P is for Partnership in Business Process Outsourcing

For technology company Calix, communication is key to getting the most out of its business process outsourcing relationships


"If any of the freight payment service companies could show a meaningful outsourcing value proposition for Chevron Phillips Chemical, I would have happily given them our business," said Richard Roberts, Support Services manager for Chevron Phillips Chemical.

Check, double-check, and triple-check

An accurate and efficient SAP freight rating process allows a staff of six FTEs to rate and pay the incoming invoices. An internal post-payment review identifies errant payments so that overpayment claims and system adjustments can be made. The company also depends on the third-party freight bill auditing company Audit Techs to perform quarterly post-audits to fine-tune the identification and elimination of payment system exceptions and errors. This serves as the final check for errors.

Richard Roberts, Support Services manager, Chevron Phillips Chemical

This system of triple checking has enabled Roberts' department to lower the overpayment amounts found by Audit Techs to 0.03 percent of its total freight spend.

But what about overhead costs?

The analysis of the multiple third-party bill payment service company's proposals proved that the economy of scale was on the side of outsourcing the bill payment process. Chevron Phillips Chemical's cost for processing a bill under the outsourcing proposals would be reduced by approximately 40 percent. This savings had the potential to significantly reduce Chevron Phillips Chemical's total departmental costs.

The industry norm for freight bill overpayment ranges from 2 to 5 percent. With this calculation, Chevron Phillips Chemical concluded that outsourcing its bill payment process for the invoice processing "savings" may put as much as 12 times more in favorable payment accuracy benefits at risk. Even a small increase in error ratio would quickly negate any savings from the outsourcing.

"The outsourcing companies might have provided us with lower processing costs and enhanced reporting tools," said Roberts, "but when we shared with them our payment accuracy rate and asked them to match it they couldn't do it."

About the Author: Geary Barnes is a Senior Partner with AUDIT TECHS, a 28 year old freight payment analysis firm, which audits varied clients' $1.5 B in annual freight spend.


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