achieving lean objectives in accounts payable
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TRANSCRIPT
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Achieving LEAN objectives with ECM
Eliminating Non Value Added (NVA) Activity in
Accounts Payable
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What is ECM?
• ECM allows organizations to automate
business processes, reduce time and cost and improve efficiency through document imaging, content management and workflow solutions.
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How does it help you to manage content?
• It provides structure to unstructured content by giving you document management, business process management and records management in a single application
• Content can be documents, images, media files, meta-data (structured and unstructured)
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Basic definition of LEAN
• LEAN is the identification and steady elimination of waste.
• As waste is removed quality improves while production time and cost are reduced.
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Basic LEAN “Concepts”
• Pull processing• Quality – waste reduction• Continuous improvement• Load leveling• Production flow• Automation
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Basic LEAN “tools”
• Value Stream Mapping• The Five S’s• SMED analysis• Kanban (pull systems)• Poka-yoke (error-proofing)
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How does thisall fit together?
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Value-StreamMapping
Provides a “road map” to see what NVA activities can be eliminated from a process
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EC
M W
OR
KFLO
WBUSINESS PROCESS
MODELING
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EC
M W
OR
KFLO
WBUSINESS PROCESS
MODELING
Define1
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EC
M W
OR
KFLO
WBUSINESS PROCESS
MODELING
Define Simulate21
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EC
M W
OR
KFLO
WBUSINESS PROCESS
MODELING
Define Simulate
Analyze
21
3
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EC
M W
OR
KFLO
WBUSINESS PROCESS
MODELING
Define Simulate
Analyze
21
3
Continuous process improvement
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from the very simple…
There are multiple ways to create value stream maps:
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…to the more complex…
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…to simple flow (or “spaghetti”) diagrams.
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We can see:
• How documents flow through a certain facility of this organization
• Holds (H) which cause delay• Walks (W) that add time and cost to the process
Let’s take a look at a spaghetti diagram for an Accounts Payable process.
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Packing slipInvoicePurchase Order
Basic Spaghetti Diagram
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Packing slipInvoicePurchase Order
Basic Spaghetti Diagram
Business Manager Approval
Shipping & Receiving
Mail Room
AP Matching
Accounting
Purchasing Check Creation
Customer Services
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Packing slipInvoicePurchase Order
Basic Spaghetti Diagram
Business Manager Approval
Shipping & Receiving
Mail Room
AP Matching
Accounting
Purchasing Check Creation
Customer Services
H
H
H
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Packing slipInvoicePurchase Order
Basic Spaghetti Diagram
Business Manager Approval
Shipping & Receiving
Mail Room
AP Matching
Accounting
Purchasing Check Creation
Customer Services
H
H
H
W
W
W
W
W
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Packing slipInvoicePurchase Order
Basic Spaghetti Diagram
Business Manager Approval
Shipping & Receiving
Mail Room
AP Matching
Accounting
Purchasing Check Creation
Customer Services
H
H
H
W
W
W
W
WMultiple points of waste
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1
ECM system
The first major step is removing paper from the process and using ECM for document management
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12
ECM system
The second major step isautomating the processes with workflow
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An electronic document routing system that
enables users to process work more efficiently,
faster, and more accurately
“
”
So…what is workflow?
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•Purchasing•Credit Approval•Expense Approvals•Accounts Receivable•Customer Service•Employee Evaluations…
It’s a proven solution in…
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…and Accounts Payable
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•Poor Work Distribution•Process Variation•No Scale•Pulling•Searching•Duplicate Invoices•Missing Vendor Terms•Poor Accountability
AP CHALLENGES:
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#1 Goal of AP Manager:Push invoices to the edge…
…Without pushing them over.
• Extend payables as long as possible• Maintain positive cash flow• Obtain interest on cash on hand• Pay within terms for early payment discounts
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ECMworkflow
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Stamp Received:
Packing Slip
Enter Packing Slip
into Accounting
System
Stamp Received:
Invoice
Verify that each Invoice
has a matching PO
& Packing Slip
Enter Invoice into
Accounting System
Deliver work to AP
Specialists
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Stamp Received:
Packing Slip
Enter Packing Slip
into Accounting
System
Stamp Received:
Invoice
Verify that each Invoice
has a matching PO
& Packing Slip
Enter Invoice into
Accounting System
Deliver work to AP
Specialists
Remove Steps
With Workflow
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Call a Web
Service
Check if Related
Documents Exist
Load Balancing
Update Keywor
ds
Update Keywords
Calendars
Timers
Call a Web
Service
= Workflow Automated Process
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Deliver documents to AP Clerk
Find Purchase Order (internal doc)
Find Packing Slip (external doc)
Find Invoice (external doc)
Verify all documents are complete
.5 min.
.5 min.
.5 min.
1 min.
.5 min.
3 Minutes
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Deliver documents to AP Clerk
Find Purchase Order (internal doc)
Find Packing Slip (external doc)
Find Invoice (external doc)
Verify all documents are complete
.5 min.
.5 min.
.5 min.
1 min.
.5 min.
