L - Lean Six Sigma?

Lean Six Sigma (LSS) is often mentioned when discussing workplace productivity and efficiency, sometimes to the point of becoming a buzzword. Lean Six Sigma (LSS) is a powerful methodology that merges the waste-reducing principles of Lean with the quality-enhancing focus of Six Sigma. It's a data-driven approach that identifies and eliminates waste and defects within processes, leading to improved efficiency, quality, and customer satisfaction.

Lean Principles: Centered on eliminating waste, Lean methodology streamlines processes by identifying and removing non-value-added activities. This results in faster turnaround times, reduced costs, and increased productivity.

Six Sigma: Aimed at minimizing process variation, Six Sigma uses statistical tools and techniques to identify and eliminate defects, leading to improved quality and consistency.

The Power of Lean Six Sigma

By combining these two complementary approaches, Lean Six Sigma provides a comprehensive framework for optimizing processes, reducing costs, and improving customer satisfaction. It's a proven methodology that has been successfully applied across a wide range of industries, from manufacturing and healthcare to service and finance.

Case Study: Enhancing Accounts Payable Efficiency Using Lean Six Sigma

The accounts payable (AP) process, while seemingly straightforward, can become incredibly complex and inefficient, especially when dealing with high volumes of invoices. This was the challenge faced by one of our clients, who was struggling with a cumbersome and error-prone AP process.

The Challenge

The client's AP process involved receiving invoices from vendors, coding them into their ERP system, and processing payments. However, with hundreds of invoices processed weekly, the process was fraught with challenges:

• • Vendor Payment Terms: Each vendor had specific payment terms, requiring timely invoice processing to maintain good relationships.

  • Invoice Approval: The AP team lacked context for each invoice, necessitating approvals from the purchasing team, which often caused delays.

  • Coding Errors: Manual coding of invoices into the ERP system was prone to errors, leading to payment delays and discrepancies.

  • Documentation and Tracking: Tracking invoice approvals and documentation was a manual and time-consuming process, often managed through email.

The Lean Six Sigma Solution

Our team applied the Lean Six Sigma framework to analyze the client's AP process and identify areas for improvement. We worked closely with the AP and purchasing teams to map the current process, collect data, and pinpoint inefficiencies.

Key Findings:

• Email-Based Approvals: The reliance on email for invoice approvals was a major bottleneck, causing delays and communication breakdowns.

• Manual Coding: Manual coding of invoices was time-consuming and error-prone.

• Disorganized Documentation: Storing documentation on a SharePoint site made data retrieval difficult and inefficient.

The Solution: Workflow Automation

To address these challenges, we implemented a workflow automation tool that streamlined the entire AP process:

• Automated Invoice Receipt: Invoices were received directly into the workflow tool, eliminating manual data entry.

• Automated Coding: The tool automatically pulled project, account, and organization codes from the ERP system, reducing errors and saving time.

• Automated Approval Routing: Approvals were routed automatically to the appropriate team members, with built-in reminders and escalations.

• Automated Payment Processing: Upon approval, vouchers were automatically generated in the ERP system, and payments were generated and sent with minimal manual intervention.

• Centralized Documentation: All invoice documentation was stored within the workflow tool, providing easy access and audit trails.

The Results

The implementation of workflow automation led to significant improvements in the client's AP process:

• • Reduced Throughput Time: The time to process invoices was significantly reduced, ensuring timely payments and improving vendor relationships.

  • Reduced Errors: Automated coding and data entry minimized errors, improving accuracy and reducing payment discrepancies.

  • Increased Team Satisfaction: Automating manual and time-consuming tasks freed up the AP team to focus on more strategic activities, leading to increased job satisfaction.

Conclusion

By leveraging the power of Lean Six Sigma process improvement and workflow automation, our team was able to transform the client's AP process, resulting in increased efficiency, reduced costs, and improved overall performance. This case study demonstrates the power of Lean Six Sigma in optimizing business processes and driving tangible results.

-Taylor Robinson