Team-Based Homework Assignment 2: Improving Accounts Payable at Ramsville In

John Smith

6 years ago

Team-Based Homework Assignment 2:
Improving Accounts Payable at Ramsville

Introduction

Sarah
McDougal, Manager of Disbursements at Ramsville thought to herself Just a few
more days until the Kaizen event kicks off.
As Manager of Disbursements, Sarah oversaw four departments in
accounting: the Sales and Use Tax Department; the Payroll, Time and Expense
Reporting Department; the Accounts Payable Department; and the International
Accounting Department.

Ramsvilles new
CEO, Chris Smith, had developed and championed Ramsvilles new Lean Initiative
not long after taking over. After
achieving substantial improvements in cost, lead time and quality from the
application of lean principles on the manufacturing floor, Chris felt it was
time to apply the same principles to other functional areas. Given the importance of Accounts Payable (AP)
in maintaining a smooth flow of incoming material and preserving good
relationships with suppliers, Chris felt that the AP area, which had been
experiencing increasing lead times for invoice payment, would be a good place
to start.

With the top
management directive of working on improvements in the AP process, Pat Davis,
the Assistant Controller and Sarahs boss, scheduled a meeting to review the
current situation. Just look at this
Pat said while pointing to a column of numbers in a spreadsheet. Weve got
almost 6.5% of our accounts payable overdue, and our suppliers are not happy
about it! In a few cases, its even
impacting further shipments of parts, potentially causing our manufacturing
plant to miss shipping due dates and impacting customers. We must get a handle on this!

Walking the Process

Following
that meeting, Sarah met with Colleen Martin, Manager of the Accounts Payable
Department, to better understand the entire AP process. Colleen provided a good overview of how the
process should work, but Sarah realized that she would need to walk the process
herself to truly understand the current state of things. She scheduled a walk-through of both the
mailroom and the AP Department, armed with a clipboard, stopwatch, calculator,
paper, and pencil to create a formal current state value stream map (VSM).

The AP
process begins at the mailroom which processes incoming mail from all sources,
including invoices from suppliers. Once
there, Colleen and Sarah spoke with Bill Hoskins, the Mailroom Manager.

Bill
explained the process to Sarah: Weve noticed, based on the post mark of
incoming mail that it takes about 5 days for most mail to get to us. After the mail is received, it has to be
opened and sorted. We are running a bit
behind, so we usually open the mail the day after we get it. If it doesnt belong to AP we have to route
it to the right department. We receive
about 300,000 pieces of mail each year. It takes about 1 minute to open and
look at each piece of mail, to determine if it is AP mail. We find that about 35,000 pieces a year do
not belong to AP.

Sarah: Wow, I didnt realize so many invoices came
in each year. I thought that we had an automatic payment process that was
supposed to reduce incoming invoices.

Bill: We do get a lot of invoices coming in, but
not all of those actually get sent on to AP.
Other processes screen out many of the invoices. First, we have to check mail that is sorted
to be AP mail to see if it has a Purchase Order (PO) listed on the
document. We have about two days of
backlog from the time the mail is opened until the PO check happens. It takes an average of 2 minutes to confirm
the PO number since all of the invoices have different formatting and we have
to enter the PO in our system, and 8 mail room data entry clerks work this
process for 75% of their work day and the rest of their time on other types of
data entry. Fortunately, we dont really
get any invoices without valid PO numbers on them.

As you know,
the PFR invoices dont go through the standard AP system, since they are paid
automatically when the material is received.
I sure wish we could get all our suppliers on to the PFR system; and I
dont understand why suppliers already set up on the PFR system still send us
paper invoices its really frustrating! So after we are done checking the PO
number, we have to check to see if the invoice is part of the automatic Pay
From Receipt (PFR) process.

Colleen: Youre right Bill, but the problem is that
some of the suppliers are running on accounting software that forces them to
generate and send an invoice. Weve
talked to them about this, but its just too expensive for some of them,
especially our smaller suppliers, to change their systems to meet the needs of
only one customer. Still, it would be
nice for both us and the suppliers if we could come up with a solution.

