Control

Lean Six Sigma Tollgate

IOT Effectiveness/Efficiency Improvement –

Project title: Improve MM Invoice Processing in SCAN Entities
Track-It #: 10831
Tollgate Date: April 25, 2016

Project leader: Ian Rose M. Cunanan

Coach: Michael Pascua

Organization: Intra Group-Inter Office Transaction- Manila

Project Start Date: April 1, 2015

Project Completion Date: April 30, 2016

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Control Deliverables
LEAN SIGMA IMPROVEMENT PROCESS: DMAIC
Provides simple structure – very powerful in mobilising change

1.0 2.0 3.0 4.0 5.0

Define
Opportunities
Measure
Performance
Analyze
Opportunity
Improve Control
Performance
Performance

Main Activities Key Deliverables

• Anticipate Change Management Needs • Pilot plan results

• Standardize & Document Processes & Write Control Plan• Process Control Plan

• Mitigate Implementation Risks • Standard Procedures

• Develop Implementation Plan • Handover documentation

• Implement & Monitor Processes / Control & Replicate • Signed off Benefits Realization as per Benefits
Framework
• Closure & Recognition
• Replication Opportunities checked
• Project Documented in Track-It
• Approval from sponsor/stakeholders

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Project Charter

Business Case Opportunity Statement

Shell Canada Oil Products (SCAN OP) bills Shell Canada Oil Sands(SCAN 1. The current structure does not align with the standard IG MM Pay
OS) around $6.1M average of product related invoices monthly. process.
These Invoices are scanned by the Canada Scanning Team and processed
by the Accounts Payable(Third-Party) in Manila. The entries flow through 2. There is an average of 61% imbalance in the accounts every month in
the SCAN OS accounts which are managed by the IGB IOT team in Manila. 2015.
The current process has caused a monthly average of 61% imbalance in
the accounts in the year 2015. The imbalance is caused by invoices already
billed but not yet recorded into the books. To resolve the imbalances, IGB
Goal
IOT team conducts investigations and posts accruals prior to and every
1. To align the current SCAN OS IOT structure to the MM Invoice IG Pay
month end close.
Process by January 2016.
The focus of this project is to uncover the root cause of the imbalances and
2. To reduce imbalance caused by unposted MM invoices from 3.9 M that
implement appropriate solution.
is 61% of the total 6.1 M average monthly billings to around 1.3M which is
Scope at 30%.
In Out
Benefit Statement
L1: 0.05 FTE Equivalent
SCAN OP MM invoices billings to L2:
Non MM invoices billings
SCAN OS L3: Improved Metrics

Project Team
Timeline
Start Comment Champion: Niall Lynch Approved: Yes/No
Project Sponsor: Ron Op den Camp Approved: Yes/No
Define 1-Apr-2015 30-Apr-2015 Project Leader: Ian Rose Cunanan
Measure 1-May-2015 31-May-2015 Project Coach: Michael Pascua
Analyze 1-Jun-2015 30-Sep-2015 Members:
Improve 1-Oct-2015 31-Dec-2015 Marissa Villafuerte Marjorie Felix
Control 31-Jan-2016 31-Mar-2016 Rennelyn Zambrano

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RCA Top Issues:
 53% reduction of invoices with PO
issues. (From 1.3M to 0.4M ave
Average No of Invoices with Issues Per Month monthly)
30
 The remaining issues are invoices
26 that cannot be processed in the
25 current month because the GR is
posted in the following month. See
next slide
20
17  100% reduction of 17
15
15 cancelled invoices.(From
 96% reduction of invoices with
0.7M to nil) 12
billing issues.(From 1.3M to
0.008M ave monthly)
10
8

5
3
2 2
0 1
-
-
Billing Issues Cancelled Invoice PO Issue

Baseline (Jan15-Jun15) Improve (Jul15-Sep15) Pilot (Oct15-Dec15) Control (Jan16-Mar16)

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Q1 2016 GRIR BALANCE:

 96% GRIR balance is cleared and

GRIR ($) reconciled with 0-60 days.
12,000,000.00

10,000,000.00 9,730,010.8

 1 invoice billed and credit

due to incorrect amount.
8,000,000.00
 1 item reportable in Still pending for issuance of
February (772 CAD), corrected invoice
6,000,000.00 cleared in March.

3,950,972.7 3,986,195.0
4,000,000.00

2,000,000.00

250,793.04 262,393.95
18,066.42 18,066.42 0.00 183,789.86
0.00
January February March

0- 30 days 31-60 days 61-90 days 91-120 days

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Account Imbalance:  90% reduction in $ imbalance from $3.9MM to
0.4MM

 88% reduction in # imbalance from 77 to 9 invoices

only.
Average Imbalance Per Month  These numbers do not include the structural
5.0 80
77 imbalances in 2016 due to process change. Please
refer to next 2 slides
4.5
70
4.0 3.9
60
3.5
50

Invoice Count
3.0
$Millions

2.5 40

2.0
26 30
1.5
1.1 20
16
1.0
0.7
9
0.5 0.4 10

- -
Jan15 - June15 Jul15 - Sep15 Oct15 - Dec15 Jan16 - Mar16

Ave Imbalance($) Ave Imbalance(#)

