Document Capture for Sales Order Automation The Value of Moving Document Capture to the Front Office Andrew Pery

Presentation Context “…physical assets are generally subject to decreasing returns while Knowledge assets generally enjoy increasing returns because knowledge is cumulative -- the more intensive the use of knowledge, the larger the benefits…” Baruch Lev. Intangibles, Management Measurement and Reporting. Brookings Institution Press, 2001.

Paper Consumption Trends Average Worker is estimated to use a sheet of paper every 12 minutes. Use of has resulted in a 40% increase in the use of paper. Worldwide growth of 600% in desktop printers since Global consumption tripled in the past three decades and is expected to grow by 50% by 2010.

Economic Implications Storage Space $ 40,000 to $ 60,000 to store 2 million pages of documents in file cabinets Lost Documents 3% of documents are misfiled, 80% eventually lost Cost of misfiled documents is $ 120 per document Postage Paper and Postage constitutes 70% of customer billing costs. Customer Relations 37% of time is allocated to discrepancy resolution and payment reconciliation

The Bottom Line “A Lawrence Berkeley Labs study estimates that the cost per ton of handling paper is: 20 times the cost of purchasing it 200 times the cost of throwing it away Automated processes can increase productivity by 50 percent or more”

The Changing Workplace Percentage of individual’s performance that will depend on group input Source: Gartner Work Styles

Capture Device Proliferation 370K units in US $350M in US (2007) 22% growth from 2006 to M units in US 14% growth (2006 – 2007) Becoming standard part of all office infrastructure 130M units in US 3-5+ megapixel cameras with optical zoom will become the standard on phones within the next 1 – 2 years 52M camera phones with 3 or more megapixels worldwide in M by 2011 Desktop Scanners MFPs Camera Phones Device Proliferation & Maturity

Document Capture Trends

Where Does Scanning Occur? Key Finding: Scanning is frequently introduced late in the process—a missed opportunity to automate data capture, workflows or information exchange. (% of respondents by choice)

Where Should Scanning Occur? 71% respondents indicated that scanning should occur at the beginning of the business process, with intelligent document recognition, extraction and notification reducing processing costs. % of respondents Agree/Strongly Agree Source: IDC

Order Processing Why Automate Order Processing?

Business Challenges of Order Automation Fax image quality (90% of orders are faxed) There is no such thing as a typical, standard purchase order Sales orders vary in format between customers, especially with tabular data, and can span multiple pages All sales orders have common elements, but there are too many different formats to template Capture of line item detail is an absolute requirement

Sales Order Processing: Key Messages Reduce the order to cash cycle Start workflows as quickly as possible Reduce exceptions – wrong shipments Control the process as soon as possible Improve customer relations

Order Processing Cycle Improve Data Quality Detect Missing, Incomplete, or Wrong Data Confirmation No error detected Order Approval Workflow Data Capture Separation Classification Extraction ERP Validate Order Dispute Resolution Process- Ready Data Data Improve customer relations by confirming receipt of order

Order Processing Cycle Improve Data Quality Detect Missing, Incomplete, or Wrong Data Order Approval Workflow Data Capture Separation Classification Extraction ERP Validate Order Dispute Resolution Data Notification Error detected NOTIFICATION Improve customer relations by notifying them of errors

Kofax Solution to Automate Sales Order Processing 1 Control Paper Flow 2 Reduce Manual Labour 3 Integrate Electronic Sales Orders 4 Enhance Process Transparency 5 Improve Data Quality + Workflow = Automate the whole process & deliver value at every step!