Bill: There
is an inbox for the PFR check that has about 1 of a days invoices in it. When we find that the invoice is part of the
PFR process, we throw the invoice into the paper recycling bin, since the paper
invoice isnt needed and it is just a duplicate of the automatic PFR. We use the extra money we earn from all the
paper we recycle to pay for refreshments at our softball games. At this point, we throw away about 200,000
invoices per year that are really PFR. We
keep exact track of what we throw away, since we want to be sure that we dont
throw away something that we shouldnt.
Since we are really careful, it takes us about 6 minutes to do this, and
we have 25 full time mail room people working only on this. The remaining
invoices are sent to the AP department.
The invoices are divided alphabetically by supplier name while we are
doing the PFR check and sent to the assigned AP person, so that each person
gets approximately the same number of invoices each year. Once we send the paper invoices on to AP, the
mailroom is done with its part of the process.

Sarah: Let me make sure I have this right. First you receive and sort all the mail, with
about 265,000 identified as AP mail.
Then you have to check for a PO. After confirming the PO, you then check
to see if it is on the PFR system. If it
is, you recycle the paper; if it isnt, you send the invoice to the assigned AP
person. Does that sum it up?

Bill: Yep, thats about it.

Sarah: Thanks Bill, we appreciate your time and
information. Colleen, lets go find out
what happens after the mailroom passes the invoices along to AP. Ive asked Sam Wolf to help us with the AP
part of the process, since Sam has been working as an AP analyst for about 5
years and has done a variety of different jobs in the accounting department.

Colleen: Hi Sam, Sarah and I are ready to have you
walk us through the AP process on this side.
Weve just finished talking with Bill Hoskins, who explained the process
through the point that the mailroom sends the invoices to you. Lets start with how long it takes the
invoices to get to you from the mailroom.

Sam: Well, they make deliveries three times a
day; at 9:30, at 1:30, and at the end of the day to clear out their area before
the end of the shift. So I guess you
could say that the average invoice takes 1.5 hours to get to us once the
mailroom is done. The mailroom
distributes the invoices to the inbox of the assigned AP analyst. Our inboxes usually have about 2 days worth
of incoming material. We process the
inbox on a FIFO system, and once an invoice comes up to be worked on, the first
thing we do is make sure that they arent on the PFR system.

Sarah: Wait a minute, didnt the mailroom already
check to see if the invoices were PFR and get rid of those that are? Why are you checking for the same thing
again?

Sam: Yes, they do check, but we still find about
1,250 per year that they missed. It
really is a pain to check for PFR status, and it takes us 7 minutes to do it
because we have to be extra careful to catch ones that were missed when the
mail room people checked them. Each
analyst has to spend about 25% of their time doing these checks. This is such a time consuming effort that we
have been keeping track of how many we find each week, and I can get that data
for you, if you want.

Colleen:
Wed like to have that data, thanks.
Okay, you screen the incoming invoices for PFR and then you only work on
the invoices that arent PFR, right?

Sam: Yes, at
this point, we have only actual invoices that need to be manually processed
through the AP system. Now an analyst
has to determine if the invoice is ready for payment. It could be that the pay-by-date is out in
the future or we have a payment schedule agreement with the supplier. It takes about 5 minutes to sort each invoice
to determine if it is ready for immediate payment or should be set aside to be
paid later. Analysts spend about 20% of
their time sorting for payment readiness.
Invoices that arent ready for payment are set aside, which happens to
about 20 invoices each day. On average,
pay later invoices arent processed for 15 working days. It takes about 1 minute (and the equivalent
of of a full time person) to look at a pay later invoice and move it over
to payment processing when it is due.
When a payment is ready to be paid, regardless of whether it is a pay
now or one of the pay later invoices that is now due, it takes about 2
minutes to enter it into the payment processing software. We take turns and
have one AP person work on this all day.

Sarah: So all of the invoices end up going through
payment processing, although some go straight there if they are ready for
payment, but some wait for a while until they are due, is that right?

Sam: Yes, they all have to go through the full
payment processing, eventually. After
they have been entered into the payment processing system, they have to go
through a batch process, which runs 4 times per day so an average invoice waits
1 hour for processing. We want to be
sure that nothing is getting paid incorrectly, so we actually spend another 2
minutes per invoice doing a final inspection of the payment before the batch is
released. We take turns doing this with one person working on it per day.

