Saving money at Kingfisher: The less obvious way

SSON: Michael, you have considerable experience with designing and implementing P2P and O2C solutions in various organizations such as Speedy Hire and Kingfisher - in your experience what is the most challenging aspect when implementing these solutions and transitioning services?

MH: The most important thing is sponsorship. It boils down to whether you have the right support in the organization to implement the necessary changes. By default people don’t like big changes and if you don’t have the right buy-in in the organization you will struggle to make a success out of it.

SSON: At the Finance Transformation Europe 2010 conference, you’ll be speaking on the importance of understanding the link between process and business value in order to drive cost savings, could you elaborate on this in greater detail? How easy is it to marry the two and can you give us some examples?

MH: What I am going to talk about at the event is something that has many names. It has been referred to as reverse factoring or dynamic discounting. It’s all about optimizing your working capital via payment. It’s the old adage: while the buyer wants to extend the payment terms the supplier on the other hand wants to be paid earlier.

It’s very important to utilize this scenario by making sure that the strongest creditor actually funds the supply chain/service supplier. It’s all about working closer together with the supplier to eliminate the huge amount of billions tied up in the supply chain, because at the moment we all (the suppliers and buyers) need the cash to cover our cash flow, but also to invest and improve our businesses.

SSON: You'll also be discussing the importance of effectiveness rather than concentrating on efficiency when processing invoices. Why in your opinion is effectiveness so important?

MH: It is because when people engage in general information projects or shared services projects specifically - there tends to be an initial focus on headcount and productivity, which in my opinion is not necessarily going to lead to major cost savings. There are a lot of other ways in P2P which will enable you to save money – like dynamic discounting and cash flow which severely outway any kind of benefits you might gain by making staff redundant. Other benefits many people tend to forget about are control and transparency.

SSON: You’ve assisted organizations in reducing spend by up to 50 million through effective process management? What drivers helped you to do so?

MH: Firstly, having more efficient working capital. The main companies I worked for had high AP spend; therefore it was the small changes which made significant differences. It is surprising how much money can be saved by reducing write-offs, control and also just the value you get out of transparency and control. Another important aspect people tend to forget is the cost of your audit and finding ways to lower the cost of your audit by installing a better system and implementing better transparency.Â

SSON: In one of your sessions you mention ‘freeing up funds for higher impact activities’ – we’re just coming out of a recession – what advice can you give to organizations who don’t necessarily have floating cash available?

MH: In today’s market more offers are coming in for solutions that have been proven and tested, for exampleÂ instead of paying the big capex costs and set up - you can now buy them on a transactional basis. Of course the downside of this option is it can be more expensive in the long run, but it does allow organizations who are short on cash to benefit from the technology many of the big companies have invested in and produced in the last few years. These technologies are now becoming standard products that you can buy off the shelf. You can also buy what I would refer to as a utility, which means you don’t have to invest in huge amounts of IT.

You will just have to be prepared to be flexible in relation to what the processes look like, because the supplier usually dictates what the process should look like but there is always the possibility to enhance this model in order to meet your requirements.

SSON: What are you hoping to take away from this year's Transformation Europe event?Â

MH: I take part in SSON’s Shared Services and Outsourcing conferences on a regular basis, therefore I look forward to seeing all the speakers at the conference. Some of the speakers come from very far away to present at the conference and I know that they are very interesting so I look forward to hearing them present. I 'm also keen to find out if there is anything new on the marketÂ and anything I should be aware of which could be beneficial to Kingfisher.Â Â Â