Case Study

Procure to pay transformation for beverage leader delivers US$60 million cash flow and $5 million EBIT yearly impact

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Client: A large beverage company

Industry: Consumer goods

Business need: Standardize and transform Procure to Pay (P2P) processes to improve vendor management and enhance cash flows

Genpact solution: Robust and end-to-end Source to pay process assessment and reengineering

Business impact:

  • Realized $60 million incremental cash flow and $4 million EBIT annually
  • Standardized P2P operations
  • Streamlined payment terms for all vendors

Business challenge

The client had a long payable cycle time and thus high vendor dissatisfaction due to inefficient P2P operations. Key issues included the following:

  • Suboptimal accounts payable process
  • Decentralized receipt of invoices and lack of invoice prioritization at the scanning/processing stage
  • Cumbersome purchase requisition creation workflow
  • Limited discount capture mechanisms
  • Lack of adequate controls

Genpact solution

Genpact team of Six Sigma and process experts conducted a 12-week process mapping and assessment exercise. A P2P operating model was designed and validated with the client’s process owners and key finance stakeholders.

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Genpact leveraged the Smart Enterprise Processes (SEPsm) framework to benchmark key performance metrics and identify improvement areas. The assessment led to:

  • Process standardization across multiple locations
  • Centralization of invoice receipt at one location
  • Streamlined PR work flow – a well-defined invoice prioritization matrix and centralized PR helpdesk
  • Optimized payment terms for all vendors
  • Increased payments through Electronic Funds Transfer, reducing cycle time and errors
  • Purchasing cards to reduce cost per invoice and negotiate discounts

Business impact

  • Improved cash flows (approximately $60 million) and EBIT (by about $5 million)
  • Centralized and standardized P2P operations so that there is one destination for invoice receipt, a robust requisition-to-PO-creation process, and better prioritization of invoices
  • Reduced payment cycle time by 8 to 10 days
  • Established and maintained predictable payment schedules by rationalizing and optimizing payment terms
  • Experienced fewer lost-discount opportunities as a result of improving discount penetration and capture percentages

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