Yarra Valley Water solves procure-to-pay mess

Yarra Valley Water has streamlined its purchasing processes by deploying an integrated e-procurement system to control all financial transactions in involved in the process over the Web.

Until early 2002 the Melbourne-based retail water utility had no formal enterprise-wide system for its 160 delegated officers from finance, HR, strategy and assets to manage the procurement process, manager of financial planning and treasury Tarnya McKenzie said.

"With a decentralised supplier contract management process, we often had people chasing different departments for the same invoice. Also, in our accounts payable audits, a purchase order was often raised after the supplier was issued an invoice," McKenzie said.

It was vital to get the company's procurement processes and policies right because it was managing multimillion dollar supply contracts with companies like Corporate Express and other generic suppliers, according to McKenzie.

Deploying a browser-based procurement solution - TransAXS Procurement by US supply chain software firm AXS-One - from February 2002, Yarra Valley completely streamlined its procurement process for employees and some 300 suppliers.

For McKenzie, the biggest headache during the project was mapping out the business rules to manage the company's supplier contracts.

"Fine-turning the business rules for the system took six months. This involved the efforts of a dedicated work group to try and get buy-in for the new system across the business.

"Also, we underwent a long process of ironing out the supply side of the business in terms of data integrity in supplier catalogues and purchase details. And since we outsource our IT infrastructure to Logica, there was a lot of coordination needed in terms of what [tasks] Logica would do during this project."

The procurement overhaul investment was $400,000. McKenzie said the AXS-One solution has produced a clear payback by enabling more flexibility and control over the purchasing process, and improving staff productivity.

"It has allowed a number of casual staff to free up their duties and go full time into other areas of the business, and also streamline the way they manage the procurement process," she said.

Yarra Valley has also realised cost savings from the system in that it has cleaned up the internal auditing process.

"It puts a finger on where the company's finances are going. There is much less double-handling of invoices and much less [paper] sitting in people's in-trays doing nothing," McKenzie said.

The system has addressed the problem of disagreements among staff over whether purchase orders were raised in a timely way or not with suppliers. "There are fewer POs being raised after a supplier issues us an invoice and less confusion over whether staff think an employee has raised a PO as the system ensures that suppliers now have a PO on our [orders] before they are issued an invoice."

TransAXS Procurement integrates with the company's Outlook e-mail system, helping to speed up the process of approving invoices, and integrates with an existing AXS-One financial system installed in 1998.

McKenzie said the main limitation of the software is that is does not automatically prompt users when their password for the system has expired, locking out a number of regular users.

Meanwhile, she said overall the rollout was successful because the company invested significant time in training core users as well as its senior management team.

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