PRGX Preventive Delivers Faster Cash to John Lewis Partnership

Challenge: Profit Leakage Cannot Always Be Captured Retrospectively

• A deal may be running at an agreed rate that is delivering an unknown and unintentionally low margin, or even at a loss, but from a GSCOP perspective, it cannot be challenged after the activity.
• Leakage may occur with suppliers who refuse to review invoice corrections post-activity due to contractual terms.
• Some suppliers simply refuse to engage in post-activity corrections and can appear untouchable.
• The agreement and evidence trail may be so ambiguous that it’s unclear what the original deal intention was.
• Some suppliers may lack the capacity to settle retrospective corrections, even after a short timeframe, due to cash flow constraints.

Solution: PRGX Preventive Audit for Retail Stops Profit Leakage Before It Occurs

Provide the Commercial team with better intelligence on upcoming deals. All analysis is done in the background, with only impending leakage flagged to the Commercial teams so action can be taken. Savings from prevention can be estimated upfront to indicate what will be lost if no action is taken, and then reconciled retrospectively against actual sales volumes or promotional activity to confirm what was saved.

Results

• 40% of preventive recoveries have addressed profit leakage that would have been unlikely to be captured retrospectively, improving profitability.
• Moving to preventive has resulted in a projected increase in recoveries of 15%
• The commercial feedback loop has shifted from retrospective to immediate, encouraging real-time behavioural changes.
• Promotional activity that didn’t make sense for the business has been cancelled.
• Unseen margin erosion has been corrected by re-aligning in-store selling prices where needed, creating enhanced margin in perpetuity.
• All recoveries have delivered a cash acceleration benefit to the business.
• Commercial teams have welcomed the integration, immediately recognising the benefits.
• Highly GSCOP-friendly – ambiguity is cleared before leakage occurs, better evidence is recorded, and suppliers face fewer surprise corrections.
• More accurate margin positions for categories throughout the year.
• Supplier delays in resolving issues via retrospective review have been eliminated on certain claim types.

Client Feedback

“The new preventive review process has proven to be a strategic step change for Waitrose recoveries during its first year of deployment.

Previously, certain types of profit leakage were almost impossible to recover retrospectively due to contractual limitations, supplier resistance or a lack of compelling insight. Now, Waitrose has successfully deployed the new preventive capability, namely real-time visibility and analysis on upcoming deals, enabling teams to detect, question and prevent potential margin erosion before it occurs, with further halo recovery benefits also. This has improved in-year profitability, accelerated cash flow, and eliminated both the delays and ambiguity previously faced with certain retrospective recoveries. Our commercial teams quickly embraced the concept and the timeliness of the new process, such that Waitrose plans to continue to build on this upstream capability to drive profitability even further.”

Keith Rosser – John Lewis Partnership

Go Beyond Recovery with Strategic Process Improvement 

Increasing recoveries by 15%, this engagement demonstrated how a preventive approach can deliver more cash and protect supplier relationships with fewer surprises that can arise from a retrospective audit. Our experts can help you uncover opportunities across your retail operations with PRGX Retail Merchandise Profit Recovery services. Our proven methodology not only recovers lost spend but also strengthens underlying processes to prevent future leakage.  

From AP Profit recovery to Contract Management, PRGX combines technology-driven solutions and decades of expertise to help you improve the financial health of your organization. Chat with our team of experts about your goals and or watch a demo to see our solutions in action.