1. Your Business Objectives and Initiatives
Continuous & disciplined approach to cost management
Grow without huge increase in headcount
Cost Reduction
Actionable visibility over company wide spend
Adequate process documentation / audit trail
Manage supplier and AP risk
Risk Management
Drive out cost quickly from newly acquired operations
Ramp up new stores / operations quickly
Speed of Business
This is a template…customize for your situation….

2. Establish Measurable Success Metrics
Value Driver
Current Baseline
Target KPI
Improve Spend under Management
$200M addressable spend
40% under management
10% average savings
80% to 85% spend under management
Reduce Budget overspending
1% “overspend”
50 to 75% reduction
Increase Savings from early payment discounts
2% early payment discount
5% spend eligible for early payment discounts
10% to 15% spend eligible for discounts
Reduce overpayment to Suppliers
0% 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….

3. Critical Metrics for Source to Pay
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….