At this
point the payment should be on the way to the supplier. However, we still have to file the paper
invoice along with proof of payment. It
takes about 4 minutes per invoice to file the paper documents. But we usually do all the filing at the end
of the day, so an average invoice waits for about day until it is filed. It would take the equivalent of 3 full time
people to do all the filing, but each analyst is supposed to do their own
before they leave for the day.

Sarah: Okay Sam, let me make sure that I have the
process straight. You get the paper
invoices from the mailroom. Then an
analyst does a PFR check. If the invoice
is PFR, it is thrown away; if not, it moves through the system for payment
processing. You have to determine if it
is ready to pay now, or should be set aside to be paid later. When an invoice is ready to pay, you input it
into the system, process the batch and then file the paper documents. Does that about cover it?

Sam: Yes, thats about what we do.

Sarah and
Colleen met later in the day to review the data they had collected and to begin
drawing their current state VSM.

Sarah: It looks like weve gotten a lot of good
data on the current process, and it seems that there are several opportunities
for improvement. Lets finish up with
the current VSM and then run it by Bill and Sam to make sure that weve
captured everything correctly. Then we
can call a meeting to begin working on our future state map.

Colleen: That sounds good. One other thing that didnt come up when we
were talking with Sam, but that I think is a problem that we should also look
into, is the number of invoices that are paid incorrectly. The AP analysts are actually spending a lot
of time trying to troubleshoot and fix invoices that suppliers have called to
complain about. Weve begun keeping
track of the reasons that suppliers are calling about incorrect invoices, and
it would sure be nice to use that data to try to find some root causes that
could fix the problems we are having.
Not only would fixing the problems free up a lot of time for our
analysts, but suppliers would also be a lot happier. Its hard to encourage them to be more
accurate in the invoicing process when we arent accurate in the payment process. Another thing that is important, a lot of the
calls we get are because we are somehow short or late with a payment, but I
suspect that we may be over-paying some invoices and suppliers may not be
calling us about those errors.

Sarah: Wow, I didnt realize that we were having so
many problems. We certainly want to fix
them to encourage good relationships with our suppliers, and we sure dont want
to be over-paying invoices! What kind of data have you been gathering on the
incorrectly paid invoices?

Colleen: Ive asked the analysts to keep track of the
reasons for the invoice errors over the past couple of months using some check
sheets that weve created. I can get a
copy of the data to you right after we finish with the current state VSM.

Summary of Ramsville Work Day

Number of clerks: 36
Number of AP analysts: 18
Average annual vacation days: 5
Number of company holidays: 5
Work day: 7:30am to 5:00pm M-F
Breaks 2 @ 15 mins
each (paid)
Lunch 30 mins
(unpaid)
Daily
Meeting 15 mins
Housekeeping/5S 15 mins

Number of Invoices Found per Week to
be PFRs by AP Analysts

Week

PFRs found each week

Checklist Results of Invoices Paid
with Errors per Supplier Complaint (6 months of data)

Check sent without signature 18
Check sent without invoice reference 42
Sent to the right company but wrong
address 21
Wrong invoice referenced 29
Paid short 27
Over paid 9
Paid paper invoice twice 7
Paid PFR invoice 8
Paid on a canceled purchase order
12
Payment sent to the wrong company 11
Payment returned for unknown reason 6
Two companys payments sent in one
envelope 9
Paid late 342
Payment never made 35
Payment sent for material that was
returned 9
Other 46

Your Mission

Your team has
been asked by Sarah McDougal, Manager of Disbursements at Ramsville, to come up
with recommendations. As your team
analyzes the problem with overdue payments to suppliers at Ramsville, be sure
to consider:

The
current VSM for the AP process and its performance

What are the total lead time,
total processing time, and percentage of time waiting for the pay now
versus pay later invoices?
Is there a bottleneck in the
current AP process?
Which activities are value-added
and which are not?

The
number of PFRs found by AP analysts

Is the task of checking PFRs by
the mailroom in statistical control?
How can you tell? Which
control chart(s) support your conclusion?

