Case Study: Quote reconciliation

Over time systems and procedures develop which may not provide an ideal degree of control or monitoring. This can be the result of growth, insufficient training or logistical issues and can contribute to unexpected cost. This situation becomes more critical when different parts of the process are remote from each other.

The Scenario

During the course of training for a relatively small Asian carrier, EVS were asked to provide some realistic training for their RO administrators. The training was to cover, OEM and independent cost structures, quote presentation, justification for exchanges, modifications and finally, quote approval and invoicing.

The Situation

During the training Q&A it became obvious that the airline did not have a mechanism to ensure that final invoices were matched to the approved quote. There was a considerable amount of discussion on a certain OEM they dealt with. Within twenty minutes of the end of the session one of the administrators, based on concerns raised during the meeting and a suggested mechanism, had identified and agreed a recovery of an overcharge of $20k from a foreign OEM.

The Conclusion

The airline modified their approved procedure to ensure that all invoices were reviewed by the RO administrator before they were submitted to their accounting group for payment. A more detailed review of invoice discrepancies indicated this simple step would reduce component spend by over $200k annually.

Process mis-steps such as this are suprisingly common, and this case provides a simple example of where spotting small chinks in the supply chain can provide considerable cost reduction.

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