Background
Everyone who worked on the procure-to-pay operations for a global consumer products company felt the process took too long and had too many errors. There was also the general sense that the company was spending more than was needed to comply with regulations that affected this part of the business. The unhappiest people were those at the very end of the process because they often took the brunt of blame when suppliers were not paid on time or for the correct amount.
Solution
The opportunities were identified via a series of Lean best practices. This team identified the major steps and substeps in the process, and identified the dependencies between the steps. They filled the wall of a conference room with a large chart that captured all the key process elements, including 8 major steps, which they further divided into about 20 substeps and 100 key activities. Opportunities were prioritized and executed with a combination of quick win, lean, and six sigma methodologies.
Results
The team identified two major areas that needed improvement: (1) identifying the correct and approved source for a particular purchase and (2) contracting with vendors. The team targeted 11 specific process steps that contributed the most waste and rework. Subsequent project teams were able to eliminate a total of 64 days of waiting and rework, with the potential to save an additional 30 days through automation and parallel processing. Key improvements included standardizing orders and discounts, and identifying best practices around compliance. The company estimated the improvements resulted in a 15% increase in efficiency, which translated into over $100 million in cost savings.
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