Hard-Dollar Savings with Bill Audit + E-Procurement
This case study shows how a bill audit carried out by RadiusPoint, associated with the use of an e-Procurement portal, helped our client generate significant soft- and hard-dollar cost savings.
Challenge
A healthcare organization with 200+ locations in the United States and Canada used the usual big operators to supply their offices with bottled water. Each location was empowered to source, hire, and manage the delivery operator. Locations did not have signed contracts covering the services. Our client was in need of a bill audit.
Opportunity
Our client’s management team monitored the vendor invoices processed by their Accounts Payable department every month, and these bills raised several concerns:
- Their AP software referenced 12 individual vendors
- These 12 vendors generated 230+ invoices monthly (but no bill audit was carried out)
- There was no way to validate water delivery or any additional services provided
- The cost of water delivery varied from location to location
- Some vendors were tacking additional junk fees to their invoices
- As locations did not put vendors under contracts, they could not negotiate cost reductions
Solution
RadiusPoint had created an e-Procurement portal that makes it possible for members to source vendors at negotiated rates. This portal generated sizeable savings for members using approved vendors. Membership was offered at no cost.
The e-Procurement portal referenced Staples as a preferred bottled water delivery service. At the end of our bill audit mission, our client took advantage of pre-negotiated contract rates, and reduced its vendors from 12 to 1. This generated very significant economies of scale as (1) the cost of bottled water went down; (2) the water dispenser rental cost decreased; and (3) the vendor also provided monthly renewable supplies at a lower cost.
Implementation
In order to quantify the potential cost savings before advising our client to switch to a preferred vendor on the e-Procurement portal, RadiusPoint reviewed each invoice for (1) the number of bottles delivered; (2) the deposit charged; (3) the water dispenser rental cost; (4) any additional supplies ordered by the locations.
Once all services were identified by physical address, our bill audit found out that several locations were charged a monthly fee for water cooler units without any corresponding bottled water deliveries. Those locations no longer needed the delivery service: the cooler rental should have been cancelled, but the location did not realize that the vendors had continued to bill them. As a result, they had not cancelled their rentals.
Once RadiusPoint completed the bill audit and timing audit, location by location, our client selected Staples as this vendor was able to meet the needs of all 209 locations.
Cost savings
The cost audit & savings mission carried out by RadiusPoint resulted in about $23K in hard dollar savings yearly for our client.
In addition, the mission also generated soft-dollar savings in paid labor, as the number of vendor invoices processed went from 230+ to only 1.
Although as a BPO provider, RadiusPoint specializes in TEM, UEM, and MMS services, we also carry invoice audits for other purposes. In this case, the bill audit pinpointed where the waste was occurring, and we could orient our client to the right vendor in an e-Procurement to realize the prospective cost savings.