Current State VSM
MEMORANDUM
November 15, 2013
TO: Sarah McDougal, Manager of Disbursements at Ramsville
FROM: Team 5
SUBJECT: Process Improvements for Ramsville
______________________________________________________________________________
Team 5 will be analyzing and providing recommendations on how to improve the issue of overdue payments to suppliers at Ramsville. After walking the process, creating a current value stream analyzing data, Team 5 has suggestions on how to increase efficiency by eliminating muda that will improve customer satisfaction and supplier relationships.
ANALYSIS
Team 5 identified the key issues by creating a Current Value Stream Mapping (Table 1, Page 3). Ramsville’s pay now invoices have a total lead time of 196,200 seconds (54.5 hours) and a total processing time of 1,740 seconds. As shown in the comparison of Pay Now and Pay Later Invoices on Table 2 (Page 4), pay now invoices spend 99.12% of the time waiting. Pay later invoices have a total lead time of 628,200 seconds (174.5 hours) and a total processing time of 1,800 seconds. Pay late invoices spend 99.71% of the time waiting.
The current VSM shows that the lead time and waiting time are too long because of too many non-value added activities. To improve the situation, the team suggests that Ramsville maximize the value added activities and remove muda. Based on the definition, an activity is value added only if it is changed or transformed. According to Table 3 (Page 4), there is one activity, Final Inspection, which actually adds value to the process. Other activities are supposed to help complete the whole process for the company. The PO checking is unnecessary because Ramsville did not get any invoices with invalid PO numbers thus far. The handlings of the Pay later invoices are also found to be a time-consuming activity because they are manually processed. The Analysts spend about 20% of their time sorting payments for readiness, which is time-consuming and leads to muda. Since the
November 15, 2013
TO: Sarah McDougal, Manager of Disbursements at Ramsville
FROM: Team 5
SUBJECT: Process Improvements for Ramsville
______________________________________________________________________________
Team 5 will be analyzing and providing recommendations on how to improve the issue of overdue payments to suppliers at Ramsville. After walking the process, creating a current value stream analyzing data, Team 5 has suggestions on how to increase efficiency by eliminating muda that will improve customer satisfaction and supplier relationships.
ANALYSIS
Team 5 identified the key issues by creating a Current Value Stream Mapping (Table 1, Page 3). Ramsville’s pay now invoices have a total lead time of 196,200 seconds (54.5 hours) and a total processing time of 1,740 seconds. As shown in the comparison of Pay Now and Pay Later Invoices on Table 2 (Page 4), pay now invoices spend 99.12% of the time waiting. Pay later invoices have a total lead time of 628,200 seconds (174.5 hours) and a total processing time of 1,800 seconds. Pay late invoices spend 99.71% of the time waiting.
The current VSM shows that the lead time and waiting time are too long because of too many non-value added activities. To improve the situation, the team suggests that Ramsville maximize the value added activities and remove muda. Based on the definition, an activity is value added only if it is changed or transformed. According to Table 3 (Page 4), there is one activity, Final Inspection, which actually adds value to the process. Other activities are supposed to help complete the whole process for the company. The PO checking is unnecessary because Ramsville did not get any invoices with invalid PO numbers thus far. The handlings of the Pay later invoices are also found to be a time-consuming activity because they are manually processed. The Analysts spend about 20% of their time sorting payments for readiness, which is time-consuming and leads to muda. Since the