Patrick Hopkins at Coupa: Coca Cola’s four truths of procurement to pay in action

At the Coupa INSPIRE procurement conference in San Francisco this week, the Chief Procurement Officer of Coca Cola Consolidated, Patrick Hopkins, shared his views on the “4 Truths of Procurement”, and how he has operationalized his views through the deployment of Coupa procure to pay software.

Coke has an incredible history dating back to 1886, when Dr. John Pemberton discovered how a carbonated beverage could be sold at soda fountains and provided a refreshing taste.  He sold the company to Asa Candler who commercialized the product, selling it at soda fountains all over the country.  When approached by an entrepreneur interested in bottling the product, his remark was that this was “a stupid idea”, but nevertheless sold the rights to bottle the product for $1 per bottle.  This led to the development of Coca Cola Consolidated, located in Greensboro North Carolina, which later moved its headquarters to Charlotte, NC.  Coke Consolidated has come up with many innovations since then, including the introduction of  Cherry Coke.  The invention of the Contour bottle also came out in 1916, and in 1919, investors took Coke global.  Today, Coke Consolidated is one of 64 bottlers nationwide, has 6000 employees who sell a case of coke every four seconds!

When it comes to “procurement truths”, Patrick shared what he believes are critical issues that procurement needs to think about when deploying a procure to pay system.

1. The product must be in the catalog.
2. Users must be able to find what they need.
3. Data must be right.
4. Users must WANT to use the system.

When Coke first started looking at 3-procurement systems, they questioned why they should go out of the current SAP system that was already deployed.  They developed a list of 48 criteria that needed to be met in considering different P2P systems.  Coupa met all of them, and Coke signed a letter of intent with Coupa to deploy the system.  The decision was to keep the front end of the system in SAP, and use Coupa for a procure to order part of the P2P process.  The Coupa system would issue the PO to the provider, and a companion non-functional PO would reside in SAP out of which payment would occur from the invoice.  Deployment occurred December 1, 2012.  Here’s how the roll-out fared compared to Coke’s four truths.

1. The product must be in the catalog.  All of the items initially piloted ended up being in the catalog.  The catalogs could be internally hosted using COUPA or in a “punch out” mode using the SAP system.  Both forms were used to access the items.  The only glitch identified was for the Grainger-based material systems, where the discounted pricing Grainger provided did not show up in the catalog pricing, so users thought they might be able to get a “better deal” as the discounted pricing was not shown.  One of the other issues was to reduce the number of items Office Max had in their catalog from 10,000 to 3,000 – the net savings?  10%!
2. Users find what they need.  The team ensured that employees were well trained prior to implementation, and as a result, there was very fast response time.  The metric used to determine if this criteria was met was the “binary rule” that went as follows:  users were able to find their exact match or 100% of all alternatives the first time using ONE SEARCH.  This refers to the ability of the search engine to find the part using keyword searches in a description field.  The system worked, and users found what they needed with zero chance of error, ensuring the right part was delivered to the right person at the right location.
3. The data must be right.  The system was able to drive good visibility and inventory availability of material, and the accuracy of the master data file was established.
4. Users must want to use it.  This was a critical element – the major element of success is whether users are satisfied with a P2P system.  The system allows mobility across different applications, including iPhones and Android devices, and is easy to use.  Patrick notes that “after we deployed, the phones were quiet – which was a great sign that things were working.”

Overall the system captured spend visibility, was now device agnostic (as it was in the cloud as a service), it was easy to use and streamlined the travel and expenses reimbursement process, and was easy to add new suppliers.  This latter feature was important, as with everyone using the system, when people wished to add a new supplier – they were first pointed to existing suppliers who already sold the product, thereby limiting the number of suppliers expanding into the system.  While deployment is still under way, Patrick notes that “this was the most successful deployment of e-procurement since we introduced p-cards”.  The cloud solution makes it easy to implement and easy to intergrate into existing SAP systems.

Coupa’s conference did indeed inspire many who were there, with great examples and best practices such as these abounding.