Agile & Lean Case Study

Purchase Order Request Process

The purchase order request process for this case study used an electronic form that was widely available to employees via their network.  Any employee could retrieve the electronic form, complete it and submit it to management for review.  Depending on the amount of the purchase order request, from one to three management reviews would occur as part of the approval process.

Once the purchase order request was approved, it was routed to a buyer to create a purchase order to procure the products/services.  The vendor(s) issued a confirmation after receipt of the purchase order and then fulfilled the products/services.

The receiving department noted when they received the products/services in the financial system, placed the products in a receiving hold storage area, and notified the purchaser of their availability.

AGILEAN's Approach

AGILEAN facilitated a Rapid Results Workshop with a cross-function team representing management and staff from departments most involved in the purchase order request process. AGILEAN's 4D LeanTM techniques were used  to develop current and future state value stream maps representing each of the four perspectives of people, process, and technology over time.

AGILEAN's 4D Lean value stream maps were analyzed to identify instances of the Seven Office Wastes, establish measurement benchmarks, and define performance improvement initiatives to the purchase order request process.

Outcomes

The following outcomes were achieved as a result of AGILEAN's Rapid Results Workshop:

  • Established the cost to process a purchase order request in the current state was $75 to $150 depending on the level of management review required.
    • Identified initiatives to reduce the variation in the purchase order request process and reduce processing costs by 20% and the time to purchase products/services by 30%.
    • Recommended use of company credit cards for small department purchases.

  • Identified quality defects in the current process.
    • Services ordered by purchase order were not being received in the financial system causing exceptions on vendor invoices. Process change for purchaser to notify receiving when services consumed.
    • Purchase order not checked to see if it matched the purchase order request. Process change for purchaser to validate purchase order. 

  • Discovered high variation in the process used for the purchase order request among departments.
    • The 4D Lean value stream maps to be used as visual work instructions to educate employees on the standards of the purchase order request process.