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Unilever implements a new Claims Management System

Unilever is one of the most celebrated names in the FMCG industry, with highly visible brands such as Lux, Lipton, Knorr, Dove, Blueband, Sunsilk and Walls amongst many others under its umbrella. It’s portfolio of more than 400 brands cater to the needs of around two and a half billion people every day and pervade seven out of every ten households around the globe.

Sales and Distribution Operation Challenges

Unilever operates with a direct to consumer business model in which their finished goods are transported to retailers through distributors. The products are bought by the end consumers from the retailers. This framework has resulted in Unilever developing an intensive network of more than 330 distributors supplying products to more than 250,000 retailers. Due to the complexity of this huge distribution network, Unilever started encountering problems of transparency and slowness in the complex paper based process of claims, along with the huge costs necessitated by a paper based system.

The number of different types of claims exceeded 850,000 and were faced at multiple stages of the intermediary sales channels. The claims were classified into invoice based and off invoice claims, each undergoing a different manual process. The invoice based claims were primarily due to trade promotions, channel wise discounts and slab based discounts offered to retailers by distributors, which were then claimed by distributors from Unilever itself. Promotions held the maximum number of claims and thereby caused the greatest hassle. The off invoice claims comprised costly damages to the inventory at retailers such as expired items, overstocked goods, damaged products due to excessive rain, salaries of field agents, fuel consumption by distributors, damages during transit, withholding tax and many more.

The prior processes for both types of claims relied heavily on collection of physical documentation from the distributor management system, manual posting of invoices and manual verification of all numbers. Consequently, the off invoice claims were resolved in an average of 40 days and the invoice based claims require a period of 14 days or more after the end of the month to clear all reimbursements.

TMX SD as Claim Management Solution

Once Techlogix implemented the TLX SD Claim Management System:

  • Claims started to be auto-generated on the 25th of every month with the option to attach any documents for proof.
  • Claims could now also be generated manually by the distributors at any point in time in addition to the auto generation at the specified monthly date.
  • Unilever’s data system was used to derive sales information and the invoices already in the system were used to generate all invoice claims, thereby completely eliminating the process of claims being manually created and submitted.
  • Data for distance travelled data, available in the system, was used to calculate the fuel expenses incurred by the distributors.
  • Claims for each distributor were developed from agreements that were pre-defined in the setup.
  • Duplication of claims was completely eliminated reducing errors and simplifying the approval process.
  • All distributors could now access the system where they could review their claims and submit them for approval.
  • Claims could be approved or sent for reworking at various different hierarchical levels such as the Area office, Zonal office or the Head office.
  • Once approved claims were settled by the Finance department at the Head office.

Key Benefits

  • The new Claim Management Process introduced e-forms and thus completely eliminated any associated paperwork.
  • Auto generation of claims also drastically reduced manual posting and human errors.
  • The digital documentation also enabled easier audit of invoices and claims to further improve governance and reduce margins of error.
  • Manual approvals were reduced as the majority of approvals were handled by pre-specified rules in the software.
  • TLX-SD significantly reduced the problematic long processing times: The Off invoice approval process was reduced from 40 to 14 days while the Invoice based process now took only 7 days instead of 14.
  • The availability of paperless documentation allowed full visibility to identify any processing stages that might be causing delays.
  • Finally, the automation and digitization process gave full visibility to the monetary value of the claims and the total time taken to complete the reimbursement process and provide useful data to further tweak and improve the system.