E-Invoicing and Supplier Networks: When Marge Met Six Sigma (Part 1)

In a presentation that I’ve used too many times on stage before, I would always pick on Marge. Depending on the role I needed her to fill in a given talk, Marge was a hypothetical buyer or AP clerk, drowning in paper. The challenge with Marge, I suggested, is not making her better at her job but rather helping her retire earlier—given that she would never be as efficient as an automated process in approving and matching POs and handling invoice exceptions, among other traditional P2P paper-pushing activities.

And most important, the best way of pushing Marge one step closer to Social Security is not to send her job to a shared services center in India or Kansas. No, the best thing any procurement, finance or operations executive could do would be to implement an approach that measured the total business efficiency, productivity, compliance and related costs associated with her manual work. Enter the world of manufacturing – and the world of measurement and continuous improvement, brought to you by Six Sigma trained practitioners.

Fortunately, I’m not alone in this type of thinking as applied to AP and procurement/finance intersections. Danny Thompsons’ new e-book, Rooting Out Invoice Exceptions: The Path to Straight-Through Processing, adopts more than a few lessons from green and black belt training in recommending “ten cultural/process changes for dramatic improvement” for AP and related e-invoicing/invoice automation efforts.

First off, these include the importance of “measurement” – a hallmark of any Six Sigma initiative in manufacturing. As Thompson observes, “we all know that you can’t manage what you don’t measure.” But he suggests that 57% of respondents to OB10’s recent survey “do not maintain key performance indicators (KPIs) to measure straight through process rates, i.e., invoices that are not blocked or require additional re-work before they can be approved for payment.”

So if you want to send Marge to Florida, begin with measurement. But don’t stop there.

To be continued.

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