A medium-sized German holding company in the gas and energy supply sector had acquired a company specializing in medical gases and medical equipment. The new subsidiary did not develop as positively as expected over several years. The parent company therefore commissioned the interim manager to get to the bottom of the reasons for the unsatisfactory financial performance and the failure of previous controlling approaches and to identify best practice approaches for future work. The interim manager was awarded the consulting and controlling mandate and also completed internal audits at two other companies in the holding company to the complete satisfaction of the client.
Holding suspects cause of poor performance in billing processes
The main task in the subsidiary's day-to-day business is to deliver medical gases such as oxygen and the necessary equipment to patients and then bill these services to more than 150 different health insurance companies or service providers. Before the start of the mandate, the parent company had assumed that the main reason for the weak financial performance was likely to be the complex billing processes. In his analysis, the interim manager quickly established that the billing processes were generating more costs than necessary. However, billing was not the main cause of the weak earnings.
Interim manager identifies delivery logistics as the most important cost factor
In order to identify the actual cost drivers, the interim manager first gained an overview of the relevant workflows and processes in discussions with managers and employees from all areas. He also drew up an overview of the quantities and the associated costs from various areas and calculated the costs per unit of service provided. In this way, he discovered that delivery logistics had a much greater impact on the result than the inefficient billing processes. In fact, this cost block was ten times larger and therefore offered more savings potential than billing.
Big data analysis of deliveries from more than a dozen branches
In order to optimize delivery logistics, the interim manager analysed several hundred thousand data records on delivery tours in more than a dozen branches. He also combined geographical data from the catchment area of the branches (number of inhabitants, area in square kilometers) at the level of more than 90 zip code areas with the billing data.
This matrix resulted in meaningful key performance indicators (KPIs) for the branches, such as turnover/km²/month, turnover/100,000 inhabitants/month and turnover density in relation to the population density of all zip code areas. These KPIs created transparency for the first time about the particularly successful regions and branches. In the next step, the interim manager supported the controlling team in preparing a profit and loss statement by branch.
Holding rolls out measures to improve logistics
After the interim manager had identified delivery logistics as a key cost factor and advised the controlling team efficiently, the company had the transparency it needed to optimize deliveries and the layout of the branches. The corresponding plans were drawn up after the mandate was completed and successively rolled out.
Process optimization in billing reduces costs by 20 percent
The interim manager made a further contribution to reducing unit costs by increasing the efficiency of service billing by 20 percent through his recommendations. Among other things, this was achieved by significantly automating the invoicing process with the help of OCR scanners and prioritizing invoices: Now, open invoices with high earnings are billed first.
