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Case Studies
Long Term Care Provider Engages TJG to Project Manage Implementation of New Procure-to-Pay Tool and Develop Processes Across 500 Senior Communities
Challenge:
A long term care provider, with $1 billion in revenue, had rapidly grown to over 500 senior communities across the U.S. through a series of mergers and acquisitions. New community integration yielded a host of procure-to-pay process issues, including noncompliant purchasing practices, invoice exception errors, and inconsistent general ledger account standards. Furthermore, the increased volume of supplier invoices warranted a transition from the existing, paper-based Accounts Payable environment to electronic invoice processing. In response, the VP of Procurement initiated the implementation of an e-procurement tool with a leading Application Service Provider (ASP). It was estimated that approximately $3-$5 million in annualized “spend leakage” could be saved by the adoption of the tool through the enforcement of spend compliance and the automation of invoice approvals and payment processing.
The Bottom Line:
A team of five consultants from The Johnsson Group was engaged to assist the client with the implementation of the new procure-to-pay tool and to develop a process for using it within the recently merged companies. To accomplish this goal, The Johnsson Group team devised, and led, several major work streams, including development of online supplier catalogs and related policies, catalog mapping to general ledger accounts, functional design documentation, and development and execution of the change management strategy. As a team, The Johnsson Group developed and executed a systems test plan, which included user test scripts and acceptance testing as well as data loads by the ASP provider.
A successful pilot occurred within six months of the project’s initiation, and within the first year of production, the procure-to-pay tool was in use by over 500 communities, encompassing 4,350 users. Highlights of this implementation include approximately $700,000 in savings in the first eleven months of operation with over 70% of invoice payments processed through the tool, in compliance with revamped AP procedures. By developing a Communications and Training Playbook, The Johnsson Group was able to transfer knowledge of the tool, enabling the client to independently complete the remainder of the system roll-out. In addition, the client is now positioned to acquire, and seamlessly integrate, new communities into it’s procure to pay process without further outside assistance.
