If an organization has implemented Six Sigma, BPM is a catalyst for further improvement in all of the phases of the methodology. Below is an overview of how one Fortune 1000 services company applied BPM to the Six Sigma DMAIC methodology in use across its organization to significantly improve operating performance in the cash flow and receivables process.
Performance data in the cash flow and receivables process was looked at by a Six Sigma Black Belt in terms of key outputs, capabilities and need for improvement to meet business needs. It was identified through this step that the invoice preparation process was a semi manual process, which required inputs from service reports generated in several departments. Further data analysis revealed that 79 percent of the invoices were exceeding their targeted completion time of 10 days and 48 percent were
exceeding the upper limit of 15 days to issue the invoice to the customer. This created an undesirable outlay of cash, in the form of receivable averaging over 62 days, estimated at $5 million. The Black Belt determined the quickest impact was to create an improvement project to reduce the invoice preparation cycle time.
In this phase, BPM process maps expedited the task of characterizing processes. Through a highly intuitive set of tools, the Black Belt was able to lay out all of the activities, participants, business rules, technologies, and resources that comprised the invoicing process and illustrated the invoicing activities performed by all participants (people, systems, and resources) across multiple functional areas of the extended enterprise.
The primary activity is to narrow down the number of potential contributors to a problem and to find the root causes. A detailed model of the process was used to discover and simulate how the existing process functioned and to determine where potential bottlenecks and other problems were occurring. Six causes were confirmed as major contributing problems, these were:
Once the process was identified, mapped, modeled and the most likely root causes were identified, additional ‘what if’ scenarios were used to create the improvement solution. Based on the knowledge gained, it was decided that the process could be partially automated. Using BPM technology along with the process analytics led to four areas where improvement could be taken. The areas were:
The objective is to provide sustainability for the improvement solution. To assure that process performance would be consistent and manageable, a BPM web-based monitoring and tracking system was built to provide managers with real-time visibility up and down the process to maintain control of the invoicing. They could take specific actions when process activity was not meeting predetermined requirements. For example:
The performance of the process significantly improved by using the Six Sigma problem solving methodology in combination with the application of BPM. The business benefits included a total of seven days of average cycle time removed from the invoice preparation process, service recording errors reduced from 17 percent to less than one percent, and the number of invoices completed over the upper limit of 15 days decreased from 47.8 percent to 7.9 percent.