Value Stream Mapping in Finance
Transcript of Value Stream Mapping in Finance
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Value Stream Mapping inFinance
Dragos OpreaShawCor Management Systems Manager
ShawCor – Corporate Operations
Israel TrejoAccounting Manager
Flexpipe Systems, a ShawCor Company
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About ShawCor
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The ShawCor Management System
SMS is ShawCor’s program of ContinuousImprovement in Manufacturing, Service and Office
It provides a structured approach to:
• Improve performance by eliminating waste and reducingvariation in:
› Manufacturing
› Service
› Non-Manufacturing processes (Finance, IT, HR, Purchasing, etc.)
• Introduces:
› Standardized operating systems and business processes
› Company wide systems & techniques
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• Launched in 2006 as the ShawCor Manufacturing System, SMS is anindustry-leading continuous improvement program that draws uponthe best elements of Lean, Six Sigma, other world class operationalsystems and our company’s own experience.
• Program integrates these elements with strong leadership andengaged employees to drive excellence in manufacturing andbusiness processes.
• We developed the SMS Vision and Roadmap to keep us focused andaligned on our journey to excellence and make SMS a Way of Life
• Key elements to achieving our Vision are Leadership, Culture, andreliable Processes. Strategic programs and a collaborative approachare key to the advancement of SMS at our facilities around the world
The ShawCor Management System
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The ShawCor Management System
SMS is not just about using tools…
…we also need to ensure that:
• We have a Shared SMS Vision
• Our people have a Shared Goal
• Our actions are aligned to the organization’s needs
• We effectively manage our value streams(end to end processes)
• We are listening to the “Voice of the Customer”(internal & external)
• We are sustaining business improvements
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The ShawCorContinuous Improvement Model
DO
PLAN
ACT
CHECK
PLAN DO
CHECKACT
StandardizeContinuousImprovement
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SMS Enterprise Wide
Office
Service
Manufacturing
Supply Chain
Sales &Marketing
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SMS Enterprise Wide
Everything we do is part of a process…
…all processes can be improved
SMS can be applied to any process!
Inputs
Process
Output
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The Developing Reality - At least Three Versions:
Why Map a Process?
What You WouldLikeIt To Be...
What ItActually Is...What YouThinkIt Is...
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The Value Stream Approach
• Evaluate the entire process
• Focus on total Lead Time
• Getting away from isolated improvements
Process Step 1
Improve
Process Step 3Process Step 2
Value Stream Approach
Improve
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The Challenge
• Identify the wasteand its causes
• Remove the wasteto deliverbusiness benefit
• Improve Flow
• Reduce batch size
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Value Stream Management
CurrentState
PerformanceLevel
Time
IdealState
TargetedFuture State
2) Back off to chosen target
ImplementationProjects
AchieveTarget
3) Establishnew target
New TargetedFuture State
From mapping to management
Achievable in Timeframe
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Value Stream Management
• Cross-functional team
• Supportive Leadership
– Close-out meeting
• Targeted improvementsummary (metrics)
– S.M.A.R.T.
• Action Plan andOwnership
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VSM in FinanceMonth-end Closing
Recognize opportunities to improve:
– Late Month-end closing
– Rework / Low First Time Quality
– Lack of standardization and unclear or datedprocedures
– Significant manual processing
– Over-processing
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VSM in FinanceMonth-end Closing
• Current State Mapping - Cross-functional team
• Identification of both issues and possible solutions
• Short-term and Long-term Action Plan
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VSM in FinanceMonth-end Closing
Results of the VSM Workshopconducted early Q2
– ShawCor standardsachieved
– Continual improvementin month-end closing time
– 75% reduction by Q4
– Verified effectiveness
75% Reduction
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VSM in FinanceThe Big Picture Map
Initial Application of SMS MethodologiesEnterprise-wide (VSM Workshop) – March 2012
– Canada-USA cross-functional team:
• Sales, Operations, Finance, Marketing,Manufacturing, Quality and IT
• Various Functional VPs, Managers, TeamMembers
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VSM in FinanceThe Big Picture Map
Opportunities:
– Improve overall process, operational and financialperformance, as well as customer satisfaction
– Better understand the process and variationbetween sites and countries
– Meet and exceed financial targets
– Minimize Lead Time, Processing Time andImprove First Time Quality
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VSM in FinanceThe Big Picture Map