The
supplier complaint data

Which types of errors account
for 80% of the complaints by suppliers?
How can you tell?

Note that
each of these considerations should lead to a recommendation for Sarah McDougal
to consider. It is also possible that a
recommendation is supported by more than one type of analysis.

HINTS

Invoices
may “exit” the AP process
o
As
invoices exit the AP process, demand changes for the consequent processing
tasks and, therefore, Takt times may change as well

When
performing calculations, take all computations to 2 decimal points
o
Think
about the bigger picture and the situation BEFORE trying to do the VSM
calculations . . draw the VSM first
before doing the computations
o
Note
that one year = 52 weeks
o
When
calculating the number of days per year, account for both holidays and
vacations for this business that runs 5 days per week
o
Transportation
can add to waiting time in the AP process for invoices
o
Do
not confuse the queue for processing and actual processing

When
parallel processing tasks develop, you will need to show more than one time
line

Note
that data entry clerks are mail clerks for PO check but 25% of their time
involves delivering mail to other areas
o
The
time for delivering mail to other areas is not of the AP process so do not try
to add them back into the current or improved VSM for the AP process

Note
that there are 18 AP analysts in total but they rotate working on some of the
processes and may have duties not detailed in this VSM so do not try to account
for all 18 people using FTE

Submission Requirements

Your
team-based assignment should be written in the format of a memorandum
addressed to Sarah McDougal
o
Download
the How to Write a Memorandum file for helpful tips
o
Download
the How to Analyze and Write Up a Case Assignment file for helpful tips

The
memorandum should look professionally appealing, be concise, be grammatically
correct, and be free of spelling errors

The
memorandum itself should not be more than two (2) pages, single-spaced, with
1-inch margins (top, bottom, left, and right)

The
font and font size for the memorandum should be Times Roman 12

Figures,
tables, computations, etc. are to be attached as exhibits to the memorandum and
be properly referred in the memorandum itself
o
In
general, do not attach an exhibit that is not mentioned in the memorandum
o
The
number of exhibits that can be attached to the memorandum is restricted to no
more than ten (10) exhibits

Please
discuss your team-based assignment with only your teammates . . . remember that
discussing graded assignments with students who are not your teammates
constitutes two types of academic misconduct: (1) unauthorized collaboration
and (2) giving and/or receiving aid in an unauthorized manner

