Horizons Spring/Summer 2021

For instance, if you make changes and can now process 200 customer invoices per day, but the Sales Manager only has the capacity to approve 100 per day, the efficiency is nullified. After identifying approval constraint as an issue, this could be a great opportunity to reexamine your approval policies. You may perform data analysis on your customer invoices and realize that 70% are under $500, and the other 30% are over $500 and consist of the majority of the dollar value of our accounts receivable. Refer to Figure 1 below as an example.

This analysis could reveal that it would be most efficient for the Sales Manager to approve customer invoices $500 and over and to have a supervisory level employee review and approve customer invoices below $500. Once the policy is adjusted, the process improvement can be implemented with maximum success. In the example above, imagine that as part of documenting the process you discover sales orders are received through multiple methods (website, phone, email, hardcopy order forms through the mail) and to multiple locations. Order entry is performed by a clerk at each location and is manual. This includes the website orders which must be downloaded and batch uploaded to the company’s ERP. Because of cost, the company has made a strategic decision not to invest in an application programming interface (API) to connect the e-commerce site and their ERP. However, through the process improvement project, the company realizes it can centralize order taking and convert the phone, email, and hardcopy order entry to a consolidated batch format, similar to the website orders.

Figure 1

NUMBER

AMOUNT

BELOW $500

3,186

70%

$955,800

26%

$500 & ABOVE

1,352

30%

$2,704,000

74%

4,538

$3,659,800

Clerks that were previously spending hours entering data are now able to assist with

4 Improving Business Processes to Prepare for Operations Post COVID-19