Optimization of claim management in technology
Requisition management in project procurement
Our client is an internationally active defence company that operates in the classic project business and supplies various governments worldwide.
Increase enforcement rate in claim management to optimize receivables pipeline
As the company is strictly bound to delivery dates, delays caused by late or faulty delivery of individual components lead to considerable costs. Therefore, as part of a comprehensive purchasing optimization project, we were also commissioned to put the company’s claim management processes to the test as well as to follow up on individual claims in order to decisively increase the enforcement rate and thus redirect high contractual penalties of the end customers to the suppliers.
Consistent digitalization of processes and definition of cross-functional supplier strategies
At the start of the project, the defence manufacturer had a database in which all receivables from customers and suppliers were recorded. This made it possible to document that a late delivery by a supplier led to delays in production and, in the worst case, to a delayed delivery. Passing on the contractual penalties for this to the supplier who caused the delay was often not successful because a structured, standardised process was lacking. As a result, the database contained a large number of difficult claims, some of which were more than five years old. The major point of contention, who caused the delay in delivery, could not be resolved due to the lack of systematic documentation. As a result, these claims kept getting postponed and the claim list kept growing.
In order to avoid these inefficiencies in the future, we worked with the client team to clean up the status quo and brought together all the documents that existed in different departments in a digital tool. In this step, not only was the information on direct suppliers recorded, but the supply chain was mapped as completely as possible. In addition, we defined a new claim process together with the client, which was also transferred to the new IT tool. In this way, all parties involved now have the latest information and can plan their next steps accordingly.
For one difficulty was that there was still a business relationship with many of the suppliers concerned in ongoing projects and therefore several departments were talking to the same supplier at the same time. In the defence industry, the supplier pool for many parts is very limited and free trials of new suppliers are difficult. Therefore, the supplier relationship plays an overriding role in this industry.
To take this into account, we analysed the relationship and order status with each supplier and derived individual approaches through scenario building. In addition to defining negotiation methods, the creation of communication guidelines and schedules played a particularly important role. Across departments, it was precisely defined when which supplier was allowed to be contacted by which department on which topic and what was to be observed in the communication.
Through cross-functional cooperation and thorough preparation of each conversation, we were able to significantly reduce the receivables pipeline and increase the degree of enforcement to 80 per cent.
During the project, the Corona pandemic caused schedules to be thrown off and further increased the complexity in claim management. In the case of Force Majeur, the structured approach allowed us to stay on top of the situation and mitigate major penalties by adjusting strategies.
- Reduction of the number of claims by increasing the degree of enforcement to 80%
- Up-to-date information basis by increasing data quality
- Centralised reporting function
- Increase in cross-functional cooperation
- Defined claim management processes
- Optimized supplier strategies
- Implementation of successful supplier negotiations