Lexmark

Challenge

Lexmark has relied on SAP to effectively manage its global supply chain and financial processes, but it also needed a way to manage the volumes of unstructured content—such as paper and electronic invoices—that begin their life cycle outside of SAP.

After several acquisitions and global growth, the legacy content management solution could not support the volume and was causing numerous issues.

Accounts payable plays a key role for the global technology and manufacturing organization and the Lexmark AP team had struggled with a cumbersome, slow and error-prone process to capture and post invoices. In addition to the growing volume of invoices per month, the team was tasked to enforce policies, seek ways to hold down costs and reduce cycle time.

“It often took up to 24 hours before a scanned invoice was available for an employee to manually link it to the right SAP record and then key the necessary data,” says Lisa Smith, worldwide accounting operations manager. “Depending on the originating region and complexity of an invoice, it took between two and 14 days to process from start to finish.”

Another obstacle was that the legacy solution didn’t catch issues or offer visibility into whether a scanned invoice was successfully submitted to the process.

“Staff at the shared service center had to reconcile a daily log of scans with invoices posted to SAP, and then open tickets with IT for any missing invoices,” Smith says.

Lexmark found its AP staff also faced additional time-consuming tasks such as manually creating Excel spreadsheets for reporting and auditing needs, which lacked information about the many invoices lost or stuck in the legacy process. This limited visibility caused the all-too-common AP fire drills, such as rushing to handle requests for past due payments.

Bottom line, the existing solution was creating higher costs that led to reduced financial control and visibility into expenses, lost productivity and low user satisfaction.

Solution

Lexmark’s First Customer program, which implements products and solutions internally, went to work. In using this First Customer approach, Lexmark gains the enhanced productivity and cost savings that customers experience. And for Lexmark customers, it means additional, real-world insights on product usage.

The First Customer team was tasked with evolving Lexmark’s AP solution into a single, global instance that uses cloud-based servers. A phased implementation approach was used and the solution relies heavily on the advanced technology of Perceptive Intelligent Capture.

Planning and implementation

The team chose to implement a pilot project at each of Lexmark’s three shared service centers,identifying and resolving any issues before expanding the solution to handle all invoice processing. The planning and implementation of the pilot projects took six months. The team completed the expanded implementation three months later. Identifying goals for the new solution provided an opportunity to develop consistent processes worldwide for accounts payable, as well as streamline upstream processes such as master data management and purchasing. This standardization further speeds up the invoice cycle and enables faster onboarding of any future acquired companies to the accounts payable process.

Advanced technology, better integration

The Perceptive Intelligent Capture solution was used to extract invoice data through advanced pattern recognition techniques.

“This removed any need for the team to create a template for each invoice format supplied by our 8,000 vendors, saving an immense amount of time during the implementation process and minimizing future maintenance needs,” says Wesley Keller, product manager for accounting and finance at Lexmark.

The ability to integrate the Lexmark Invoice Processing solution with SAP using standard BAPIs and the ArchiveLink method helped speed up the implementation process, as well as in creating a stable and secure connection between the components. As a certified partner and one of SAP’s largest customers, Lexmark leverages that relationship to ensure its enterprise software solutions match the needs and requirements of SAP’s roadmap.

With the new solution, invoices are submitted in a variety of file formats, languages and currencies via email or by scanning at a multifunction product (MFP). The solution provides real-time confirmation when an invoice is received, which enhances the tracking at the point of capture. Perceptive Intelligent Capture automatically classifies invoices and extracts header and line-item data. It validates and shares information with SAP, then passes the invoice images to Perceptive Content where they are indexed and stored.

The invoice images in Perceptive Content are automatically linked to the corresponding record in SAP and an email confirmation completes the process. Any errors are handled through the Intelligent Capture Verifier.

“Problems don’t occur often, but the solution enables visibility when they do, as well as quick resolution,” Smith says.

Employees with access privileges can open records in SAP to view the linked invoices, or can view the invoices through the Perceptive Web client.

Results

Faster processing and more visibility

“The Invoice Processing solution enables us to automatically capture 90% of the data on invoices without manual keying and eliminate 75% of the manual work that was previously required to process invoices,” says Keith Moody, Vice President and CIO. “Also, 76% of invoices are now automatically processed in less than a day. That’s an 80% reduction in cycle time from when staff manually linked and keyed invoices.”

And with the ability to track invoices at every stage, AP staff members no longer worry about invoices getting lost in the process. Further visibility is provided through real-time auditing and reporting features that have access to the automatically extracted and validated data.

Moody says more accurate data is available more quickly, providing insight that is instrumental for audits and in making informed business decisions.

Improved efficiency

“Standardized data collection through the new, automated solution provides far-reaching effects,” he says, “as the finance department is the source for most analytics initiatives throughout the company.

By automating invoice processing, the AP staff spends less time manually keying data, presenting more time for value-added tasks. “Workers who used to be keying information are analyzing data,” Moody says. “They have recovered $1.6 million through internal credit recovery.”

Integrating the Invoice Processing solution with SAP offers new efficiencies that will scale with the organization. Implementing the new solution to capture and process invoices brought about an 80% reduction in cycle time while significantly enhancing visibility and financial control.

“Based on the technology and its stable integration with SAP, as well as the outstanding benefits we’ve realized, we feel confident this solution can grow with Lexmark,” Moody says.

Another important factor is that the solution provides insightful product knowledge so Lexmark teams can better consult and collaborate with customers on their own invoice processing needs, providing customers the tools to ban those formidable AP fire drills.

Enhanced vendor relations

The new solution also helps build strong vendor relationships because vendors spend less time waiting. Communication is enhanced because of the ability to locate invoices wherever they are in the process.