Business processes are the source of value for an enterprise. Cost, efficiency, effectiveness, quality of output, and time are some of the elementary process parameters amenable to various forms of optimization. There’s much more that can be done to processes to uncover new sources of value, be it business process reengineering (the rage of the early nineties) or Six Sigma or lean or software-driven BPM. Genpact, the BPO provider, is reporting success in the process management area, based on its home-grown methodology called smart enterprise processes (SEP).
Some examples of the company’s success include: A leading fortune 500 global financial security company uncovered opportunities to improve revenues by $6-8MM. A leading hi-tech company would potentially improve cash flow and reduce Total Cost of Ownership (TCO) by $28-40 MM’.A leading shipping, energy, logistics and retail conglomerate found opportunity to reduce IT Helpdesk cost and improve productivity by $9MM. An US trucking major transformed its Order-to Cash process and improved cash flow by $40MM.
Genpact experimented, tested and analyzed data from more than 200 million transactions across more than 3,000 processes it manages for clients to determine the benchmarks that best-in-class companies achieve at each level in a process. The next step is to distinguish `the vital drivers of enhanced business results for each process, and develop best practices for addressing those drivers. Developing customized client-specific- diagnosis and roadmap for achieving business results along with recommendations for the execution phase are the next steps. The end-step is to arrive at a commercial model that bases compensation on the results achieved..
SEP in the Making
Sasha Sanyal, Senior Vice President, Smart Enterprise Processes (SEP), Genpact, articulates, “The way we originally managed our business was very much about managing just the part of the process that we ran. Most of the process management happened onshore and what really happened offshore in our captive was people management. The Team Leaders would look at the SLAs that were around such as accuracy, efficiency and turnaround time. A lot of the time, while we would manage upstream and downstream processes, we would not look at the inter linkages between the process.”
This did not work nearly as well with multiple clients. Most companies when they look at processes or functions they look at them in silos, so what happens is that each function, each silo optimizes that process so it manages it to perfection. But, between different functions, there was a lot of value leakage. “No one was looking at the process holistically. While you optimize your process at an individual level, who's looking at the process holistically from end to end and seeing what value leakages happen across the way. This is the point of efficiency vs. effectiveness, which is each process is managed to efficiency, but the overall effectiveness of the entire process value chain is not something people look at. That was really the start of SEP as a concept,” adds Sasha.
In a nutshell, SEP helps to test the effectiveness of client’s processes by measuring points of leakage at each level of a given end-to-end process and then to apply best-in-class benchmarks from within and across industries. The result is a client specific roadmap for maximizing process effectiveness.
Going Beyond Efficiency -Penske's Study
Genpact is currently engaged in comparing Penske’s existing metrics to those in SEP methodology to:
(a) identify additional metrics that should be tracked to provide deeper insight into processes which would drive effectiveness and efficiency improvements, and
(b) to benchmark Penske’s performance against proprietary benchmark database.
A few examples of insights gained to date:
• Penske compares favorably to benchmarks in Average Days Delinquent, a measure of collection effectiveness, and in Cash Application Accuracy.
• Penske has the opportunity to improve performance in the Service Completion to Invoice Cycle Time, a measure of billing timeliness, and in further increasing the Auto-Cash Hit Rate
Genpact’s wide expertise in understanding the key drivers of the order –to-cash process across geographies and industries has enabled the company’s ability to provide insights into how specific focus points and improvement areas within operations can lead to a positive and significant impact to an organization’s revenues and bottomline figures.
When Genpact embarked on the SEP way, the first thing they did was look at the existing processes they were running. Genpact did a diagnostic of Penske's Order To Cash process. Existing process templates were measured along with their measurement systems, benchmark and best practices. Genpact identified gaps. Although, they were running this process for a long time, a different approach aided in identifying gaps. The entire process within order management, across order-to-cash life cycle was analyzed. What leakages were happening, what areas were not doing optimally and when were they not close to benchmarks.... all these points were studied.
Within six months, it was identified that if there were about 45 metrics being measured, then there were about 38 that were best-in-class, and there were seven where there were gaps. These gaps were addressed using best practices.
Five new opportunities were identified for this process through benchmarking. Next, these were then implemented into their process, which was then able to drive an additional outcome of almost 25 additional million dollars a year.
Frank Cocuzza, CFO, Penske Truck Leasing articulated, “Our partnership with Genpact has not only provided us cost-efficient business processes, but also the process rigor and metrics that enable us to achieve ever-higher levels of performance. We look forward to continuing our progress by leveraging Genpact’s Smart Enterprise Process Methodology.”
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