a change to an SAP box, and there was a significant bottleneck after the terms were selected while waiting for these approvals. After gathering the names of more than 100 people who needed to approve the changes before they could be implemented, the project managers and sponsors decided to meet directly with the CFOs for the regions to see what could be done. The project team presented the goals and direction and requested assistance with streamlining this approval process. As a result of these meetings, a new approval process was implemented that significantly abbreviated the list of sign-offs required for this and all future global projects green-lighted by the CFO. The most difficult challenge was defining the benefit of the project. The easiest benefit to define at the outset was a reduction in complexity. It was not as simple to explain the monetary benefits that would come as an extension of the project, and so it was imperative that the team identify early in the process how these changes would improve the business in ways that could be quantified in terms of financial benefits. The team analyzed several vendors with different terms in different regions, and developed a sheet describing the difficulties involved in comparing these regional terms. This sheet served as a guide for all discussions on future value for this project. It was proof that the value was there for a few large vendors, which made it easier to convince customers that the value would be there for many vendors. Results and Improvements Though the project is ongoing, significant progress has been achieved to date. The cross-functional Global Payment Terms project team has successfully reduced payment term options from 501 to 27 days – a 95% reduction in complexity. Kimberly-Clark has converted 96% of vendors and 87% of spend to the new standard global payment terms (surpassing its first-year goal). A 100 percent conversion is expected by June 2015. Team members estimate that reducing the complexity of vendor terms has saved 19,000 hours of staff time – freeing individuals to perform more value-added tasks that benefit the business. What differentiates your achievements? One important differentiator for this project is that no incremental costs were involved. Instead, the team was able to accomplish significant results by thinking differently about the tools they already had at their disposal – creating significant new value from existing resources. One measure of success: The Global Payment Terms initiative won Kimberly-Clark’s prestigious CFO Leadership Award for the value it delivered to the business. The FirstStrike Global Implementation was also a finalist in the same competition for bringing the value of the tool to the entire global operations. . Both projects broke new ground as the organization’s first true global initiatives – setting an important precedent for future cooperation. One executive predicted that the organization would be looking back on these successes in years to come as the proof of concept that global projects can be done successfully in Kimberly-Clark. More info – read the interview with the leadership team: Award Winner: P2P Project Creates Value Through Data Analysis [eventpdf]

Global Standardization of Terms Makes Kimberly-Clark’s P2P Team a Winner at SSOW European Awards

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