The clerk returns the invoice the vendor unpaid

Case Study:

ABC University has been providing education for over 50 years, and currently provides for 20,000 students. Numbers of students and staff are increasing. In order to produce a high- level education service to their students and provide quality support to their staff, the university management team believe that increasing the emphasis on Business Process Management (BPM) is the most important requirement. This means that BPM initiatives have to be implemented on a university-wide level in an effort to establish a process infrastructure and a process improvement culture.

Presume that they have already completed process identification and process discovery and designed a clear process map which includes all level of processes. Now they move on to process analysis and redesign stage. This case focuses on one of the support process’ (Equipment, materials and service acquisition at ABC University) analysis and redesign. Below are details of the current process description and current issues/problems.

Please read the case and refer to the assignments 1 for detailed tasks.

The employee makes two photocopies, one for each of two managers, the Financial Manager and Procurement Manager to amend if appropriate. The Financial Manager attaches a budget line to cover the cost. The

Procurement Manager locates the University’s policy that covers the proposed purchase. Both managers need to acknowledge the proposed purchase before the purchase requisition can proceed.

Material goods are always delivered to the Goods Receipt Department. When goods arrive, a clerk at this Department retrieves the corresponding purchase order from the ES. If a purchase order cannot be found, the shipment is returned to the vendor.

The clerk checks the quality and quantity. If there are any significant issues with the goods, the clerk cancels the purchase order in the ES, returns the goods to the vendor and advises both the employee, who made the original request and the Accounts Payable Office that the purchase is cancelled. Accounts Payable then know not to pay any invoice. Otherwise, the shipment is then delivered to the department of the employee through the internal mail and parcel service. The employee is notified they can collect the item from the mail drop in their department.

Two weeks before the end of the financial year, if there are any purchase orders older than one month for which delivery has been received, but invoices have not yet been received, an Accounts Payable clerk sends out a request for invoice to the vendor. If an invoice is not received within two weeks, the PO is cancelled.

If the item requested is not material goods, but a digital artefact or service, it is delivered directly to the employee who requested the item. In this case, there is no goods receipt form. Once the Accounts Payable clerk receives an invoice and matches it to a purchase order, he asks the employee to confirm that the artefact or service has been satisfactorily received. If so, the clerk can go ahead with payment. However, the ES has not been updated. The Accounts Payable clerk advises the Goods Receipt Department that the item has been received so they can update the ES. A goods receipt form is automatically generated and discarded.

• Not always do both Financial Manager and Procurement Manager give approval. After one manager has rejected an application, the other one may still remain needlessly in the process until notice of the one’s rejection has arrived.

• For relatively inexpensive items, say under $100, the cost of managers administering the approvals tends to outweigh the cost of the items. However even for such items, the expense still needs to be independently authorised.

payments. This should arrive with the goods receipt form. If it is missing, the employee has to provide a copy. All this paper shuffling is confusing and unreliable.

• Once a purchase order reaches its expiry date, the Goods Receipt clerk sends a cancellation notice to the vendor and at the same time cancels the invoice in the ES. However, the clerk his required to do periodic checks for expired POs, usually only once a week. Sometimes therefore, goods arrive long after they were needed.

• It is very expensive and inconvenient to have bulky engineering equipment delivered only to find it was unacceptable to the employee and had to be returned. If the employee could vet the order for large items before it was sent, this might save time and money.

• It is not uncommon for a purchase requisition to come before a Purchase Order clerk for items so poorly described, it is not possible to find a match in the ES. In such cases, the clerk has to call the employee to for clarification. Many suppliers are now providing electronic RSS feeds to update their catalogues to which anybody can subscribe.

• Some Goods Receipt clerks often just rubber-stamp the validity of goods delivered because they believe the employee will check the goods. On the other hand, employees, under time pressure sometimes delay checking goods in the belief any problems would have been picked up in the Goods Receipt department.

• Horst Heckelhumfp, is aware that there are problems with the Equipment, Materials and Service Acquisition processes at ABC University. He has sought the advice of a number of process improvement consultants. He has stipulated that any new solution must work in conjunction with the existing ES system. He is concerned that new software will not interoperate with the old ES.

requisitions and Invoices still go to the respective campus departments. However, the two campuses have slightly different semesters, so sometimes one campus department is overworked while the other campus is idle.