iSixSigma

Revenue leakage

Six Sigma – iSixSigma Forums General Forums General Revenue leakage

Viewing 8 posts - 1 through 8 (of 8 total)
  • Author
    Posts
  • #53417

    Sivaprasad
    Member

    Hi,
    I have been asked to do a project on revenue leakage in our organisation and wondering whether anyone has done a similar project?
    what measurement system analysis should i use?
    thanks
    Sheena

    0
    #190023

    Ropp
    Participant

    Hi Sheena – What do you mean by the term “revenue leakage”?

    0
    #190024

    Sivaprasad
    Member

    Hi Dave,
    First of all thank you for asking.

    Revenue leakage is not billing the customer for services or products supplied. There is a huge contract and several quotes supplied for that contract – and the customer pays upon receipt of products supplied , so sometimes when the money arrives is when we realize they have not been invoiced!!!! So what else could we have missed? A lot more as we dig!!! So that is what i termed revenue leakage – though rightfully we should be paid but invoices are missed or quotes are misinterpreted. It is not as straight forward as as just make sure they invoice – there are several issues around this, monies collected are not receipted to the correct invoice and there is always outstanding amounts in the debtors balance.

    I would need some guidance on this and appreciate any help.
    Many thanks
    Sheena

    0
    #190031

    G
    Participant

    You can consider looking along the full quote to collect money flow.

    Was the quoted price correct, were there discounts along the way that reduced the original quoted price, look up Ppricing waterfall,” were there invoice errors, did the customer short pay and was it written off as too small to collect?

    0
    #190032

    Charity
    Participant

    Sheena,

    Yes I have perfromed a revenue leakage Lean Six Sigma initiative before and it was very tricky. It was hard to quantify the leakage because our payment system and service system was not integrated.

    The first thing I did was perfromed a Root Cause Analysis; specifically a Apollo Root Cause Analysis that allows you to identify multiple primary effects and apply solutions to them all. Some people argued that you should have a specific event that you start with, however I utilized the tool to identify all of the possible facets of leakage to further analyze each facet of leakage.

    You may have to get craetive and apply different tools and methodologies to analyze each prospective facet of leakage. However I was successful with this approach.

    Good luck.

    Charity

    0
    #190033

    Sivaprasad
    Member

    Hi Charity,
    I am not sure what Apollo Root cause is.

    We are using SAP here and though the implementation happened sometime back i guess there are still a lot of other issues around that – incorrect quote, incorrect invoicing, variations etc etc – i am at the define stage now.

    Can you please advise what measurement system i could use please to gather the data please?

    My email is [email protected] if you could further advise me on this please.

    Also well done that the approach you picked was successful.

    I need to get my head around this and have no idea how and where to start – actually too much of information that it is mind boggling. This is unlike the earlier six sigma project i did where the problem was evident but not much data to gather and it was hard but that turned out really successful.

    Thanks
    Sheena

    0
    #190034

    Sivaprasad
    Member

    Hi G,
    I suppose the answer to your question is all in all “yes”.

    That would be at analysis state – i am trying to see what methodology i could use to measure the data – straight from SAP – so what measurement method do we use – like Attribute analysis – i think this is continuous data. Appreciate your comments.

    Thanks
    Sheena

    0
    #190039

    Sayyed
    Participant

    Sheena, hi..

    I have had some exposure to such a project in my previous life at a BPO…

    It was a telecom client that we were servicing and had found an opportunity in reducing the ‘revenue leakage’ there. The project goal was broken down into two…

    a. Survey all the existing client accounts and review the current Billing with the contracts. This also would flag off if Billing is being done in the first place!! This is a large excercise and not as simple as it sounds depending on the size of the customer base and the complexity of the product/service being provided

    b. Run a Six Sigma project on ‘Increasing On-time Billing’ for all new accounts. The unit was ‘any new account’ while a defect was ‘new account not billed post 45 days of installation’.

    Does it makes sense?
    All the Best for your project!

    Cheers, – Neal

    0
Viewing 8 posts - 1 through 8 (of 8 total)

You must be logged in to reply to this topic.