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Tech Data + Celonis

How Tech Data cut their Procure-to-Pay cycle time by 57% in a year

Tech Data uses Celonis to achieve a 95% invoice automation rate, reduce P2P cycle time, and unlock operational savings.

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Tech Data knows that distribution is all about simplifying transactional complexity for the customers and partners who buy and sell technology. Armed with real-time process data that empowers all parties to take the right actions at the right time, they are driving operational excellence while maintaining competitive margins โ€” with Celonis.

As a technology distributor, Tech Data enables vendors and resellers to bring the most exciting technologies to market, and helps customers get the most value from those cutting-edge products, solutions and services by delivering a wide range of technical and business support services. Tech Data recently merged with SYNNEX to become TD SYNNEX, the largest IT distributor in the world with $60 billion in combined revenue, serving 150,000+ customers.ย ย 

The company relies on the highest levels of operational excellence to serve its customers effectively โ€” amid rapidly evolving technology markets, growing customer expectations, and tight competitive margins.

This is a primary focus of the global business services group: to achieve operational excellence through innovation and transformation, and to streamline central processes so that Tech Dataโ€™s local entities can focus on empowering their vendors and customers.ย 

Celonis has quickly become a vital partner in driving the success of these initiatives.ย 

Simplifying process complexity

โ€œFrom the outside, distribution looks like a very simple business. You buy and you resell to your customers. In reality, our role is clearly to simplify the complexity of the IT industry,โ€ says Patrick Zammit, President EMEA and APJ at Tech Data.ย 

Tech Data knew they had to provide a foundation of operational excellence that would empower their partners not just today, but in the long term โ€” by helping them take advantage of the many profound shifts impacting the IT industry right now.

โ€œOur role is really to connect everything together. So we need to be able to address the changes that are happening. The software that used to fly through our warehouse in CD-ROMs is now used through cloud consumption models. From one quarter to another, you see new things coming through,โ€ says Marco Preda, Corporate Vice President of Global Business Services.

Tech Data needed a platform that would give them the flexibility required to quickly embrace new technologies and consumption models, and thatโ€™s what Anna Sagarra, Vice President of Operations, Regional Innovation Business Services, set out to find.

โ€œIn distribution, commercial excellence starts with operational excellence. Thatโ€™s what Celonis helps us achieve for our vendors, our customers, and for Tech Data.โ€
Patrick Zammit
President EMEA and APJ,
Tech Data

โ€œA very quick decisionโ€

โ€œMy colleague had seen a process mining demo, and he came into my office saying: Anna, I found something that I think you are going to love," remembers Sagarra.

โ€œTech Data works with the leading tech suppliers,โ€ she says, so contacting Celonis โ€” the market-leader in Process Mining โ€” for a demo was a logical next step.ย  โ€œI still remember muting the mic during the demo and saying to each other, โ€˜No, no, no, this cannot be. How is this possible?โ€™"

After a three-month proof of concept, Sagarra was ready to present Celonis to Tech Dataโ€™s leadership at their innovation forum. Patrick Zammit recalls: โ€œAnna presented Celonis to the team and after one hour โ€” including the demo โ€” the team voted to adopt it. We saw the power of the tool, and how we could take full advantage of the insights. It was a very quick decision.โ€

Optimizing Procure-to-Pay, Order-to-Cash and After-Sales Management

With Celonis in place from May 2020, the Tech Data team was ready to prioritize the areas where the greatest gains in operational excellence could be made.ย 

Procure-to-Pay, Order-to-Cash and After Sales Management were the clear frontrunners. Getting comprehensive visibility into those areas helped Tech Data identify the improvement opportunities that would have the most immediate impact on their business โ€” enabling them to ensure customer satisfaction by reducing cycle times while also cutting down on operational costs.ย 