Order to Cash Let the Value Stream, the Big PictureMap, drive the Improvement Plan andfuture actions
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VSM in Finance
And we mapped…
Accounts Receivable(AR 1.0)
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The AR Process VSM
Initial Focus – Areas with mostopportunities for improvementand affecting subsequent stepsin the process(Invoicing of Product and Freight)
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The AR Process VSM
Actions and Improvements:– Batch Reduction
• Weekly Invoicing vs. monthly
– Improved document management andwarehousing
• Create a digital document flow (expanded IFS)
– Standardization using best practices
• Quote and Order Process
• Freight process
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The AR Process VSM
Metrics and Results:
– 16% Y-O-Y reduction in DSO
Also… Apply PDCA– Planned for AR 2.0 VSM
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VSM in Finance
PDCA application
Value Stream Mapping of the new Current Statein…
Accounts Receivable(AR 2.0)
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AR 2.0 - The follow-upVSM Workshop in Finance
AR 2.0 VSM Workshop - May 2013:
– Mapped the new Current State
– Compared to previous Current State andevaluate results
– Envisioned a new Future State and
– Developed a new Action Plan to achieve anew round of improvements
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AR 2.0 - The follow-upVSM Workshop in Finance
Y-O-Y Invoicing Improvements:- Lead Time and Processing Time:
- Product & Freight – 50-80% reduction- Labour and Rentals - 30-50% reduction
Invoice
TypeMetric
Lead Time
Processing Time
Lead Time
Processing Time
Lead Time
Processing Time
Lead Time
Processing Time
56%
46%
Year Over Year Progress (May 2013 vs. March 2012)
77%
78%
79%
32%
42%
53%
Freight
Actual
Improvement(Time Reduction)
Pipe
Labour
Rentals
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AR 2.0 - The follow-upVSM Workshop in Finance
Added to the new Map:- 3rd Party Invoicing- RMA’s & Reel Deposits
New opportunities to improve identifiedat the back end of the invoicing process- Updated the new Action Plan
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AR 2.0 - The follow-upVSM Workshop in Finance
Actions and Status:
– Batch Reduction – Rentals - Weekly invoicing
– Vendor Management - POD’s – met with alltrucking vendors to receive signed POD’s within aweeks period of delivery.
– IT/IS Engagement:
• Improved and fast AR Reporting
• Investigate options to automate taxes
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AR 2.0 - The follow-upVSM Workshop in Finance
Metrics and Results:
– Over 20% Y-O-Y reduction in DSO
> 20%
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VSM in Finance
The success story in Accounts Receivabledrove the team to map…
Accounts Payable(AP 1.0)
Invoice
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The AP Process VSM
AP 1.0 VSM Workshop was conducted in 2013:
– And … the story is the same…
• Canada-USA cross-functional teamencompassing:
– Sales, Operations, Finance, IT, Procurement,Manufacturing, Quality
– Various Functional VPs, Managers, TeamMembers
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The AP Process VSM
The team:
- Mapped the Current State; Identifiedwastes and obstructions to flow
- Brainstormed Solutions andopportunities for improvement
- Developed Action Plan
- Targeted significant improvements
Metric
Lead Time (Days)
Processing Time per Week (Hrs)
Number of Process Steps
First Time Quality
Current State vs. Future State (6 months)
70% reduction
45% reduction
130% improvement
Targeted
Improvement
50% reduction
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The AP Process VSM
Actions and Improvements:
– Standardization
• Revised Purchasing SOPs and Guidelines
• Revised and Standardized the Invoice receipt,distribution and approval process
– Process / Flow Improvements:
• Moved some approval steps upstream in the process
• Updated Delegation of Authority (US/CA)
• Revised inter-company transfer process
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The AP Process VSM
Actions and Improvements:
– Standard Work and batch reduction initiatives:
• Increased frequency of reviewing invoices
• Reduced batch size and AP reports(10 pages reduced to max 2-3 pages)
– Improved reporting:
• Created additional reports to simplify work,improve process controls and visibility
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The AP Process VSM
Actions and Improvements:
– 5S initiatives:
• System - vendor information
• Mail distribution process
• Email protocol
• GL codes
– Knowledge Sharing:
• Best practices shared between US and Canada
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The AP Process VSM
Results and Benefits:
– Steady increase in the average number ofinvoices processed monthly in the US:
• Doubled during 2013
• No additional resources!
– ~75% reduction in OT
and weekend work
~ 125%AP 1.0VSM
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Thank You!
Please complete the session survey at:AMESurvey.org
Session Code: (….)
Value Stream Mapping in Finance
Dragos Oprea Israel TrejoShawCor Ltd. Flexpipe Systems
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VSM in Finance
Q&A