Maximise Your Data

Case Study 2 – Corporate Customer Re-structure

Situation

• Corporate customer structures had grown organically over many years, and often did not reflect the current situation. Many accounts were in fact dormant, but still live on the system, with pricing and discounts that were not maintained. This allowed sales staff to select these accounts and apply incorrect prices.
• Local pricing and discounts were set up at individual trading account level. These had priority over corporate agreed deals. This resulted in inconsistent pricing, loss of margin on some sales and invoice queries on other sales.
• Customer Structure data was not held in the company business warehouse. It was therefore not possible to produce reports that showed the structural links.

Consequently, corporate customer data maintenance was neither coordinated nor consistent.

Challenge

• A system reporting tool was required to include Customer structure. We therefore developed a data reporting tool, using data directly from the ERP system. All reports used to support this project and for ongoing audits were produced using this tool. This meant that for the first time, the structures of complex customers were described to account owners in an easy to read report.
• We now needed to challenge the structure to ensure it is aligned to the customer’s own structure. Product pricing and discounts could be maintained at any level of the structure. Therefore a particular division could have special deals that do not apply to another division. Individual trading accounts could also have a specific deal for a specific project.

We could then check that the prices and deals were correct and up to date?

Approach

• We reviewed the account structure using the new reports and coded dead trading accounts as obsolete. This avoided the possibility of picking up the wrong trading terms and also reduced the number of zero and low spending accounts. Checked that payer account references were consistent and correct, ensuring that invoices were sent to the correct party, so reducing delay in payment. We ensured that customer classifications were consistent within the corporate customer. We then built a cross reference tool to apply corporate financial codings to ensure consistency in group financial reporting.
• We reviewed spend and profit margin by account, highlighting low spend or low margin issues. Reviewed price lists to ensure they were correct and current. Inconsistencies in the selection of the price lists could result in invoice queries.
• We reviewed discounts that were then applied to the master price list. These could be maintained at any level in the structure which would result in local prices and discounts overriding corporate agreements and so causing invoice queries.
• Reports were developed to identify both pricing and discount conflicts at different levels in the structure. The account owner could then review and delete where necessary.

Results

• Cleansing of conflicting discounts and obsolete accounts allowed us to delete over 3M system held discounts. Local net prices were also largely removed, allowing corporate deals to be used.
• Improved invoice matching resulted in a significant reduction in invoice queries – avoiding late payment and additional clerical work.
• The review of obsolete and out dated prices lists enabled us to delete 247K price list references across 60K live accounts – a 47% reduction.
• Even though this was not designed as a margin improvement project, the overall margin on the cleansed accounts increased by 1.4% (140 basis points).

Accounts are now pro-actively managed using the suite of reports available.