Abreviated Project Slides

Avaya - Proprietary. Use pursuant to your signed agreement or Avaya policy. 1

Billing Adjustment Process Improvement

University of South Carolina Moore School of Business

Global Supply Chain & Operations Management Program

Spring 2016 Final Presentation: 04/22/2016


Define

Define Measure Improve Analyze Control

Avaya - Proprietary. Use pursuant to your signed agreement or Avaya policy. 3 3

Delighters

Requirements

●  Measure the impact of the future-state process on the adjustment tail, number of adjustments and reserve.

•  Document and map current-state process.

•  Map process for reserve calculations.

•  Measure and track revenue impact of adjustments.

3

•  Propose an improved future-state adjustment process.

•  Measure and Analyze the causes behind adjustments.

•  Propose control mechanisms for continuous improvement.

Satisfiers Customer Satisfaction

Degree of Fulfillment

Kano Analysis


Measure



Swim Lane Process Map (Complete)

Pay


Swim Lane Process Map (Part 1) OEFC

Automated

SAP

PlaceRequest

SalesGeneratesQuote

ReceiveQuote

SendPOtoAvaya

UploadContract

Informa@on

Checkcontract/invoiceforerrors

GenerateInvoice

ContractUploadTeam

DisputeTeam

RightInvoiceInfo?

SendsInvoiceatDesignated

Time

ReceiveInvoiceInfo

HavePO?

InvoiceInfo

Correct?

ValidErrorClaim?

Yes

Yes

No

No

Yes

Resolu@onIden@fied

No

Custom

er

No

Yes

Pay

Con@nuedInvoice

Generated

DisputeLoggedinGetPaid

Collec@onsTeam

CallorLogDisputeinCustomerPortal

AcceptQuote?

Yes

No


EasyFix?

BillingBlock

No

NeedNewPO?

ProvideNewPO

Yes

CancelInvoice(S1)

YesNo

ModifyContractInfo

FutureRevenueDebited

CreateNew

Invoice

Swim Lane Process Map (Part 2)

Exis@ng

BillingBlock?

RemoveBillingBlock

Yes

No

RequestNewPO

DisputeClosedinGetPaid


GenerateMonthlyEDWQuery

ConverttoValidityFile

Endofquarter?

No

GenerateMonthly

S-1Query

ConverttoValidityFile CalculateBAT

CalculateBAT

SumTotalAdjustmentsfor

GCS

SumTotalAdjustmentsfor

AGS

MovingMonthly

Average*xAdjustmentTail

CalculateOver/UnderProvision

Yes

PosttoGeneralLedger

Duplicate removal and other reasons for

excluding adjustment data

Billing Adjustment Tail Process Map (monthly)

adjustment date – invoice date

*5 quarter moving average Excluding:

Highest and lowest values

Avaya - 60 days Team - 46 days

$7.3 million in the quarterly Billing

Adjustment Reserve


Net Value vs. Total S1 Count Average Net Value $

Average Occurrence 1205


Analyze



Problem Occurrence Pareto

Problem Description Definition

Incorrect Charges Maintenance

Customer is charged incorrectly for rendered maintenance

PO Update Required Customer’s purchase order has not been updated to match the received invoice

No PO Customer’s purchasing department has not been cleared to issue a purchase order for the received invoice


Net Value By Problem Description - Pareto

Problem Description Definition


Customer is charged incorrectly for rendered maintenance

PO Update Required Customer’s purchase order has not been updated to match the received invoice

No PO Customer’s purchasing department has not been cleared to issue a purchase order for the received invoice


Average Detection Time in Days


Average Dispute Resolution Time (in days)


Failure Modes and Effects Analysis (FMEA) = failure points

Pay

Process Steps with Failure Points:

❏  Sales Generates Quote ❏  Accept Quote? ❏  Continued Invoice Generated ❏  Upload Contract Information ❏  Check Contract/Invoice for Errors

❏  Sends Invoice at Designated Time

❏  Call or Log Dispute in GET PAID ❏  Remove Billing Block ❏  Modify Contract Info


FMEA- Top RPN’s Process Step/Input FMEA # Failure Mode RPN

Sends Invoice at Designated Time

25 No PO provided by customer 576

Continued Invoice Generated 40 Avaya fails to notify customer of needed PO 576

Sends Invoice at Designated Time

26 Incorrect PO provided 567

Continued Invoice Generated 41 Updated PO Required 567

Sales Generates Quote 1 Service/Price/Quantity higher than agreed upon 504

Customer Overlooks Error in Quote

7 Service/Price/Quantity that is higher than agreed upon

504

Upload Contract Information 13 Service/Price/Quantity higher than agreed upon 504

