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Situation Analysis: ClientCo is the world's largest producer and leading competitor in its core business, generating over $7 billion in global revenues and maintaining a 70% share of the U.S. market. Following the rigorously planned implementation of a new accounts payable ERP technology module, followed by a lengthy and often-extended technology "settle down" period, A/P service performance continued to deteriorate. Processing backlog increased by over 60%. Errors, such as duplicate, missed and unaccounted for payments contributed to suppliers' increased dissatisfaction and diminished cooperation.

Improvements Identified: The Lab conducted a Phase I Analysis of ClientCo's Accounts Payable function. The standard eight-week, template-based approach incorporated several additional A/P analytical tools: invoice hold segmentation research, invoice submission quality, processing cycle time impact and supplier satisfaction value.

The effort identified over 120, activity-level operational improvements. Approximately 90% required no change to the recently-implemented technology. Slightly over 40% could be implemented within 1–2 months. Examples:

1. Inconsistent Payment Cycle Times - No formal method was used to align and track the processing cycle times for invoice payment. Consequently, suppliers, A/P staff, and the requisitions group, all began counting cycle time [>40%] in an ad hoc informal manner, using different starting points. This resulted in a large, costly increase in "follow up for payment" calls.
2. Inadequate Submission Training - Inadequate training for invoice requisition staff across 32 plants generated high intake error rates. Roughly 65% of the invoice requisition forms submitted were completed incorrectly.
3. Skilled Staff Diversion - Due to the high backlog levels, the most experienced staff were frequently interrupted and diverted to address the most basic issues. Roughly 50% of the organization’s capacity was devoted to rework and other low value tasks.
4. Excessive Internal Blocks/Holds - Numerous internal blocks on payments exceeded comparable benchmarks by a wide margin. At peak times, up to 70% of A/P staff were engaged in reducing internal blocks/holds.

Overall Results: The 5 month implementation plan targeted an immediate action [1–2 month] documented service improvement and a simultaneous labor cost reduction [15%].