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5.4 Current State in the Case Organisation

5.4.1 Complex and Long Process

If already the input of a process is incorrect, the output is not most likely of the best quality. Or, the cost of the internal order-delivery process and production is extremely high when numerous process steps are done several times including checking and correcting to deliver value to the customer. Also, if the beginning of the process is not familiar with what the end of the process is doing and vice versa, the process most likely includes insufficient communication, inadequate information flows and bad process quality with long lead times and delayed deliveries. Consequently in the end is the unsatisfied customer.

The Purchasing team’s function can be perceived to be in the back-end of the process. In practice it appears that all the mistakes made in the front-end of the process will cumulate towards the end. The incorrect ordering will eventually come visible in the purchase order creation phase. The errors are corrected by the Logistics Coordinators and Buyers so that the purchase order can

be created or the supplier can confirm the order as soon as possible. In other words, the problems of the process are currently cumulated to the back-end.

The correction and finding the missing mandatory information is done in a huge hurry because the target of the purchase order creation lead time is one business day. Typically the incorrect sales orders have several errors and they are released late, meaning that the delivery date requested by the customer can be due already.

Currently the process is said to be slow and having extreme impacts on sales (Workshop 6th

October 2009). A slow process impacts also customer satisfaction, resource utilization and margins. The case organisation consists of small 1-6 members’ teams distributed in several countries and in different time zones. The process is said to be so complex that the right hand does not know what the left is doing. The complexity of the process also means that if bad quality occurs in the beginning of the process, there is a disaster in the end. In other words the process is very inflexible to changes. The case organisation has informed the Customer teams and the back-end of the process that if the orders are forecasted well enough and if the orders are placed in the system correctly including all the mandatory information needed, the delivery accuracy and the promised lead time can be guaranteed.

The process is also too slow compared to customer needs and expectations. One cure for the slowness are efforts that improve the lead time. If the lead time “depends”, it is a question of consistency that affects customer satisfaction. Customers expect reliable actions from suppliers, not deliveries with depending delivery dates. However, there is no sense to speed up the process and simultaneously deliver bad quality. Then again, if high quality is delivered, waste is automatically removed.

According to the Kaizen method waste increases costs and provides no value to the customer.

Currently the global order process for 3rd party products is said to be a copy-paste process, full of

checking and controlling, so to say waste (Pierre, Workshop 6th October 2009). Checking is

waste because everything should be correct the first time. Quality should be built inside the process, so there would be no need for pre-checking. All checking activities are only treating the symptom, while the root cause of the actual problem stays hidden. According to Kaizen there are seven types of waste; correction, waiting, processing, inventory, transportation, motion, and over-production. The ideal is that everyone in the internal process would receive only excellent quality information so that they can do their work easily.

Although checking can be considered as waste, before radical improvement of the order-delivery process organisation must set standards for working methods and add the controlling and checking steps as a short-term solution. Currently it seems that the Logistics Coordinator does not always know and identify the requirements of a purchase order that should be found in the sales order. Also, at times the missing mandatory information from a sales order might be left unobserved in a hurry. However, the LCs’ remissness inflicts double work and costs on the Buyers as well, in the worst case also on the suppliers.

The situation with the sales order errors is a global sales order level problem, meaning that everything should to be correct in the sales order. The impacts of the incorrect sales orders on purchasing operations need to be informed about to the customer teams and other order entry related teams in the front-end of the process. The division of work and authorization rights split in the ERP system between the Logistics Coordinators and Buyers requires extensive cooperation and effective communication between the LCs and Buyers. This also adds working phases if changes due to incorrect orders are needed. For example, if the Buyer notices an error that needs to be fixed, the correcting and changing takes time because the Buyer can only change the purchase order side, and the Logistics Coordinator the sales order side. Thus, they will have to communicate on-time and effectively together to get the order clean as soon as possible. This cooperation works well if both the LC and the Buyer are located in the same country or in the same time zone. Usually, the change has to be executed in the sales order before the purchase order can be fixed.