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I. Overview
Because of inefficient and non-existent accounts payable processes, many issues were arising and the department was at a critical point. Late fees were being applied to late payments from suppliers and vendors; the accounts payable department was working overtime with additional help to reduce the late fee charges being applied; the system of communication was causing excess wait time for receiving critical information to continue moving the process forward.
Identify problem areas within system causing communication breakdowns Improve throughput to eliminate late fees Create a visual workplace to increase cross-training abilities
Staff decided to conduct a Kaizen event to show immediate and significant improvements to solve issues. The Kaizen team consisted of both people from the accounts payable department as well as people outside of the department.
Value Added Time = 324 minutes Non Value Added Time = 35, 200 minutes or 80 days.
The steps were separated into non-value added, value added, and needed (but not value-added). Out of the 119 steps, only 9 were value-added. Step 2 Created a matrix to separate the non-value added steps into categories and determine most critical areas to focus on during the event.
Step 3 - Figured out ways to make needed steps shorter by focusing on the following objectives: Communication, standardization, tracking, work presentation organization and lead times. The chart below represents the findings of the current state based on the process map created in step one.
Communication: The team addressed communication issues by applying 5S principles to create a more standardized process. They improved and developed process steps which identified who, what, where, when and how, greatly reducing overall miscommunication issues and eliminating the need for additional research, rework, and waiting for responses.
Work Presentation and Standardization: One key observation was achieved by mapping how information was sent and received internally. The team identified four key internal groups contributing to the non-value added steps of the process. Each group was responsible for feeding approval information back to accounts payable. In most instances, the information was sent to the groups in an ad hoc format in a batch system, adding to the cycle time. The large amount of paperwork forwarded to the groups was an issue and increased the lead-time for receiving approvals and paperwork back. The team created a daily system, decreasing the batch sizes by 90% or more. The team took this process another step and added a color-coded system with time constraints. This gave those responsible the ability to track the compliance of each internal groups response time.
Folder system created to regulate batch sizes and increase throughput and reduce lead times / wait times Tracking: The above picture shows each day with a different color folder with process owner and identified along with a time stamp. Each internal group had a mailbox within their area in which the folders were placed daily. The colors were a quick identifier to ensure that the incorrect days folder was not left in the box. In order to sustain the process, the team created a simple compliance sheet with each department listed with Yes and No check boxes. The form was submitted to the Area Controller daily and the information keyed into a simple excel database immediate. At the end of the week, a compliance chart was printed and reviewed
during the weekly staff meetings. Over the next 30 days the compliance reached 100% for all internal groups, creating a total reduction of tracking days by 92.3%. Training: The team created and held training to present the new system to the four internal departments. The training was designed to help them understand why the new system was important and what was causing the lead times. They were also shown how to use the forms, which helped to raise the overall compliance scores as well.
VI. Conclusion
The Kaizen event allowed the team to identify and improve a process that negatively impacted four key internal departments, increased overall company costs, upset customers, and caused poor morale in the accounts payable department. By focusing on the process and the individual, the team was able to identify root causes and apply easily executable solutions. Overall the event did more than improve the bottom line: it also helped to kick off lean efforts within all aspects of the business.