One
copy of your team-based assignment with names of all team members must be
submitted by the date and time detailed in the syllabus
Team-Based Homework Assignment 2:Improving Accounts Payable at RamsvilleSarah
McDougal, Manager of Disbursements at Ramsville thought to herself Just a few
more days until the Kaizen event kicks off.
As Manager of Disbursements, Sarah oversaw four departments in
accounting: the Sales and Use Tax Department; the Payroll, Time and Expense
Reporting Department; the Accounts Payable Department; and the International
Accounting Department. Ramsvilles new
CEO, Chris Smith, had developed and championed Ramsvilles new Lean Initiative
not long after taking over. After
achieving substantial improvements in cost, lead time and quality from the
application of lean principles on the manufacturing floor, Chris felt it was
time to apply the same principles to other functional areas. Given the importance of Accounts Payable (AP)
in maintaining a smooth flow of incoming material and preserving good
relationships with suppliers, Chris felt that the AP area, which had been
experiencing increasing lead times for invoice payment, would be a good place
to start.With the top
management directive of working on improvements in the AP process, Pat Davis,
the Assistant Controller and Sarahs boss, scheduled a meeting to review the
current situation. Just look at this
Pat said while pointing to a column of numbers in a spreadsheet. Weve got
almost 6.5% of our accounts payable overdue, and our suppliers are not happy
about it! In a few cases, its even
impacting further shipments of parts, potentially causing our manufacturing
plant to miss shipping due dates and impacting customers. We must get a handle on this!Walking the ProcessFollowing
that meeting, Sarah met with Colleen Martin, Manager of the Accounts Payable
Department, to better understand the entire AP process. Colleen provided a good overview of how the
process should work, but Sarah realized that she would need to walk the process
herself to truly understand the current state of things. She scheduled a walk-through of both the
mailroom and the AP Department, armed with a clipboard, stopwatch, calculator,
paper, and pencil to create a formal current state value stream map (VSM). The AP
process begins at the mailroom which processes incoming mail from all sources,
including invoices from suppliers. Once
there, Colleen and Sarah spoke with Bill Hoskins, the Mailroom Manager. Bill
explained the process to Sarah: Weve noticed, based on the post mark of
incoming mail that it takes about 5 days for most mail to get to us. After the mail is received, it has to be
opened and sorted. We are running a bit
behind, so we usually open the mail the day after we get it. If it doesnt belong to AP we have to route
it to the right department. We receive
about 300,000 pieces of mail each year. It takes about 1 minute to open and
look at each piece of mail, to determine if it is AP mail. We find that about 35,000 pieces a year do
not belong to AP.Sarah: Wow, I didnt realize so many invoices came
in each year. I thought that we had an automatic payment process that was
supposed to reduce incoming invoices.Bill: We do get a lot of invoices coming in, but
not all of those actually get sent on to AP.
Other processes screen out many of the invoices. First, we have to check mail that is sorted
to be AP mail to see if it has a Purchase Order (PO) listed on the
document. We have about two days of
backlog from the time the mail is opened until the PO check happens. It takes an average of 2 minutes to confirm
the PO number since all of the invoices have different formatting and we have
to enter the PO in our system, and 8 mail room data entry clerks work this
process for 75% of their work day and the rest of their time on other types of
data entry. Fortunately, we dont really
get any invoices without valid PO numbers on them.As you know,
the PFR invoices dont go through the standard AP system, since they are paid
automatically when the material is received.
I sure wish we could get all our suppliers on to the PFR system; and I
dont understand why suppliers already set up on the PFR system still send us
paper invoices its really frustrating! So after we are done checking the PO
number, we have to check to see if the invoice is part of the automatic Pay
From Receipt (PFR) process.Colleen: Youre right Bill, but the problem is that
some of the suppliers are running on accounting software that forces them to
generate and send an invoice. Weve
talked to them about this, but its just too expensive for some of them,
especially our smaller suppliers, to change their systems to meet the needs of
only one customer. Still, it would be
nice for both us and the suppliers if we could come up with a solution.Bill: There
is an inbox for the PFR check that has about 1 of a days invoices in it. When we find that the invoice is part of the
PFR process, we throw the invoice into the paper recycling bin, since the paper
invoice isnt needed and it is just a duplicate of the automatic PFR. We use the extra money we earn from all the
paper we recycle to pay for refreshments at our softball games. At this point, we throw away about 200,000
invoices per year that are really PFR. We
keep exact track of what we throw away, since we want to be sure that we dont
throw away something that we shouldnt.
Since we are really careful, it takes us about 6 minutes to do this, and
we have 25 full time mail room people working only on this. The remaining
invoices are sent to the AP department.
The invoices are divided alphabetically by supplier name while we are
