A major US manufacturing company realizes $26mm in accumulated earned discounts
"We leverage simple DMAIC approach entailing data collection and segmenting process covering the supplier-input-process-output-customer (SIPOC) chain to reveal root causes and potential opportunities for improvement."
A major US manufacturer of paper and packaging products has been partnering with EXL since 2010. Over time, EXL had observed that a growing number of allowable discounts on payable invoices were not being collected for a variety of reasons. In 2015, the EXL team proactively presented the potential for discount earning opportunity and worked closely with the client to identify issues, possible solutions, and an implementation plan. The goal was to quickly increase the average discount earning rate and incrementally grow it year over year.
Issues with discount realization were mainly attributed to the following challenges:
To increase the average discount-earning rate from a baseline of 58.69% to 93% i.e. ~ 34.31 base points improvement, EXL team partnered and engaged with clients to further define the problem statement. We leverage simple DMAIC approach entailing data collection and segmenting process covering the supplier-inputprocess-output-customer (SIPOC) chain to reveal root causes and potential opportunities for improvement. Our approach,
- Introduced a Qlik Sense dashboard tool to help manage payment analytics for days to pay and net day pay analysis
- Missed discount opportunity analysis and quantification of bottom line impact
- Identified suppliers who sent invoices late and educated them on correct methods for submitting invoices
- Corrected email and physical address errors made by suppliers
- Identified top discount suppliers and informed associated client payment locations of priorities
- Sent exceptions labeled as discount invoices to onshore team for quick resolution
- Faster exception management and resolution for high value invoices
By focusing on top discount suppliers and creating visibility into payment terms, EXL effectively closed the knowledge gap among team members, enabling quick invoice payments ahead of due dates. Further, by tracking discounted invoices daily and monitoring improvements over time, the process yielded incremental gains year-over-year for a substantial bottom line impact.
Mallikarjuna S. Chinchali | Assistant Vice President, F&A Operations | Mallikarjuna.Chinchali@exlservice.com