Paper-based information - an obvious candidate for process improvement

In today’s world, organisations are faced with ever growing challenges. Globalisation and increasing competitive pressures not only demand cost reductions and compliance to severe legal directives, but moreover obligates organisations to clearly differentiate their products and commit to a full customer focus.

As a consequence, there is a market shift towards process automation with organisations adapting their business processes to maximize the automation bene¬fits. C-level executives are looking for ways to extend the lessons and benefits of e-business to other business processes. Business process automation (BPA) and re-engineering are „top of mind“. The potential return on investment and tangible increase in customer satisfaction are compelling.

An infrastructure built to support real-time e-business processes is predictably ineffective when dealing with paper. While organisations want to extract, categorise and transform the vital information in those documents at their point of origin for immediate use in a business process, manual methods of extraction and validation tend to be costly and faulty.

For this reason, there is a need to unite both paper and electronic information sources, more easily integrate information where it enters an organisation, and provide knowledge workers with simple tools that work with existing corporate applications.

"There is an overwhelming need to automate the plethora of business transactions that are paper-based, or that include one or more paper-based sub-processes, to reduce costs and improve efficiency. Corporate governance requirements which require traceability and information security compound this problem and customers, suppliers and partners demand fast and accurate responses to queries, regardless of their original form," said Melissa Webster, program director at IDC.

A perfect example how organizations can benefit from the elimination of tardy and error-prone manual processes by deploying an intelligent automation-solution is the following case study.

Mazda MLE Is Driving with Kofax Intelligent Capture & Exchange for Faster Automated Invoice Processing

The Situation
Mazda Motor Logistics Europe (MLE) is the division of Mazda that ships cars and parts to European customers. On top of its logistic activities, MLE offers financial and IT-services to its National Sales Companies (NSC).  MLE has a unique structure, wherein vehicle and parts logistics are linked to centralized European services such as IT, accounting and cash management.

Since 1998, the company has seen massive growth with a 10-fold increase in turnover, from about 400 million to four billion Euros and the take-over of 14 countries in just six years. All of this has been accomplished thanks to a competent and continuously trained workforce of 150 office staff and 220 warehouse employees.

Due to the company’s effective back office operations, Mazda today is able to launch operations and trading in a country with no people on the ground. This set-up enables the commercial side of the organization to focus on the commercial relationships with the retail network.

The Challenge
The Mazda Accounting Shared Service Center (SSC) in Willebroek, Belgium, is responsible for Belgian accountancy, supporting seven other European accounting departments – UK, Norway, Sweden, Denmark, Switzerland, Italy and Spain.  In the past, invoices were first received locally and, despite not being registered, they were physically forwarded to the respective contact person for approval.  After the approval, all invoices were shipped to Willebroek for booking.  Altogether, some 800 invoices arrived at the Accounting SSC on a weekly basis, with many of them already close to or passed the expiration date.

Peaks in workload demanded high flexibility from the SSC accountants, who had to work overtime whenever an invoice-package arrived. This put a lot of pressure on the SSC accountants, especially during end-of-month closing.

The only way to somehow plan and manage the workload of the incoming flood of mail was to track the arrival date of the packages via the linked bill numbers of the courier services. After being booked, the invoices had to be returned to the country of origin for archiving. It took up to thirty days to get an invoice through the approval cycle, especially when something had gone wrong within the workflow.

If issues arose after the cycle was completed, the documents had to be resent to Willebroek by fax. In the meantime, some departments used their own tracking spreadsheets to check the invoice status and to manually manage invoice workflow. These sheets were often specific to one department and were not shared between accounts payables teams. Mazda soon realized it needed a long term solution to bring efficiency to the process.

The Accounting SSC was looking for a stable and transparent system, which allowed users to access invoice information at any given moment. Since not all approvers had access to the SAP system, seamless integration with MS Outlook and a web application to access this information was a must. Mazda needed to scan invoices remotely, dividing the workload over all departments. The system had to be easy to use and had to facilitate communications between people and departments by adding comments, questions or documentation to the workflow.