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Account Imbalance:
 Increase in 2016 billings is due to the change of
Diesel Supplier from 3 rd Party(SUNCOR ENERGY
PRODUCTS PARTNERSHIP) to SCP.
 This change increased the imbalance because the
invoices are released on the LWD and impossible to
process in the current month. An average of 6
invoices monthly equivalent to $5.2MM
12,000,000.00 Account Imbalance(Invoice Amount)

10,000,000.00

5245724.81
8,000,000.00
3941146.63
6447695.75

6,000,000.00 7,850,367.03,422,619.5
304,244.8
341,972.0

6,364,349.6
4,000,000.00
1,554,035.1
546,160.6
2,097,349.4 5,798,302.0
5,109,170.5
4,612,857.4 750,612.2
2,000,000.00 2,150,515.8 1,632,672.7 1,121,759.8196,879.0
2,996,860.5 670,741.1 3,121,852.3
2,254,673.7 1,191,592.6
1,842,499.1 1,962,478.0 1,691,225.4
1,096,236.9 871,657.9 1,130,659.4 1,087,888.31,245,583.3
603,139.4
0.00
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16

Structural Imbalance True Imbalance Reconciled

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Account Imbalance:

250 Account Imbalance (Invoice Count)

200
70

150
141

100 60
140

151 27 18
26
32
50 27 6 10
74 74 67 19 6 16 3
63 22 4
52 8
42 36
26 32 24 30 27
21 21
0
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16

Structural Imbalance True Imbalance Reconciled

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SCP Overdue:

4,000,000.00
Overdue (Invoice Amount)
 95% decrease in products overdue from 2.2M ave. in
Jan15-June15 to 0.11M in Jan16-Mar16.
3,500,000.00

3,000,000.00

2,500,000.00

2,000,000.00
3,542,412.27
3,174,997.32
1,500,000.00

2,150,463.29
1,000,000.00
1,764,233.27
1,404,185.75
500,000.00 907,021.82
656,795.50
436,963.88
336,880.78
122,605.87
120,398.82 177,161.85
121,994.17
119,034.99
- 34,975.95
Jan-15 Feb-15 Mar-15 Apr-15 May-15 Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16

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High Level Timeline:
Jun '15 Jul '15 Aug '15 Sep '15 Oct '15 Nov '15 Dec '15 Jan '16 Feb '16 Mar '16
                   
 Root Cause Analysis
   
 Assess current  
process performance              
   Minimize wastes and agree on improved
                 
  performance
                 
 Identify activities to transfer from AP to IG
                   
           Pilot processing
   
by IG Analyst      
           Change lockbox
  to enable
  IG      
          Workflow         
                 
Control Phase  
                Assess/Evaluate
  process  
                performance   
 Transfer activities
                   
 Mitigate risks (Hypercare)
                   

Key Activities, FTE Equivalent and Controls

Activity FTE Equivalent Transfer (Y/N) Important Notes:

Invoice Processing 0.023 Y  A total of 0.05FTE equivalent of activities

Disbursement Audit (Control xx) 0.015 N to be transferred.

DupPay Check (Control xx) 0.007 N  NO FTE movement involved. Only activities
Return to Vendor (RTV) 0.011 Y will be transferred.
GRIR - Download 0.005 N  NO transfer of Control Ownership
GRIR - Analysis(IG Only) 0.011 Y
 NO transfer of SOAR accounts
SOAR - Analysis(IG Only) 0.007 Y
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Finance CI department 0.05 Month 2010 10
Reduced Invoice Processing Time:
Invoice Processing Time
 71% reduction in processing time from 28 to
8 day average.
180

 75% of all invoices are processed within 0-

10 days

 Process is more stable

130
 Outliers in the Jan16-Mar16 bucket are due
to 2 Jan16 invoices that were posted only in
Mar16 when GR was created.
Days

80

30

-20

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Other Results:

• 96% Reduction in time spent in reconciliation from 231 minutes to 9 minutes.

• Alignment of MM invoice processing to IGB standards.

• Updating the invoice dispatch address to route the IG invoice to an IG Lockbox

thus eliminating the dependency with Expenditure and Scanning team for the
retagging of invoices

• Improved metrics both for SCAN OS (Imbalance) and SCAN OP (Overdues)

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As-Is vs. To-Be Process Map

BEFORE AFTER

Billing Team Confirm billing and Confirm billing and

SBO Cape Town Start Release invoice Start Release invoice
(Automated) (Automated)

Scanning Team Receive and scan Receive and scan

Canada invoice invoice

Expenditure – AP
Record invoice
SBO Manila

IGB – IOT
Analyse and Analyse and
SBO Manila End Record invoice
reconcile balances reconcile balances End

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APPENDICES:
• Work Instruction – to be saved in sharepoint
• Project Pack and Documents

NEXT STEPS ACTION PARTY TIMELINE STATUS

Signoff of MHO Sponsor TBD
Creation of IG GL Accounts Jayaraman, Q2 2016 WIP
Balasubramaniam Beverly
Huntsman

Invoice Print Update (2 out of 4) Shae Tanner May 2016 WIP

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