Case Study

$8.5 million cash flow impact through improved order management process for a global aviation manufacturer

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Client:
Leading manufacturer of aviation engines

Industry:
Aerospace

Business need addressed:
Improve the order management process to reduce the percentage of Accounts Receivables (AR) locked in disputed invoices to 3% within six months

Genpact solution:
Redesigned the order management process to detect disputes earlier; automated and standardized manual processes to reduce errors

Business impact:

  • Improved cash flow and liquidity
  • Higher customer satisfaction

Manual supply chain processes produced errors that led to a high percentage of AR under dispute, with subsequent slow payments, for a leading manufacturer of jet engines for commercial and military aircraft. Genpact’s procurement and supply chain management solution reengineered the entire upstream order management process to prevent errors and proactively resolve disputes, resulting in a positive cash flow impact of $8.5 million within six months.

Business challenge

The manufacturer’s manual order management processes led to errors in order entry and materials handling at the warehouse. Mismatches between purchase orders (POs) and shipments resulted in many disputed invoices. The dispute management process itself was reactive, unable to spot or correct potential problems prior to billing, or provide clear visibility to managers as to the cause of requests for credit. Within five months alone, $2.7 million of AR was under dispute out of $88 million, amounting to 6.36% of total AR. The company engaged Genpact to improve cash flows while maintaining service levels of fulfilment.

Genpact reengineered the entire upstream order management process, producing $8.5 million of cash flow impact in six months
  • Redesigned the order management process
  • Performed system enhancements to automate processes and reduce errors from manual entry
  • Created a Request for Quote (RFQ) template that forced customers to enter required information, reducing mismatches between quotes and invoices
  • Automated email responses to customer RFQs, verifying quote details and thereby reducing queries and disputes
  • Investigated disputes and requests for credit, clearing hundreds of incorrect POs and speeding payment for goods received

Business impact

  • $8.5 million cash flow impact
  • $0.5 million EBIT impact
  • Higher customer satisfaction
  • Reduced AR under dispute from 6.36% to 0.4% with six months

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