Acasestudy.com

Exel Case Study

Company: Tranmit
Customer: Exel
Submitted by: Byline PR
Date: July 2001

Exel

In 1999 Exel, the world’s biggest logistics firm faced a logistical nightmare of its own.

The company, then part of the giant Ocean Group, operates freight services on behalf of other companies in 15 European countries, the Americas and Asia. Exel procures freight services from an extensive network of suppliers and presents the customer with a single, consolidated bill. The freight suppliers bill Exel directly for deliveries, generating 1 million invoices each year.

A high percentage of the invoices received by Exel contained one or more anomalies, each of which resulted in a query that would need to be resolved by Exel finance staff before the invoice could be paid. The result was an enormous administrative overhead for Exel and frustration and delays for suppliers, who would sometimes need to wait past their credit terms for payment.

The extraordinarily high query rate was the legacy of earlier attempts to streamline the finance process. To keep the number of invoices down to a manageable level both for Exel and its suppliers, a single invoice could contain details of up to 999 different orders. The more orders per invoice, the higher the chance of missing or erroneous information.

Exel Case Study

Exel used a single procurement application, UNITEL, to generate orders to the freight suppliers and for the purchase of MRO supplies (mainly consumables). Purchase orders were issued from locations throughout Europe, known as stations. When the goods had been delivered, invoices would be sent to the head office in each country of operation, each of which had its own accounts payable department. Finance staff would have to match the invoice against the purchase order details held in the UNITEL application before the supplier could be paid.

Typical problems encountered were that items on the invoice would appear with no job number or an invalid job number, making it difficult to locate the original purchase order in UNITEL. Where a job number did exist it might have no assigned value or an under-provision. In either case, it would need to be returned to the issuer or the appropriate Exel manager for approval.

The highly distributed nature of the process meant that there was no way to identify which suppliers or buyers were causing problems. No definitive procedures were in place either for resolving queries or for authorising payments.

Any queried invoice would need to be sent for approval by post or fax to the station that generated the original order. And the paper chase would begin…

There was a clear need to automate the delays and inefficiencies out of the process, and to establish an audit trail.

In the autumn of 1999 a project team was established to redesign the invoice approval process for Exel European locations. The project’s objectives were to centralise the accounts payable function and establish a management-reporting regime to ensure compliance with the new process.

Among the constraints faced by the team were that the solution would need to be delivered within a tight timeframe and acceptable cost. A longer-term objective was the overhaul of the wider procurement process, but for now the redesign of invoice approvals would need to be carried out without uprooting the rest of the finance infrastructure. In practical terms, that meant identifying a solution that could work with the existing procurement system, UNITEL, and Exel’s ERP system, SYNON.

To be deemed a success, the project was going to have to deliver two main financial benefits: increased productivity and improved predictability and control of cash flow. Scarcely less important was the aim of providing better service to internal customers and fostering better supplier relations.

The external consultant from Meta Management, leading the project, Andrew Turner (now with PriceWaterhouseCoopers), led the search for the suitable technology. Tranmit’s Sprinter Document Manager, electronic document management and workflow system, and the company’s Sprinter Invoice Approvals application was chosen as the solution met the criteria at a very reasonable cost.

Now

Less than 12 months later, the accounts payable function has been transformed. A shared financial services department in Dublin has replaced all the regional A/P offices. Just 40 staff now process all invoices for the European locations received each year, while the level of anomalies is falling. Invoices are now received directly by Dublin and matched to a PO within 24 hours. Likewise unmatched invoices are distributed electronically within 24 hours for resolution. Visibility has been attained. Moreover, there is increased internal customer service, improved control, and hence enhanced vendor relationships. Savings in staff costs, postage, couriers, telecoms bills, storage and office space are estimated at £500,000 per year.

Andrew Turner says, “Cost savings were among the key goals for the project, but the most important single objective was to bring a wayward process under control. What Exel now has is a fully transparent and auditable process, allowing for much more accurate forecasting and tighter control. This project was part of a fundamental process redesign which has proved an effective use of e-enabled application in a real working environment, delivering measurable benefit to the client.”

Now invoices arrive at the European Services Centre (ESC) in Dublin and are scanned into the Sprinter Document Manager system for processing by the A/P clerks, who index an on-screen image of the invoice allowing it to be retrieved later. The indexing information is also automatically passed to the UNITEL system for matching with the original purchase order.

Where there is no match or some other query arises, the Sprinter Invoice Approvals module kicks in. If the original PO cannot be found, for instance, Sprinter generates a faxed copy of the invoice, which is sent to the supplier together with a request for details of the order and its associated job number.

If the value is wrong, Sprinter automatically sends an email to the originator of the order or to a manager who can approve the amended provision and authorise payment. Sprinter also requests that the details held in UNITEL are changed accordingly so that the values match when it comes to reconciliation.

For recipients of a request for approval, doing nothing is not an option. The recipient needs to update a Sprinter screen either to reject or approve the request. An email message advising of the outcome and any changes that need to be made in UNITEL is then sent back to the A/P clerk.

The UNITEL system scours the list of reconciliations overnight to determine what can be sanctioned for payment, and sends the reconciliation report to the Synon finance system. A copy is also sent to Sprinter to close any remaining issues.

Management reports can also be produced overnight, listing outstanding queries by type, by point of origin (the station or individual causing them) and by supplier. The reports also provide performance details, showing, for example, how long queries are taking to resolve.

Michael Smith, Exel ESC Project Director, says, “Automating the payables process has been one of the foundations to deliver process improvement in our financial service centre. It has been fundamental in eliminating much of the paper chase that existed, has brought new technology to our financial and business processes and helped facilitate our change management service centre project.”

The future

The rollout of the new A/P workflow process to all Exel ESC countries of operation is now underway. Because the system uses a browser-based interface and email messaging, the rollout is expected to be rapid and trouble-free with minimal implementation and training costs. The substantial reduction in invoicing anomalies achieved to date is only a start. While the complexity of the process makes it unlikely that queries will be eliminated altogether, Exel believes that they should be reduced to around 10% over time. The invoice capture process, which is paper-based today, will be enhanced in future to include various electronic formats possibly including EDI, email and XML.

Martin Cunningham Exel ESC Managing Director says, “Many of the benefits the system was designed to achieve in terms of productivity and cost-saving have already been realised. Others, such as improved supplier relations and better policing of the process are ongoing. It is a truism of business automation that you start by analysing and reshaping the process and then move forward to automation. Reality is more complex. It is only when the process has begun to be automated that the full potential for change becomes clear. What we learned on this project and the benefits produced by the resulting system provide a useful basis for a programme of continuous improvement of Exel’s business.”

He adds, “The impact of a document management solution that is designed to work the way we work on a pan European basis cannot be underestimated. It is difficult to envisage how we could successfully implement our European Service Centre and pricing mechanisms without it.”

References

Businesscasestudies.co.uk. (2017). Exel case studies and information | Business Case Studies. [online]

Hbs.edu. (2017). Exel PLC–Supply Chain Management at Haus Mart. [online]