AUTOMOTIVE
Improved billing process resulting in optimized
working capital and a 40% reduction in blocked
bill count
About the client
A Forbes Global 2000 automotive parts
manufacturer
The client’s billing operation had bottlenecks, which led to a large number
of “blocked bills”—i.e. invoices due, that could not be generated by the
client’s system although order shipping had been completed. This led to
payments getting impacted, which resulted in delays in revenue realization
Industry
and increased pressure on working capital. Genpact did an in-depth
Automotive
through Six Sigma tools that could help the client run a more effective
Business need addressed
Improve working capital by releasing
study of their order-to-delivery process and identified improvement areas
billing operation.
Result: US $4 million cash flow, 40% reduction in blocked bill count and
streamlined processes across geographies.
cash stuck due to bottlenecks in billing
operations
Results
Genpact implemented continuous process
improvement initiatives in the client’s billing
operation, which resulted in:
• Over US $4 million cash flow and EBIT
impact
• A 40% reduction in the blocked bill
count in one year
• Streamlined billing process resulting in
increased operational efficiency
Business challenge
The global economic downturn in 2008-09 had a significant impact on
the automotive supply industry’s working capital (WC) performance. While
suppliers have taken multiple measures to address this impact, there
are still many opportunities to improve their WC position. The accounts
payable and billing process is one such critical area.
The client’s billing and invoicing process had a significant number of
blocked bills leading to delays in revenue realization. This increased
pressure on their WC prompted the client to engage Genpact to identify
gaps and deliver sustained process improvement.
Genpact approach
Client testimonial
Genpact brought in a team of industry experts, Six Sigma and process
“Truly global project! The project not
order-to-delivery process. (See Fig. 1)
improvement certified professionals to do an in-depth study of the client’s
only achieved substantial cash flow
impact…it also brought best practices
that are followed in some of the European
Contract
Administration
Work Order
Creation
Collections
Apply Receipts
from Customers
countries for standardization opportunity.
Production
Back-office
Support
Congratulations to both Genpact and
our team for working on this project for
successful closure”
- Director, Global Finance Business Services
Fig. 1
Bill Generation
Our deep dive revealed the following:
Best practice sharing
• Operating procedures were inconsistent across
• The team institutionalized a standard quote template for use
geographies - for instance, teams in Turkey and the Czech
by account managers and an alert system for when non-
Republic were not fully aware of the bill generation process
standard templates are used.
followed by the rest of EMEA and North America. This
resulted in a disproportionate number of blocked cases across
those countries.
• Processes were not fully integrated with the billing ERP
system - for instance, sales teams and account managers of
different products and services followed unique workflows
that led to delays in reconciliation activity.
• A lack of a robust escalation mechanism for errors resulted in delayed responses to queries/clarifications for
blocked cases.
Genpact solution
Based on this analysis, Genpact came up with a smarter, threepronged solution:
Process enhancements
• Genpact found that more than 75% of blocked bills were a
result of pricing errors. Since Genpact handled both accounts
receivables (AR) and contract administration processes,
we recommended redesigning ‘account-level follow up by
contract administration’ and ‘release of bills by AR’ activities.
• A year-end communication drive was launched to notify
• Genpact suggested changes in some reports from the
ERP system and provided inputs on its effective usage for
resolving blocked cases.
• The team implemented an escalation matrix to improve
accountability in the new process.
Business impact delivered
Significant improvements across the client’s billing process were
seen in the first year itself as a result of the Genpact solution.
These included:
• Over US $4 million cash flow impact
• A 40% reduction in the blocked bill count in one year
• Streamlined workflows across geographies and increased
operational efficiencies
Genpact’s solution also ensured that this improvement is
sustained and ongoing through early problem detection, right
escalation and speedy resolution.
Early
Problem
Detection
account managers of their blocked bill instances and a target
date was set to close those bills.
• A SAP-specific report was run to identify process
inconsistencies across geographies. The Genpact team
Right
Escalation
Continuous
Business Impact
Additional
cash flow
of
conducted trainings for account managers for them to better
$4.5
use existing ERP reports from two key regions: North America
million
and EMEA.
One-time fix
• Genpact undertook a one-time cleaning effort of all ERP records
Speedy
Resolution
of blocked instances that were more than 1000 days old.
About Genpact
For More Information, Contact:
Genpact Limited (NYSE: G), a global leader in business process management and technology
services, leverages the power of smarter processes, smarter analytics and smarter technology
to help its clients drive intelligence across the enterprise. Genpact’s Smart Enterprise Processes
(SEPSM) framework, its unique science of process combined with deep domain expertise in multiple
industry verticals, leads to superior business outcomes. Genpact’s Smart Decision Services deliver
valuable business insights to its clients through targeted analytics, reengineering expertise, and
advanced risk management. Making technology more intelligent by embedding it with process
and data insights, Genpact also offers a wide variety of technology solutions for better business
outcomes.
Stephen Weisenstein
Vice President, Business Development,
Automotive
[email protected]
For more information, visit www.genpact.com. Follow Genpact on Twitter, Facebook and LinkedIn.
© 2012 Copyright Genpact. All Rights Reserved.
Arun Dias
Vice President, Operations, Automotive
[email protected]
Visit us at:
http://www.genpact.com/home/
industries/automotive