NON-VALUE ADDACTIVITIES3 Minutes
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Deliver documents to AP Clerk
Find Purchase Order (internal doc)
Find Packing Slip (external doc)
Find Invoice (external doc)
Verify all documents are complete1 min.
VALUE ADDACTIVITIES1 Minute
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Create Check
Verify that the total amount matches on the Invoice, PO, &
Packing Slip
Verify that the quantity matches on the Invoice, PO, & Packing Slip
Is the amount
>= $15,000?
True
Update Accounting
System
False
Send to AP Manager
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Create Check
Verify that the total amount matches on the Invoice, PO, &
Packing Slip
Verify that the quantity matches on the Invoice, PO, & Packing Slip
Is the amount
>= $15,000?
True
Update Accounting
System
False
Send to AP Manager
Remove Steps
With Workflow
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Compare Keyword Values
Compare Keyword Values
True
Validate Keyword Values
FalseCall a Web
Service
Electronic Routing
Notifications
= Workflow Automated Process
Create Check
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Create check
Verify total amounts match on PO, Invoice, Receipt
Verify total quantity match on PO, Invoice, Receipt
Verify if manager approval is required
Route to manager for approval
1 min.
1 min.
.5 min.
.5 min.
.5 min.
3.5 Minutes
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Create check
Verify total amounts match on PO, Invoice, Receipt
Verify total quantity match on PO, Invoice, Receipt
Verify if manager approval is required
Route to manager for approval
1 min.
1 min.
.5 min.
.5 min.
.5 min.
NON-VALUE ADDACTIVITIES3.5 Minutes
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Create check
Verify total amounts match on PO, Invoice, Receipt
Verify total quantity match on PO, Invoice, Receipt
Verify if manager approval is required
Route to manager for approval
1 min.
1 min.
VALUE ADDACTIVITIES2 Minutes
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New
Eliminate Cost Eliminate Paper, Printers,
Copiers, File Cabinets
2
Improve QualityEliminate Duplicate Payments,
Late Payments
3
Eliminate WasteWalks, Hand-offs, Wait Time,
Reduce Cycle Times
1
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1. Sorting2. Straighten 3. Sweeping or Shining4. Standardizing5. Sustaining the discipline
Work Area
The Five S’s
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1. Sorting2. Straighten 3. Sweeping or Shining4. Standardizing5. Sustaining the discipline
Work Area
The Five S’s
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Standardizing
Standardized work practices means operating in a consistent and standardized fashion.
Pre-Configured workflow Rules & ActionsTimersCalendars & Organization ChartsLoad-balancingAd-Hoc Tasks
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Ad-Hoc tasks
Workflow uses this concept by managing processes with step-by-step queues.
Henry Ford figured this out with the assembly line.
Pushing product to the right person at the right time to make a decision is critical.
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Ad-Hoc tasks
In workflow, human interactions (Ad Hoc Tasks) allow people to perform work
on documents by clicking a button to:• Make a decision• Launch an E-Form• Send a notification• Update a keyword
• Find a related document• Perform many other tasks…
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System workOver the years, things have become
much more automated.
The same should be true of your business processes
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System work
That’s where workflow comes in.
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Load Balancing
1234567
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Sustaining the discipline
Maintaining and reviewing standards
Report servicesBusiness activity monitoringException reportsBusiness process modeling
Workview
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SMED analysis(quick change-over)
Reduce or eliminatechange-overs & application switching
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Why SMED? When we look at a transaction, there’s a
user/worker on both sides of the documents. They have to:• Interact with those documents and add value—AND—• Be “middleman” between the business
application (where the data is) and the ECM system (where the documents are)
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Why SMED?
Going back and forth between the applications and the ECM system wastes time and money.
SMED removes the need to be a “middleman”
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LOB Data
01011101001011
0101110
1001011
0101110
Actions &
Events
AP ProcessingECM System
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LOB Data
01011101001011
0101110
1001011
0101110
ApplicationEnabler
Actions &
Events
AP ProcessingECM System
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No change-overs, no application switching
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Kanban
Pull systems, ensuring process flow
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Kanban
• workflow load balancing– work is appropriately distributed and no
individual has too much or too little work.• workflow actions
– automatically trigger a chain of workflow follow-up actions, systematic events.
• business activity monitoring– provides a performance dashboard so you
can monitor work levels “real-time”.
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Poka-YokePut limits on how an operation can be
performed to force the correct completion of the operation
Fail Safe-ing, Mistake Proofing
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• Point-and-click to set rules and actions which provide structure.– Rules govern activity.– Actions automate activity and movement of
documents.• Organization charts and calendars
ensure work coverage.• Timers ensure work completion
Poka-Yoke
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Stop digging for information.Make accurate decisions.Eliminate bottlenecks.Improve visibility.Enforce consistency.Promote accountability.Reduce complexity.
Why LEAN?
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Bring LEAN to AP…
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…Automate your AP Process!
LEAN&
ECM
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Want to learn more about how ECM can make a difference in your
organization?
Check out our blog:
blog.hyland.com