 Early Scanning 1 Control Paper Flow

Distributed Capture Scan at Document Origination Central and distributed capabilities Atlanta Seattle Phoenix New York

Image Quality Effective scanner throughput: User interface/Image processing/ speeds and feeds Effective paper throughput: Increase image quality/Reduce file size/Data ready Effective people throughput: Ease of use/Focus on business process Kofax VirtualReScan

Business Challenges Step 1 is important because… Most invoices are still received via postal mail, often through different entry points.. Forwarded manually to Order Department Are lost / misplaced Delayed processing No visibility of outstanding payments

 Automatically extract invoice information  Includes fax, (& trailing documents) 2 Reduce Manual Labour

Extraction and Classification 1. Classify Document Type Invoice Credit Note x Purchase order x etc Supplier 1Supplier 2 Supplier 3

Extraction and Classification 2. Extract and validate information 3. Feeds ERP systems (SAP, Oracle, Lawson, etc)

Business Challenges Step 2 is important because... Data has to be manually keyed into LOB applications. Manual intervention results in Processing delays High / random error rates Separate manual processes reg. and fax Elevated costs Negative impact on relationship with suppliers

Main Benefits Reduced AP labour (time saving) Significant cost reduction Prioritization of invoices (for early payment discounts,...) Increased supplier satisfaction: faster processing & payment times Higher employee satisfaction, less frustration

 How to make my customers send electronic sales orders? 3 Integrate Electronic Sales Orders

Business Challenges Why is it hard to on-board most suppliers? Lack of IT skills to setup EDI EDI is a very costly and complex solution. Cost to supplier between $8k and $15k Limited resources to roll out EDI

Kofax e-Transactions Accounts Payable System Invoicing System Postal Service (2-3 days) ERP System Envelope Stamping Mail Open, sort, distribute mail (1-2 days) SellerBuyer ERP System eInvoice Sender eInvoice Receiver Instant electronic delivery (2-3 sec)

 Send receipt confirmations  Trigger exception notifications 4 Enhance Process Transparency

Business Challenges Step 4 is important because... 10% – 15% of suppliers place inbound calls relate to the status of the transaction Up to $30 per call Have you received my order? Is the order OK? Has my order been processed? When will shipment occur?

 Leverage communication to initiate exception handling (outsource to purchaser)  Help to automate the matching 5 Improve Data Quality

Business Challenges Step 5 is important because... It is hard to match sales orders due to: Data errors Business logic errors Invoice conformity issues Extraction related issues AP personnel have the burden to manually fix the problem

Automated Order Processing Features Import order from fax server Extract order information Validate part numbers, unit prices, etc. Locate the customer number Create order in the ERP system Route order to appropriate workflow for fulfillment

Benefits of Automated Order Processing Reduces order fulfillment time and cycles Streamlines efficiencies Reduces costs Enhances accountability, Accelerates business processes Optimizes corporate performance

Use Case: Promotional Products Company Use Case Sales orders 100,000 customers, 300 fax lines Faxed orders Business Problems Lost/misplaced orders Customer service back log 11 individuals processing orders (3 just to confirm customer number) Service-level agreement of 48 hours to fulfill an order Kofax Solution 24-hour turn-around time over 48 Automatic confirmation/notification of incorrect orders

Use Case Promotional manufacturer (balls, hats, calendars, awards, etc.) Multi-million revenue, 5 operating divisions 300 fax lines, 100,000 customers, processing orders daily 95% of orders received by fax, 4% , 1% hard copy 25% of faxes arrive at the wrong division/group 25% of orders result in a customer call asking, “Did you get my order?” 11 individuals processing orders (3 of them just to confirm customer number) Service level agreement of 48 hours to fulfill an order

Kofax Capture VRS Image Quality Integrated Product Portfolio Transform Intelligent Classification Capture Front-Office Back-Office Deliver Release to Multiple Back-Ends Kofax Transformation Modules Kofax Document Exchange Server Integrations with hundreds of systems Kofax Express Kofax Communication Server Data ValidationNotification

Order Processing Questions?

Why More Services Than an Invoice Project? Order processing is dependent on line item detail Quote includes the definition of up to 75 top customers Order processing requires separation of orders Without the inclusion of Kofax Transformation Modules Professional, scripting is added to separate orders upon the occurrence of a new purchase order number Fax receipt date must be parsed from fax server data file Lookup of customer number Notifications Internal External Business rules around Ship To Address Higher project manager involvement

Thank You ! For further information, please contact: Joanne Oldfield Director, Professional Services Americas Phone: ext For further information, please contact: Joanne Oldfield Director, Professional Services Americas Phone: ext