A deep-water drilling company was dealing with several issues within their Procure-to-Pay processes. They suffered from only 55% of their invoices being paid on time, and high invoicing costs. Various teams were working in silos and there was not a clear end-to-end view of the Procure-to-Pay process. The organisation set a target of achieving 90% on-time payments and decided to review the overall procure-to-pay process to help improve on-time payments and overall process efficiency.
Earlier initiatives had identified about 200 specific issues, but it was unclear on where to start first. By creating visibility of the end-to-end process, the team was able to identify the key as-is processes. Key stakeholders were also interviewed to verify the process and clarify main issues. This helped identify the most critical root causes.
Based on the processes’ impact on timely payment and current maturity – a simultaneous exercise of prioritisation helped identify the high impact and low maturity areas of business. This helped drive the next phase of rapid process improvement, by helping focus efforts on the high impact, low maturity areas.
The team held a workshop with key stakeholders to help provide a broad view of the procure-to-pay process. This provided visibility to the core issues within the process, along with their impact on the process. The workshop yielded 48 improvement actions for the processes, which ultimately resulted in a series of 29 “Mini Projects”, the value packages. These packages were then prioritised based on an effort vs benefit analysis. This gave the company a good overview of which value packages to pursue first and allowed them to prioritise packages into three waves. Wave one focused on resolving key source issues. Wave two focused on optimising the purchase order processing. Wave three focused on continuous improvement.
In a short time of three months, the organisation was able to understand the current state procure-to-pay process, shape improvement actions, and develop and initiate the relevant work packages. The result of these work packages was an approximately 25% increase in purchase order and invoice processing efficiency. The total benefits across all work packages produced a projected savings of $7.5 million over two years.
By utilising process prioritisation, the organisation was able to identify quick wins, prioritise value packages and projects, and execute their business strategy to address the core issues identified in the procure-to-pay processes. The project also leveraged the BPM-D Application to support the prioritisation and planning activities.
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