Check/Contract Invoice for Errors

19 Overlooks Service/Price/Quantity that is higher than agreed upon

504

Modify Contract Info 33 Service/Price/Quantity higher than agreed upon 504


Fishbone Analysis (Example)

NoPO

providedbycustomer

Workforce

SalesTeam

FailstoobtainPOfromcustomer

UploadContractTeam UploadscontractwithoutthePO

Procedures

Policies System

NopoliciestostopacontractfrombeinguploadedwithoutaPO

Lackofcommunica@onbetweenSalesTeamandOEFCtoverifycontractinforma@on

Fewchecksinplacetoverifyinforma@oniscomplete

SAPallowsacontracttobeuploadedwithoutPO

Noformaldisciplinarysystemrelatedtogenera@nganduploadingincompletecontracts

A.NoPOprovidedbycustomer–(ProcessStep:SendsInvoiceatDesignatedTime)

SAPallowsaninvoicetobegeneratedandsentwithoutaPO


S1’s with “PO Update Required” Problem Descriptions

Net Value spikes in January and June.


S1’s with “No PO” Problem Description


Improve



Future State Process Map OEFC

Automated

SAP

PlaceRequest

GenerateQuote

ReceiveQuote

SendPOtoAvaya

UploadContract

Informa@on

Checkcontract/invoiceforerrors

GenerateInvoice

ContractUploadTeam

DisputeTeam

RightInvoiceInfo?

SendsInvoiceatDesignated

Time

ReceiveInvoiceInfo

HavePO?

InvoiceInfo

Correct?

ValidErrorClaim?

Yes

Yes

No

No

Yes

Resolu@onIden@fied

No

Custom

er

No

Yes

Pay

Con@nuedInvoice

Generated

DisputeLoggedinGetPaid

Collec@onsTeam

CallorLogDisputeinCustomerPortal

AcceptQuote?

Yes

No

Sales

= reports for expiring POs

ReceiveReport

GenerateExpiringPOReport

= create domestic SOA

= uniform set of reason codes

ValidateReport

ValidateReport

2

3

4


EasyFix?

BillingBlock

No

Yes

CancelInvoice(S-1)

ModifyContractInfo

FutureRevenueDebited

CreateNew

Invoice

Future State Process Map

Exis@ng

BillingBlock?

RemoveBillingBlock

Yes

No

DisputeClosedinGetPaid

AcquireNecessary

Authoriza@onLevel

= reports for expiring POs

= create domestic SOA

= uniform set of reason codes

2

3

4


Proposed New Set of Reason Codes- 95% Original New Description


Incorrect Charges- Credit Service/Price/Quantity higher than customer agreed upon

Incorrect Charges- Debit Service/Price/Quantity lower than customer agreed upon

Incorrect Charges- Time Incorrect timeline on Invoice or Contract

PO PO Update Required Continued Invoice - multiyear contract

Incorrect PO Either Initial or Continued Invoice

No PO Initial Invoice

Invoiced on Wrong Account Invoiced on Wrong Account Invoice Created with Wrong Customer ID

Payment Terms Disagreement Payment Terms Disagreement

Dispute Concerning Billing Terms of the Contract.

Document Needed Document Needed Normally needed for government contracts that require signatures on items, contract copy requests, invoice copy requests, and tax document requests such as Avaya’s W2.

Manual Review Manual Review Customer requests review of contract by Avaya because of previous errors identified.

Tax Issue Tax Issue Incorrect Tax Information that causes Avaya to under or over pay

Other (remaining 5%) All Other Possible Disputes- All together account for 5% of occurrences


Summary of Future State Impact Impact Area Current State Future State Percent Change

Number of S1s 21.1% decrease

Net Value of S1s 48% decrease

Number of Hours 21.1% decrease

Billing Adjustment Tail

10% increase

Billing Adjustment Reserve

22% decrease


Total Annual Cost Savings

$202,856.16

(S1 reduction x hours to complete S1 adjustment x labor cost per hour) + (estimated total cost of capital x reserve reduction)


Control



Future State Process Map (S1 Internal Review) OEFC

Establishperformancemetrics/goals

PullS-1DatafromSAP

Define Measure Analyze Improve Control

PullDisputeDatafromGetPaid

AggregateandMatchData

Sets

MakeParetoChartsforAdjustment

Cause

DocumentResults

RootCauseAnalysis

CauseandEffectDiagram

FutureStateAnalysisfor

TopOccurrences

DevelopImplementa@on

Plan

Iden@fyProcessOwners

If implemented, countermeasure 4 will eliminate these steps.

Countermeasure5

quarterly

bi-annually

Abreviated Project Slides

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