โ€œWe are recording 40 million transactions inside Celonis. Thatโ€™s a lot, so itโ€™s critical to be able to visualize this to the organization, so that they can see all the dimensions of all the transactions in each moment,โ€ says Sagarra. โ€œNow we can visualize data at the vendor and the SKU level, which is bringing a lot of value to the organization.โ€

This lets Tech Data zero in on where specific units are in a process, or how a specific vendor is performing. Tech Data are using these insights to improve the accuracy of order ETAs โ€” helping them ensure customers get their orders on time, and enabling Tech Data to compare vendor performance against declared ETAs, so they can make better-informed procurement decisions in the future.ย 

โ€œUsing Celonis has given teams at all levels in the organization the capability to see a new reality of the company based on facts. Based on data. Based on true things that are happening every day.โ€
Marco Preda
Corporate Vice President Global Business Services,
Tech Data

โ€œAnother challenge that Celonis supports us with is our understanding of stock availability for our customers,โ€ explains Iulia Cioclea, Data Analyst. โ€œRight now we have an analysis that gives us an overview of our aged stock that is reserved using a wide range of delivery blocks.โ€ย 

Using Celonis, the team discovered that 10% of stock was aging in place due to โ€˜improper holdsโ€™ โ€” with tens to hundreds of millions of dollarsโ€™ worth of inventory on hold for customers. This less-than-ideal inventory situation was having an impact on working capital, as well as disrupting Procurement and Order Management processes.

Combining intelligence with automated action, Tech Data is able to address these issues and further their ongoing commitment to commercial excellence through operational excellence. โ€œWe want to take this analysis one step further by setting up an action flow that will send us notifications when we reserve stock for more than a certain number of days,โ€ says Cioclea.

In another analysis Tech Data discovered that in the millions of transactions it processes per year, around 30% of the purchase orders were subject to price changes or cancellation, causing delays and requiring additional labor hours for PO reworking. Using Celonis, the team was able to identify the problem and reduce their price change ratio by 27% in six months. In the longer term, this contributed to an overall 57% reduction in P2P cycle time in just a year.

Tech Data continues to uncover additional opportunities with Celonis. โ€œI'm particularly excited about one of our recent analyses that is helping us to detect the amounts that we over-credit to our customers. The potential of this analysis is huge as initial estimations show that we could potentially recover between โ‚ฌ300,000 and โ‚ฌ500,000 per year,โ€ says Cioclea.

Results

57%
reduction in Procure-to-Pay total cycle time within a year
27%
reduction in price change ratio in 6 months
20%
increase in overall automation rate within a year
95%
automated invoice processing achieved
4M
Purchase Order items visualized
โ€œThe beauty of it is that our business leaders are now telling me which processes they would like to see in the future because they see the value already.โ€
Anna Sagarra
Vice President of Operations, Regional Innovation Business Services,
Tech Data

Pushing the limits of end-to-end optimization

Looking ahead, Tech Data has further applications of process mining and the EMS in mind. โ€œOne of the most valuable aspects of Celonis that we want to explore in the near future is related to its capability of predicting future outcomes based on current and historical data. As an initial candidate we are thinking about vendors' ETAs โ€” trying to predict the likely ETA before the vendors provide them to us,โ€ says Cioclea. In an industry where the smallest of margins โ€” in terms of cost, lead times and stock availability, not to mention customer satisfaction โ€” can unlock critical competitive advantage, this kind of intelligence will help Tech Data to maintain its edge.ย 

For Patrick Zammit, the future potential of Celonis extends beyond the confines of Tech Data; if their vendors and partners are also using the technology to share more accurate data around payables and delivery dates, the impact will be exponential. โ€œToday, when we look at our processes end to end, it starts and it ends at the borders of Tech Data; but in fact, what we are seeing is that the true opportunity in that supply chain is to push the boundaries to our vendors and to our partners. And in fact we start seeing some of them adopting Celonis. The partnership is very important because the more vendors and partners adopt Celonis, the better it will be for us because we will truly be able to optimize our processes end to end.โ€

Tech Data Patrick and Marco

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