Results & ROI
- Reduction in Failure Demand (previously 50% of total demand)
- Reduction in new supplier requests from 28 a week to a handful per month
- Increase in capacity of Senior Managers by reviewing approval limits.
Family Mosaic is one of the largest housing associations providing affordable housing across London, Essex and the South East. They currently manage around 24,000 homes for rent, as well as providing care and support services, with a customer base totalling around 45,000 people.
The Purchase Ledger Team, responsible for processing of invoices and administering payments to suppliers, were identified as team coming under increasing pressure. It was apparent this was due a pincer effect from issues both at the start of the process with how things were purchased, and end of the process, where failure to make payment within terms was resulting in repeat invoices coming into the Purchase Ledger Team. FM embarked on a comprehensive review of the process from end-to-end. The aim was to reduce waste in invoice processing, provide traceability of invoices that were work in progress, ensure all payments were made within terms and introduce controls around the use of suppliers.
The team undertook diagnostic activity including mapping the flow of information from purchase to payment being made. This showed how complex the process had become due to non-value adding steps and seemingly inappropriate checks and approvals. Redesign workshops took place and key principles that any improved process would have meet were agreed. These principles included making a purchase and paying an invoice should be easy and quick. This resulted in three processes differentiated by purchase type. The result was a simple process for the majority of purchases allowing them to go through quickly and easily with only more unusual purchases going through a more complex process approach.
There were a number of benefits identified as a result of the process changes identified. These included:
- Improved process with fewer delays and hand-offs resulting in suppliers being paid within terms consistently, thus improving customer satisfaction and decreasing failure demand
- Reduction in time on new supplier set up through only allowing purchases where a supplier was already in place and staff having the ability to search for approved suppliers
- Improved clarity in invoice process through introduction of centralised approval of invoices
- Reduction in time spent on rework caused by invoices by developing of a standard level of detail required from suppliers on invoices
- Increased capacity within the Purchase Ledger team by increasing the use of credit cards for small purchases to reduce the number of payments going through the purchase to pay process.