doing the PFR check and sent to the assigned AP person, so that each person
gets approximately the same number of invoices each year. Once we send the paper invoices on to AP, the
mailroom is done with its part of the process.Sarah: Let me make sure I have this right. First you receive and sort all the mail, with
about 265,000 identified as AP mail.
Then you have to check for a PO. After confirming the PO, you then check
to see if it is on the PFR system. If it
is, you recycle the paper; if it isnt, you send the invoice to the assigned AP
person. Does that sum it up?Bill: Yep, thats about it.Sarah: Thanks Bill, we appreciate your time and
information. Colleen, lets go find out
what happens after the mailroom passes the invoices along to AP. Ive asked Sam Wolf to help us with the AP
part of the process, since Sam has been working as an AP analyst for about 5
years and has done a variety of different jobs in the accounting department.Colleen: Hi Sam, Sarah and I are ready to have you
walk us through the AP process on this side.
Weve just finished talking with Bill Hoskins, who explained the process
through the point that the mailroom sends the invoices to you. Lets start with how long it takes the
invoices to get to you from the mailroom.Sam: Well, they make deliveries three times a
day; at 9:30, at 1:30, and at the end of the day to clear out their area before
the end of the shift. So I guess you
could say that the average invoice takes 1.5 hours to get to us once the
mailroom is done. The mailroom
distributes the invoices to the inbox of the assigned AP analyst. Our inboxes usually have about 2 days worth
of incoming material. We process the
inbox on a FIFO system, and once an invoice comes up to be worked on, the first
thing we do is make sure that they arent on the PFR system.Sarah: Wait a minute, didnt the mailroom already
check to see if the invoices were PFR and get rid of those that are? Why are you checking for the same thing
again?Sam: Yes, they do check, but we still find about
1,250 per year that they missed. It
really is a pain to check for PFR status, and it takes us 7 minutes to do it
because we have to be extra careful to catch ones that were missed when the
mail room people checked them. Each
analyst has to spend about 25% of their time doing these checks. This is such a time consuming effort that we
have been keeping track of how many we find each week, and I can get that data
for you, if you want.Colleen:
Wed like to have that data, thanks.
Okay, you screen the incoming invoices for PFR and then you only work on
the invoices that arent PFR, right?Sam: Yes, at
this point, we have only actual invoices that need to be manually processed
through the AP system. Now an analyst
has to determine if the invoice is ready for payment. It could be that the pay-by-date is out in
the future or we have a payment schedule agreement with the supplier. It takes about 5 minutes to sort each invoice
to determine if it is ready for immediate payment or should be set aside to be
paid later. Analysts spend about 20% of
their time sorting for payment readiness.
Invoices that arent ready for payment are set aside, which happens to
about 20 invoices each day. On average,
pay later invoices arent processed for 15 working days. It takes about 1 minute (and the equivalent
of of a full time person) to look at a pay later invoice and move it over
to payment processing when it is due.
When a payment is ready to be paid, regardless of whether it is a pay
now or one of the pay later invoices that is now due, it takes about 2
minutes to enter it into the payment processing software. We take turns and
have one AP person work on this all day. Sarah: So all of the invoices end up going through
payment processing, although some go straight there if they are ready for
payment, but some wait for a while until they are due, is that right?Sam: Yes, they all have to go through the full
payment processing, eventually. After
they have been entered into the payment processing system, they have to go
through a batch process, which runs 4 times per day so an average invoice waits
1 hour for processing. We want to be
sure that nothing is getting paid incorrectly, so we actually spend another 2
minutes per invoice doing a final inspection of the payment before the batch is
released. We take turns doing this with one person working on it per day. At this
point the payment should be on the way to the supplier. However, we still have to file the paper
invoice along with proof of payment. It
takes about 4 minutes per invoice to file the paper documents. But we usually do all the filing at the end
of the day, so an average invoice waits for about day until it is filed. It would take the equivalent of 3 full time
people to do all the filing, but each analyst is supposed to do their own
before they leave for the day.Sarah: Okay Sam, let me make sure that I have the
process straight. You get the paper
invoices from the mailroom. Then an
analyst does a PFR check. If the invoice
is PFR, it is thrown away; if not, it moves through the system for payment
processing. You have to determine if it
is ready to pay now, or should be set aside to be paid later. When an invoice is ready to pay, you input it
into the system, process the batch and then file the paper documents. Does that about cover it?Sam: Yes, thats about what we do.Sarah and
Colleen met later in the day to review the data they had collected and to begin
drawing their current state VSM.Sarah: It looks like weve gotten a lot of good
data on the current process, and it seems that there are several opportunities
for improvement. Lets finish up with
