KMD Efficient Invoice Management

Leading European Dairy Arla Foods chose 1st generation of KMD’s Efficient Invoice Management to optimise Accounts Payable processes.

At Arla Foods, bills don’t just get paid. By far the majority of them get paid on time. And should someone contrary to expectation not live up to this goal, it won’t be because the bills have been mislaid in the other piles on the table, shelved by an employee who's gone on vacation, or simply gone missing. That is simply no longer possible, as the dairy company has introduced a system for electronic invoice management – and has since then created a formerly unknown overview in the creditor department.

In the old world – which does not date further back than the 80s and the 90s where Arla Foods begun its ambitious growth strategy by acquiring and merging with a long list of companies with a wide geographical spread - all incoming invoices were managed manually.

Put into practice, this meant that the creditor department received all paper invoices, registered them in the IT system in order to print a so-called entering slip with all necessary information at a later time. This slip and the appurtenant invoice were then placed in an internal envelope and sent out to the individual operation centres, which took care of invoice approval, followed by trusted employees re-entering all invoices into the system. And then the invoices could be paid.

As we are talking about one of the world’s leading dairy companies, we are also talking about a substantial number of invoices, approx. 2,000 every day in Denmark alone. 400,000 every year, with and without purchase orders.

First there was darkness

”In spite of the fact that we at corporate level had decided to unify the company in one system, SAP, we made the mistake of continuing to manage invoices in the old system. This happened as result of our not wanting to launch too many sub-projects at the same time. Or put in another way: When you are standing at the foot of a mountain, it may appear as a shortcut to continue to make use of familiar systems or routines rather than bite the bullet and simply climb the mountain as best you can", Claus Buus Søgaard, project manager at ARLA Foods, explains with a smile.

”In short, we started out by choosing an interface solution. And I advise all other companies against doing the same: Don’t ever do that. It simply doesn’t work.”

However, we reached the middle of 2003 before we were ready to take the next step. We knew that we wanted an invoice scanning system and a workflow. And our demands for the solution were clear: It had to be as integrated with our SAP-platform as possible. And it had to be as flexible and user friendly as possible due to our relatively large number of invoices”.

So we searched for the right contact

”We scanned the market. And we scanned it thoroughly”, Claus Buus Søgaard continues.

Arla Foods was looking for a solution with high level of flexibility in relation to the wishes for integration with the SAP-system and consequent transparency in the transactions. The combination of the 1st generation of KMD Efficient Invoice Management and the high level of workflow experience that KMD’s Danish partner SPRING CONSULTING brought proved to satisfy the expectations of Arla Foods.

And then there was light

”It was introduced out of nowhere. And suddenly we had a solution which was based on the standard, but which also had the ability to incorporate our specific wishes, demands and needs. Thereby SPRING CONSULTING provided us with the one thing no other supplier had been able to: The option to make a lot of choices as far as setting up the mentioned workflows was concerned”.

”That made it easy to go from thought through decision and on to action. We started the project with kick-off in January 2004, and by June 1st that year, we had the solution up and running on the first pilot operations centre. And even though we spent a lot of time together doing project management that is actually one of the biggest advantages when working with SPRING CONSULTING: All is planned from the start, and arranged in nice plans. And all deadlines are not just watched carefully during the process. They are also met”, praises sound from Claus Buus Søgaard.

Success based on change management

”One must remember however, that rationalization was the main reason for launching an electronic invoice management system for all our operation centres. As a result, all operation leaders and employees knew from day one that we were dealing with a large transition. Tasks that had previously been handled by people typing in invoices in order to ensure that they were sent to the right place could now be managed automatically by workflows in the system".

”The aim was to improve efficiency, and therefore a large part of the project was focused on change management in relation to a list of operational centres, which are on different levels of IT usage. While some welcomed the higher level of efficiency, others were more cautious and reserved. There was – and still is – much difference between the users of the system".

”Therefore, it was with some nervousness that we completed a user survey last year in March – right on top of implementing a big change in the system - where the creditor department was able to score between 0 and 5 points, 5 being the best, in level of user satisfaction. All our nervousness was put to shame however, as we scored 4.5 in Denmark and just a little less in Sweden”, the project manager says with relief in his voice.

Success is gladly shared with SPRING CONSULTING

“SPRING CONSULTING is responsible for a great deal of the good results we have achieved with the solution. Especially their way of involving SAP HR in the solution has resulted in us now taking full advantage of the HR-system".

”At the same time, they have constantly managed to challenge us with regard to laying down the rules which are a prerequisite for the work with workflows. Overall, this has provided us with a solution that sets our circulation speed to an average of 5 days which is an enormous improvement".

”So all I can say is that I am impressed. Not only with SPRING CONSULTING's great business and system insight, but also with their ability to manage a project and ensure constant progress. At the same time, it has been of significant importance that they have been such good sparring partners, and have shown the willingness to challenge us at all times. All in all, it has been an impressive process and cooperation”, Claus Buus Søgaard, project manager at ARLA Foods, finishes.