“By using visual task boards (Kanban) that portray clear time-frames and expectations coupled with the prioritization of tasks including preventative plans for mitigating the unexpected is a great way to optimize productivity. It is important that work-in-progress is kept low to reduce over-production. You can also encourage employees to collaborate on tasks as well.”
Creating a Word or PowerPoint Culture reference material and distributing to employees on on-boarding day and briefly talking about it in your Monday morning meeting because you feel your employees are not “getting it” is not going to drive any significant results. Human Resources is not the captain when it comes to engaging employees in the company’s culture. Culture is top management responsibility.
Effective leaders are known to practice and support their culture on a daily basis. They integrate visual controls and visual KPI Metrics so that quality, productivity, cost goals and objectives are visibly clear. To quote Dwight Eisenhower, “They never listen to what I said; they always watch what I do.”
For example, if a Procurement Manager sees the CEO ignoring client calls when the culture document states, “Serve the Client”, it would now seem that the culture document is void because the CEO is not practicing it. The Procurement Manager now thinks its okay to ignore vendors/clients because the CEO does.
Leaders should engage with their employees everyday instead of only appearing when there is a problem. By actively participating in all the departments of the company and listening to employees, leaders can use the Voice of the Employee to identify bottlenecks and improve overall employee satisfaction. They also include all employees in the decision-making process by making strategic plans visual and accessible to all employees; and ensure their actions correspond with the company’s written vision and mission statements.
The fault lies with leadership when the employee does not know what she/he is supposed to do, does not know what is expected of them, has no means to assess if the work is being doing properly, nor has the authority or means to correct the process when something is wrong. Effective leaders know the importance of translating the vision and mission of the company into daily activities. They set realistic goals for their employees and provide timely rewards to those who meet them. And offer educational and training opportunities to enhance their employees’ capabilities.
Per my previous article, “Taking a Visual Management Approach to Accounts Payable”, I touched upon a Lean Six Sigma technique, called, Standardized Work.
“Standardized work is often referred as standard operating procedures to refer to the activities that must happen in order to complete a process. Essentially, everyone doing the job does it exactly the same way.” There should be no difference as to how your Sr. Accounts Payable Manager enters and processes bills versus your Junior Accounts Payable Coordinator. There would also be no difference between the 10th time they did the work or the 7,000th time they performed the work.
These standards and process procedures should include visual checklists, setup procedures, an integrated preventative plan, or other process steps. They should be written in terms of expected behavior or actions, and must be auditable.
Why do visual process controls make sense? It is known that people gain 80% of their information from their vision, 18% from their hearing and 2% from other senses. By implementing visual standard operating procedures for Accounts Receivable and Accounts Payable you aid in the reduction of transaction errors and process cycle time; and improve overall productivity, and client and vendor relations.
Critical departmental information, such as, KPI metrics (cost of A/P and A/R invoice, current process cycle time, on time delivery rate, et cetera) compared with industry and competitor data should also be visual as this will prompt your team to look for opportunities to improve.
Purchase order approval audit trails and visual bill entry controls can be an effective way to reduce the time it takes to resolve Accounts Payable errors and keep your vendors happy.
Visual management allows for standardized visual controls that are visible to all Accounts Payable (and also accounting team) on how approvals should be obtained for a purchase order, how to document these approvals, and how to enter bills into the accounting software. Visual controls are effective because the accounting team will see them everyday and there should be a constant review of them and essentially they should all be processing Accounts Payable the same way.
Visual controls are like visual checklists for your Accounts Payable team. These controls should be placed in high traffic areas where your accounts payable team will see them. A copy should be placed by each members desk as well and update them of course accordingly to business changes.
For recurring fixed bills, automation is a given. For example, lets say company HBN gets billed from Microsoft $17.95 for a productivity application every month a recurring transaction can be created in Quickbooks that will automatically create the bill every month. This significantly reduces manual entries and overall cycle time.
To reduce manual entries of non-fixed expenses you can create templates in Quickbooks (or other accounting software) in which they can be duplicated and make the changes needed per your company’s data entry controls and new bill specifications (purchase order, invoice #, et cetera).
Critical KPI metrics that your company should be tracking and analyzing in regards to Accounts Payable are the following:
- Total Cost of an AP invoice
- Overall time to complete the AP process
- Overall time to resolve an AP error
- Percentage of manually entered invoices
- Number of full-time employees that perform the AP process, per 1 million (billion) in revenue
- Percentage cost to perform the AP process as a percentage of total process cost
You should periodically compare these metrics with industry and competitor data to see where you stand and where you need to improve.
In conclusion, standardized visual controls for Accounts Payable is a great way to ensure the AP process is done the same way by all AP personnel.
Onboarding a new hire is stressful enough. Paperwork needs to be done, work area needs to be set up, et cetera. But no one remembers about supplies. Utilizing Lean Six Sigma methods and tools like 5S, visual management and Kanban to remove office waste is a great way to have a supplies inventory system that ensures all employees know where each item is kept and are aware of what is considered to be low inventory. This will ensure an order is placed in a timely manner to avoid any impairment in daily business operations or having to run out to your local supplies store and grossly over-pay.
When all supplies are cataloged, organized, labeled, tracked in Excel and this information is readily available to employees; waste is reduced in terms of time looking for supplies, productivity time wasted and money wasted. Ensuring employees know where all supply items are kept will significantly reduce time and productivity wastes. They should also be aware of what is considered to be low inventory (Zero is not acceptable) because this will allow immediate and timely replenishment.
For example, you would start by creating an inventory tracking Excel sheet like the one below (you can personalize it as you wish). You can set it up in Google Sheets and share with your team. You can encourage employees to make notes on whether items should be made more accessible to them (move printer closer to marketing team, et cetera) or add additional items to the list that will help them enhance their productivity.
In short, those that prepare and organize their office supplies inventory systems effectively reduce the most critical waste which is time and then of course, money.