the current VSM and then run it by Bill and Sam to make sure that weve
captured everything correctly. Then we
can call a meeting to begin working on our future state map.Colleen: That sounds good. One other thing that didnt come up when we
were talking with Sam, but that I think is a problem that we should also look
into, is the number of invoices that are paid incorrectly. The AP analysts are actually spending a lot
of time trying to troubleshoot and fix invoices that suppliers have called to
complain about. Weve begun keeping
track of the reasons that suppliers are calling about incorrect invoices, and
it would sure be nice to use that data to try to find some root causes that
could fix the problems we are having.
Not only would fixing the problems free up a lot of time for our
analysts, but suppliers would also be a lot happier. Its hard to encourage them to be more
accurate in the invoicing process when we arent accurate in the payment process. Another thing that is important, a lot of the
calls we get are because we are somehow short or late with a payment, but I
suspect that we may be over-paying some invoices and suppliers may not be
calling us about those errors.Sarah: Wow, I didnt realize that we were having so
many problems. We certainly want to fix
them to encourage good relationships with our suppliers, and we sure dont want
to be over-paying invoices! What kind of data have you been gathering on the
incorrectly paid invoices?Colleen: Ive asked the analysts to keep track of the
reasons for the invoice errors over the past couple of months using some check
sheets that weve created. I can get a
copy of the data to you right after we finish with the current state VSM.Summary of Ramsville Work DayNumber of clerks: 36Number of AP analysts: 18Average annual vacation days: 5Number of company holidays: 5Work day: 7:30am to 5:00pm M-F Breaks 2 @ 15 mins
each (paid) Lunch 30 mins
(unpaid) Daily
Meeting 15 mins Housekeeping/5S 15 minsNumber of Invoices Found per Week to
be PFRs by AP AnalystsWeekPFRs found each week1302273244235226217198389211022112312613251425152616251725182519202024212322262324242525232626Checklist Results of Invoices Paid
with Errors per Supplier Complaint (6 months of data)Check sent without signature 18Check sent without invoice reference 42Sent to the right company but wrong
address 21Wrong invoice referenced 29Paid short 27Over paid 9Paid paper invoice twice 7Paid PFR invoice 8Paid on a canceled purchase order
12Payment sent to the wrong company 11Payment returned for unknown reason 6Two companys payments sent in one
envelope 9Paid late 342Payment never made 35Payment sent for material that was
returned 9Other 46Your MissionYour team has
been asked by Sarah McDougal, Manager of Disbursements at Ramsville, to come up
with recommendations. As your team
analyzes the problem with overdue payments to suppliers at Ramsville, be sure
to consider:Note that
each of these considerations should lead to a recommendation for Sarah McDougal
to consider. It is also possible that a
recommendation is supported by more than one type of analysis.HINTS
Invoices
may “exit” the AP processo
As
invoices exit the AP process, demand changes for the consequent processing
tasks and, therefore, Takt times may change as well
When
performing calculations, take all computations to 2 decimal pointso
Think
about the bigger picture and the situation BEFORE trying to do the VSM
calculations . . draw the VSM first
before doing the computationso
Note
that one year = 52 weekso
When
calculating the number of days per year, account for both holidays and
vacations for this business that runs 5 days per weeko
Transportation
can add to waiting time in the AP process for invoiceso
Do
not confuse the queue for processing and actual processing
When
parallel processing tasks develop, you will need to show more than one time
line
Note
that data entry clerks are mail clerks for PO check but 25% of their time
involves delivering mail to other areaso
The
time for delivering mail to other areas is not of the AP process so do not try
to add them back into the current or improved VSM for the AP process
Note
that there are 18 AP analysts in total but they rotate working on some of the
processes and may have duties not detailed in this VSM so do not try to account
for all 18 people using FTESubmission Requirements
Your
team-based assignment should be written in the format of a memorandum
addressed to Sarah McDougalo
Download
the How to Write a Memorandum file for helpful tipso
Download
the How to Analyze and Write Up a Case Assignment file for helpful tips
The
memorandum should look professionally appealing, be concise, be grammatically
correct, and be free of spelling errors
The
memorandum itself should not be more than two (2) pages, single-spaced, with
1-inch margins (top, bottom, left, and right)
The
font and font size for the memorandum should be Times Roman 12
Figures,
tables, computations, etc. are to be attached as exhibits to the memorandum and
be properly referred in the memorandum itselfo
In
general, do not attach an exhibit that is not mentioned in the memorandumo
The
number of exhibits that can be attached to the memorandum is restricted to no
more than ten (10) exhibits
Please
discuss your team-based assignment with only your teammates . . . remember that
discussing graded assignments with students who are not your teammates
constitutes two types of academic misconduct: (1) unauthorized collaboration
and (2) giving and/or receiving aid in an unauthorized manner
One
copy of your team-based assignment with names of all team members must be
submitted by the date and time detailed in the syllabus