Genpact Focuses on Cash Flow and Balance Sheet to Provide Consistent Business Impact | Article

Outsourcing Excellence Award - Service Provider Excellence Award: Most Consistent Business Impact: Genpact and Top Four Australia Bank

Debra Floyd, COO, Outsourcing Center; Bob Pryor, Executive Vice President – Sales, Marketing & Business Development; Joe Hogan, Managing Director, Alsbridge

Outsourcing Excellence Award – Service Provider Excellence Award: Most Consistent Business Impact: Genpact

“Genpact and the bank’s relationship has really matured over the last couple of years and we are truly partnering to achieve the right outcomes for our business and customers.” – Top Four Australia Bank

Criteria: The service provider had to:

1. Consistently meet or exceed customer expectations
2. Produce outcomes that increased customer satisfaction among the buyer’s customers
3. Help the buyer grow its business
4. Consistently achieve outcomes across three or more industry verticals
5. Create deals global in scope
6. Have an effective change management methodology to minimize disruption when transitions or changes occurred.

The seventh requirement came from buyers: They had to renew the contract and increase scope.

“Consistent business impact is part of our GE heritage,” observes Bob Pryor, executive vice president and head of sales, marketing and business development for Genpact. He reports in 2010 Genpact generated $2.4 billion of business impact for its buyers. “This figure goes way beyond profit and loss impact or cycle time improvement. It represents a substantial impact on the business,” he points out.

Pryor says Genpact looks at five things:

  1. How can we free up cash?
  2. How can we improve working capital?
  3. How can we intelligently manage costs?
  4. How can we help our clients improve customer loyalty and satisfaction?
  5. How can we drive business impact well beyond our current contractual commitments?

The service provider combines Lean, which eliminates waste, with Six Sigma, which focuses on quality and eliminates errors. But its secret element is a time-honored tool —observation — coupled with sophisticated analysis.

Here’s how it works in real life.

Saving a buyer millions

Pryor tells the story of one buyer, a manufacturing distribution company. Genpact only handled its accounts payable process. The team noticed the days sales outstanding (DSO) number was increasing. DSO measures the average number of days it takes for a company to collect its revenue after it makes a sale. A low DSO number means it takes fewer days to get the payments into accounts receivable. A high number means it takes longer or has to sell to its customers on credit.

Especially in this economy, companies need cash to run their businesses. So it’s in a company’s best interest to collect its cash as quickly as possible.

Genpact performed a root cause analysis to determine why the DSO was rising. First it discovered the company’s customers were paying at the same rate. So the DSO was not going up because its customers need more time to pay. What was having such a huge impact on working capital?

It turned out the head of distribution noticed that the company’s tractor-trailers were heavily utilized the first two weeks of the month but were only partially utilized the last two. He figured he could save $2 million a year if he readjusted the load factor by moving more goods to the last two weeks for transport.

What he didn’t realize was that the company’s billing process closed on day 17. Everything billed after that went to the next month. This move increased the DSO by $100 million. The carrying cost on the postponed invoices was $5 million, more than twice his savings from optimizing the fleet utilization.

“The distribution manager was trying to optimize his operations, which is his job. But he didn’t realize delaying the shipments would have such a huge impact on other parts of the business, particularly DSO,” says Pryor. In today’s economic climate, everyone is focused on optimizing their individual business unit or siloh. “But this can have unintended consequences. Someone has to look at the overall process,” he adds.

The manufacturer was concerned about the increase in DSO but couldn’t understand why it was happening. “We ask the questions and perform the root cause analysis they sometimes miss,” says the Genpact executive.

Helping a bank simplify its loan process

A retail bank was making both commercial and residential loans. It was losing business because it took too long for its underwriters to review the loan applications and make a decision. Management asked Genpact to speed up the loan cycle time.

Genpact analysts discovered the bank had 25 different forms for one residential loan. There were even more for commercial loans. Each form was difficult to understand; it took a while to fill out because the borrowers were confused about what information they really needed to share.

Genpact streamlined the forms. This decreased cycle time. Voila! The bank was able to close more loans.

“We look at the whole process to see where we can have an impact,” explains Pryor. “Often we generate savings outside the process they outsourced to us.”

3 Comments on "Genpact Focuses on Cash Flow and Balance Sheet to Provide Consistent Business Impact | Article"

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  1. Hi, its really a nice post and very thoughtful. Now a days, Its became a part of business and its cost effective too.

  2. Luella says:

    Whoever wrote this, you know how to make a good arctile.

  3. I really agree with the Genpact goal. This is a basic attraction for customer satisfaction and the simplest loan process.

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