The Solution
With these requirements, Mazda turned to Smart Solutions, a Kofax Certified Solution Provider (CSP) and trusted SAP business partner with profound knowledge in the field of ERP and DMS to implement Kofax Intelligent Capture & Exchange, the foundation for Kofax’s strategy to help organizations streamline business processes. The implemented solution consists of:
• Kofax Capture, the world’s leading automated information capture platform,
• Kofax Capture Network Server (KCNS), which captures documents and data from remote offices directly into the Kofax Capture system and 
• Kofax Transformation Modules (KTM), which streamline the transformation of business documents into structured electronic information by automating the processes of document classification and data extraction

Kofax Intelligent Capture & Exchange was implemented along with the Smart Solutions Invoice Cockpit application for error handling in SAP and advanced workflow capabilities. “From the very start, we felt that Smart Solutions spoke our language,” said Christine Plasmans, European Accounting Manager at Mazda SSC MLE. “We chose to kick off with a one-week workshop to specify the requirements, involving the most important stakeholders. Smart Solutions had a very structured way of addressing our issues, related causes and effects and could answer all our questions, pointing us to the potential and limitations of the project.”
Whenever the invoices arrive at the remote departments, a barcode identifying the local entity is attached to the document before scanning. Kofax Capture Network Server (KCNS) releases the locally captured data directly into the central Kofax Intelligent Capture & Exchange site in Willebroek using secure internet communications. The central Kofax Intelligent Capture & Exchange site handles the index recognition, validation of extracted invoice information, PDF conversion and release to SAP, as well as its own local scanning. The images and data are accessible directly from within SAP or via a web application connected to SAP, enabling people to work with this data without having direct access to the SAP environment.

After logging in, the user sees the invoice information and the images of invoices awaiting approval, checks all data and consequently approves the invoice or determines the next step in the workflow through a list of options. The approver can also get to the web application through a link received in an Outlook email notification.

After the invoices have been captured and invoice information is automatically extracted, approvers are notified of a pending action via email. This email contains a link to the web application, where the user can see the invoice information and the images of scanned invoices. From within this web application approvers may check information and approve invoices or determine next workflow steps from an options list.

With the new system in place, the workload is equally divided over the week. Now, the SSC processes some 200 documents per day, where it used to be 800 in one go in earlier days. “Invoices can be approved within three days, compared to up to thirty days in the past, when the documents often got stuck on someone’s desk,” says Kristel Van den Broeck, Supervisor Accounting at Mazda SSC MLE.

After scanning, approvers can immediately access the images via a workflow in SAP or through the web-application. The invoices are displayed for each transaction, literally telling people what to do next in the workflow. “Prior to the application, people had to figure this out themselves, consuming lots of working hours. People communicate via the workflow, adding comments, documents or questions. In total, work has become much more interesting.”
“We are also defining the coding to be used on invoices for cost center allocation,” Ms. Van den Broeck adds. “This used to be done by local departments, often using different coding in each country, demanding a lot of communication to figure out things. This new approach brings a little more work to the table for us, but defining a shared and uniform coding system certainly pays off over the long term.”

The Results
The solution saves Mazda a lot of time and money. Ms. Plasmans concludes, “At Mazda, some 300 people are working with the system on a daily or occasional basis. In the beginning, people were skeptical, but soon they found out that the system makes life a lot easier for everyone involved in the approval cycle. In the past, we were often working with a backlog of three weeks, waiting for the invoices to arrive. Now they are available for booking immediately and even non-accountants don’t have to get back to their office to approve an invoice, as the information is available online. This leads to accurate results for the end-of-month closing and eliminates late payments charges. The overall process is transparent, as we have defined an internal approval overview and we know exactly who approved what. In addition, every invoice is blocked until it has passed the complete workflow, reducing the risk for errors to an absolute minimum.”

In the future, Mazda plans to invest more in optimizing the purchase cycle. Ms. Plasmans says, “We want to integrate even more processes in the future to reach maximum efficiency and transparency over time.”