Friday, December 9, 2011

Texas Industries, Inc (TXI), Oracle WebCenter IPM, and AP Automation

Here's a topic that you likely don't think much about but has a very large impact and application within any medium to large size customer.  It's around taking accounts payable invoices, pulling them into a managed infrastructure, and reducing the need to manage all kinds of forms and paper documents.

Sexy? Not really.  Big business benefit for a reasonable investment?  Absolutely.

At Keste, we worked with Texas Industries, Inc during this year to provide a solution in just this space.

Borrowing from TXI's site, they are a leading supplier of cement, aggregate and consumer product building materials.  All types of construction - residential, commercial and public works - use these materials.  They have 4 Cement plants in TX &CA, 18 Aggregate plants, and over 70 Concrete plants to meet their increasing demand from customers.  TXI is the largest, low-cost producer of cement in Texas. When the economy recovers, TXI will enhance its market position when it completes its expansion project to more than double the existing production capacity at our Central Texas cement plant.  They have similar expansion plans for their CA plants as well.  So needless to say, they aren't the exact profile that you might expect a high tech AP automation process to have a lot of value but they absolutely are a key target area for these types of solutions.

Reducing operating cost is one of the main reasons to initiate this project because if look at the Elements of a Typical AP cost from the chart below, you can see that the labor cost is by far the largest cost in the invoice processing cycle. 

So in order to reduce the cost of labor, it requires an understanding of the elements that contribute to the total cost.  For TXI, the main cost areas were manual data entry, approval routing and manual
approvals.  The best way to eliminate this manual process is through automation.

Invoices were mailed to virtually all plant/office locations. Each location has resource(s) dedicated to handling AP invoices and TXI had over 50 people involved in the process.  At each plant location from opening the mail, to identifying the approval hierarchy, through routing the invoice for approval, took nearly 30 days.  Some of the plants are located very close to each other and have shared management resources, but these were still very laborious and very expensive processes.

So the overall goals were simple:
1. Minimize manual data entry
2. Eliminate manual paper handling processes
3. Reduce employee resources involved in AP invoice processing

Our specific target was to get all invoices into the AP system in less than 5 days (compared to ranging from 1 day to 2 weeks or longer).
This would enable three changes to the business:
1. Allow for additional earned discounts
2. We can identify liabilities much faster
3. We could better assess the daily cash needs 

Now lets talk about how TXI's new invoice process works.  The diagram below also illustrates this.  Invoices are no longer processed at the field office/plant locations, they are all sent to central processing center. This immediately reduces the need for an AP Processor in each field office. For TXI, the AP processor total headcount was reduced by a total of 47 people.  These 47 people were then able to spend more time helping the field offices serve customers or retrained in other parts of the business.

WebcenterCapture, which starts the process by scanning documents such as invoices and receipts, and then capturing important data from them for indexing before committing them to WebCenter Imaging. 

There is 1 person that is performing invoice scanning through the use of Oracle Forms Recognition technology.  This allows us to achieve over 75% of scanned invoices to be entered into the system without any exceptions.  This means that the 3 other AP processors handle the exceptions.  Their job focus shifts from data entry to data review, editing, & workflow monitoring.  A much more efficient use of their time and much more valuable to the overall business.

In addition, Oracle WebCenter IPM 11g was used for coding and handling the different validation errors in combination with Oracle eBusiness Suite as the AP system source of record.  

Webcenter Content is the storage and content lifecycle management system for all financial documents. It ensures that no more costly
shipping, handling and retention of paper is required, as documents such as invoices can be imaged at the front end of the process, and then effectively managed throughout the various stages of business operations until they need to be archived for safekeeping and data offload. Secondly, it allows for imaged invoices to be attached to workflows, and be retrieved through E-Business Suite interfaces for processing, such as the Payables UI.  So, this implementation cut down on processing times by ensuring that AP Processors never have to leave their environment to accomplish tasks like key from image or P.O. matching. 

Leveraging the power of Oracle BPEL Process Manager workflow engine included with the Oracle Business Process Management Suite, TXI implemented advance exception handling capabilities for routing and delegation to handle tasks. The Business Activity Monitoring component provides a customizable dashboard view of key metrics, enabling the A/P Manager to gain the insight into any process bottlenecks before they become an issue. 

And the actual goals have been reached and exceeded to the extent that invoices without any exceptions are in the system on the same day.  At worst case for the exceptions, invoices are in the system in less than 5 days, always!

For the future, TXI plans to leverage this solution as a foundation for automating other operations such as expense management, contracts or receivables, and various HR processes.

All of this was kicked off by a discovery workshop run by Keste to nail down the specific business requirements and put a phased delivery plan in place.  Anyone at Keste can provide you more specifics! But you can download the whitepaper and learn more from


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