Strategies for Business Recovery

Strategies for Business Recovery,
Construction corporation: Procurement process reengineering

The Challenge

A construction client who had been through a period of expansion via mergers and significant organic growth was left with a procurement process at the limits of management control. The central invoice processing function was staffed 30% over budget and only half of invoices received could be matched first time.

The Solution

Our consultants were engaged to programme manage a portfolio of initiatives to re-engineer the entire "Purchase to Pay" process. A structured approach was applied to analyse the large number of symptoms of failure across the process and derive a consolidated list of root causes. Working with the senior management of the business, this list was prioritised and a list of quick win projects selected.

Fifteen projects were implemented over a 6-month period spanning:

  • An executive level KPI reporting pack to drive management focus where action is most needed.
  • A training programme across construction site operatives and suppliers to ensure a consistent understanding of procedures and systems.
  • System enhancements for construction operatives to simplify material call off and delivery confirmation.
  • Rollout of electronic communication with suppliers to increase the reliability and accuracy of communication.
  • System enhancements for the invoice processing function to streamline many of their activities.
  • Implementation of tough follow-up measures with suppliers and site operatives who fail to comply with procurement procedures.

The outcome

The results have been highly successful and show in several areas:

  • Improved supplier relations and payment performance
  • Reduced headcount in the central invoice processing function
  • Dramatic reduction in invoice queries as compliance with procedures has improved, both by site operatives and suppliers.

The full effects of the changes will not show for several months due to the ordering lead-time for materials. Based on results so far, it is forecast that staff levels in the invoice processing function will ultimately reduce by 40% alongside overall increases in throughput.