Case study 2 - Moving to a shared services

Client situation

Large organization with finance resources spread across the country. This situation had grown out of smaller parts of the business, which had grown organically along with some mergers of new acquisitions in new geographic areas. The organization was involved in freight and bulk transport.

Background

The industry and the organization had come to believe no purchase orders and manual on demand payments were standard. This was going on in each location with internal controls either ignored or overridden and local managers with a lot of power. Controlling purchases in each location and getting value from preferred suppliers were opportunities not being realized.

Challenges facing the client

The client had to work through the following challenges:

• Vested power and control or purchases at a local level
• Demands of small contractors for immediate payment
• Purchases being made from local suppliers with relationships
• Different technology being used in each location
• Monthly submission of data, resulting in the surprise element at month end, when purchases exceeded budget
• Numerous reasons and excuses why the model could not be changed
   

Key Outcomes

• Development of new processes and interactions with third parties
• Change management program
• Strong support from senior management for new direction
• Implementation of a new system to support shared services
• Implementation of a prefered supplier program
• Set up of shared service centre and call centre
   

Result

• Significant cost and cultural change to implement this solution
• Costs reduced on average around 10-15% due to improved controls and preferred supplier program
• Other benefits from improved coordination and information available
• Improved reporting