Achieving LEAN objectives with ECM

Eliminating Non Value Added (NVA) Activity in

Accounts Payable

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. 

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)

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.

Basic LEAN “Concepts”

• Pull processing• Quality – waste reduction• Continuous improvement• Load leveling• Production flow• Automation

Basic LEAN “tools”

• Value Stream Mapping• The Five S’s• SMED analysis• Kanban (pull systems)• Poka-yoke (error-proofing)

How does thisall fit together?

Value-StreamMapping

Provides a “road map” to see what NVA activities can be eliminated from a process

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Continuous process improvement

from the very simple…

There are multiple ways to create value stream maps:

…to the more complex…

…to simple flow (or “spaghetti”) diagrams.

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.

Packing slipInvoicePurchase Order

Basic Spaghetti Diagram

Packing slipInvoicePurchase Order

Basic Spaghetti Diagram

Business Manager Approval

Shipping & Receiving

Mail Room

AP Matching

Accounting

Purchasing Check Creation

Customer Services

Packing slipInvoicePurchase Order

Basic Spaghetti Diagram

Business Manager Approval

Shipping & Receiving

Mail Room

AP Matching

Accounting

Purchasing Check Creation

Customer Services

H

H

H

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

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

1

ECM system

The first major step is removing paper from the process and using ECM for document management

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ECM system

The second major step isautomating the processes with workflow

An electronic document routing system that

enables users to process work more efficiently,

faster, and more accurately

“

”

So…what is workflow?

•Purchasing•Credit Approval•Expense Approvals•Accounts Receivable•Customer Service•Employee Evaluations…

It’s a proven solution in…

…and Accounts Payable

•Poor Work Distribution•Process Variation•No Scale•Pulling•Searching•Duplicate Invoices•Missing Vendor Terms•Poor Accountability

AP CHALLENGES:

#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

ECMworkflow

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

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

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

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

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

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

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

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

Compare Keyword Values

Compare Keyword Values

True

Validate Keyword Values

FalseCall a Web

Service

Electronic Routing

Notifications

= Workflow Automated Process

Create Check

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

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

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

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

1. Sorting2. Straighten 3. Sweeping or Shining4. Standardizing5. Sustaining the discipline

Work Area

The Five S’s

1. Sorting2. Straighten 3. Sweeping or Shining4. Standardizing5. Sustaining the discipline

Work Area

The Five S’s

Standardizing

Standardized work practices means operating in a consistent and standardized fashion.

Pre-Configured workflow Rules & ActionsTimersCalendars & Organization ChartsLoad-balancingAd-Hoc Tasks

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.

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…

System workOver the years, things have become

much more automated.

The same should be true of your business processes

System work

That’s where workflow comes in.

Load Balancing

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Sustaining the discipline

Maintaining and reviewing standards

Report servicesBusiness activity monitoringException reportsBusiness process modeling

Workview

SMED analysis(quick change-over)

Reduce or eliminatechange-overs & application switching

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)

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”

LOB Data

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Actions &

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AP ProcessingECM System

LOB Data

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Actions &

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AP ProcessingECM System

No change-overs, no application switching

Kanban

Pull systems, ensuring process flow

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”.

Poka-YokePut limits on how an operation can be

performed to force the correct completion of the operation

Fail Safe-ing, Mistake Proofing

• 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

Stop digging for information.Make accurate decisions.Eliminate bottlenecks.Improve visibility.Enforce consistency.Promote accountability.Reduce complexity.

Why LEAN?

Bring LEAN to AP…

…Automate your AP Process!

LEAN&

ECM

Want to learn more about how ECM can make a difference in your

organization?

Check out our blog:

blog.hyland.com