Using Process Mapping to Reveal Process - Redesign Opportunities in ERP Planning

JOURNAL OF EMERGING TECHNOLOGIES IN ACCOUNTING Vol. 12 2015 pp. 169–188

American Accounting Association DOI: 10.2308/jeta-51253

Using Process Mapping to Reveal Process Redesign Opportunities during ERP Planning Marianne Bradf Marianne Bradford ord North Carolina State University Gregory J. Gerard Florida State University

ABSTRACT: The objectives of the Elizor Case are to give students experience with business process analysis by requiring them to first document an as is raw materials purcha pur chasin sing g pro proces cess s du durin ring g the pla plann nning ing for an en enter terpri prise se res resou ource rce pla plann nning ing (ER (ERP) P) system syste m impl impleme ementat ntation ion and then to have students students dete determin rmine e issue issues s inhe inherent rent in the proces pro cess s tha thatt wil willl nec necess essita itate te pro proce cess ss red redesi esign gn.. Stu Stude dents nts wil willl lea learn rn the di diffe fferen rence ce between betw een two type types s of proce process ss rede redesign sign—bu —busine siness ss proc process ess reen reengine gineerin ering g (BPR) and business busi ness proce process ss impr improvem ovement ent (BPI) (BPI)—syn —synthes thesize ize this know knowledg ledge e in orde orderr to iden identify tify process issues inherent in the case, and suggest process redesigns that an ERP system willl ne wil need ed to pro provid vide e so tha thatt the pu purch rchasi asing ng pro proces cess s is mo more re eff effici icien ent, t, eff effect ective ive,, an and d controlled. The case has broad appeal for faculty teaching ERP systems and/or business process managem management. ent. ‘‘

’’

Keywords: enterprise resource planning (ERP) systems; business process improvement; men t; bus busine iness ss pro proces cess s ree reengi nginee neering ring;; pro proces cess s ma mappi pping; ng; pur purcha chasing sing process; expenditure cycle; case study.

INTRODUCTION

E

‘‘

’’ ’’

lizor Co. ( Elizor ) is a mid-si mid-sized zed manufacturer manufacturer of mode modern rn office furniture, furniture, specializing specializing in chairs, desks, sofas, and cubicle spaces. The company was founded in 1970 and employs 375 people, primarily at its Durham, NC manufacturing facility. It also has six showrooms located in North Carolina and South Carolina and more than 250,000 square feet of warehousing and storage space space.. Eliz Elizor or has also esta establish blished ed a custo customer-fac mer-facing ing web prese presence nce for busi business-t ness-toobusiness (B2B) sales and is considering e-commerce solutions for its suppliers. Their mission is to produce such amazing office furniture you’ll never want to leave work. Elizor recently has experienced a great deal of growth and is in the process of expanding its production and storage capacity and adding a new line of ergonomic office furniture. Because of this, management is interested in obtaining an understanding of its current business processes and existi exi sting ng fun functi ctiona onalit lity y bec becaus ausee the they y wa want nt to imp implem lement ent an ent enterp erpris risee res resour ource ce pla planni nning ng (ER (ERP) P) system in the near future. They believe an ERP system will help them solve their current problems, ‘‘

’’

Published Online: August 2015 Corresponding author: Gregory J. Gerard Email: [email protected]

169

Bradford Bradf ord and Gerar Gerard d

170

ensure their business processes are as effective and efficient as possible (e.g., non-value-added steps are minimized), and maintain better internal controls over operations. Current business issues Elizor faces are:    

long cycle times for key business processes, including raw materials purchasing; desire for growth, in particular the launch of a new product line; need for advanced functionality and technologies; and too many outdated business systems supporting business processes.

Over tim Over time, e, Eli Elizor zor’s ’s pro proces cesses ses hav havee dev develo eloped ped org organi anical cally, ly, wit with h ver very y lit little tle att attent ention ion to optimization. Additionally, since the early 1990s, Elizor has used various information systems to support its core business processes, such as the raw materials purchase-to-pay process. Two systems support suppo rt this process: CODE, a finan financial cial accounting accounting syste system m that maintains maintains the general ledg ledger er (GL), accounts payable/cash disbursements, accounts receivable/cash receipts, and produces the financial state sta temen ments; ts; an and d EPT EPT,, a pr proc ocure ureme ment nt sy syste stem m th that at han handl dles es ven vendo dorr man manag agem ement ent,, in inven vento tory ry management, purchase requisitions, and purchase orders. Elizor’s top management has formed an ERP project team, which will play a critical role in the success of the ERP project. This team includes process owners, end-users, managers, and IT staff, who span functional boundaries, locations, and organizational levels of the company. One of the first tasks in planning for an ERP system implementation is to document the as is processes to help determine determine requ requiremen irements ts for a new ERP syst system em and identify identify curre current nt proce process ss pain points that the ERP system should rectify or that could be rectified prior to implementation. The ERP project leadership team is made up of Elizor’s most valuable and knowledgeable employees—the best and brightest, including Joe Wall from purchasing and Martha Long from accounting. Both of these individuals have ERP implementation experience at previous employers and are considered by management to be employees who will likely embrace organizational and procedural change, influence others in a positive way, and work well with others. These individuals were also chosen because management believes they have a clear understanding of the relationship between the operational requirements of the business, corporate strategy, and customer satisfaction. Joe and Mar Martha tha wil willl beg begin in doc docume umenti nting ng cur curren rent t as is processes, processes, enga engaging ging key busi business ness process owners to brainstorm ways to improve key business processes, and incorporating these ideas into new to be processes that will be supported by the new ERP system. Thus, Joe and Martha will be responsible for planning, organizing, leading, and managing the business process documentation stage of the project. An ERP system implementation can bring radical, dramatic changes to processes, known as business busin ess proc process ess reeng reengineeri ineering ng (BPR), which involve major overh overhauls auls of proce processes sses to achie achieve ve breakthrough performance. Companies must reengineer to match the best practices programmed in the ERP software—the software dictates the way processes will be conducted. Other changes to the processes may be more incremental, depending on how closely current processes line up with the new ERP system. This type of change is known as business process improvement (BPI), which is a relatively minor change compared to BPR but still very effective. Elizor will likely experience massive changes to their business processes when implementing the ERP system (BPR), but will also al so tw twea eak k pr proc oces esse sess pr prio iorr to th thee im impl plem emen enta tati tion on (B (BPI PI). ). BP BPII is al also so so some meth thin ing g th that at is do done ne throughout the operation and maintenance stage of an ERP system to further fine-tune business processes. Joe and Martha also have experience with process mapping, but realize that it is important to determine process mapping standards so that there is consistency in how the process maps are drawn (see Appendix A for their process mapping standards and conventions). One of the first processes that Joe and Martha chose to map out is the raw materials purchasing process. This process has been fraught with inefficiencies for years, including a long cycle time, which has ‘‘

’’

‘‘

‘‘

’’

‘‘

‘‘

’’

’’

’’

Journal of Emerging Technologies in Accounting Volume 12, 2015

Using Process Mapping to Reveal Process Redesign Opportunities during ERP Planning

171

negatively affected customer satisfaction. The longer it takes to get raw materials to the plant, the longer it takes for customers to ultimately receive their orders. In addition, Elizor’s mission of producing amazing office furniture places utmost importance on purchasing high-quality raw materials. In the past, Elizor has received inferior materials from its suppliers. Below is the narrative that Joe and Martha compiled after a lengthy group interview session in which manufacturing, purchasing, accounts payable, receiving, and warehouse employees were interviewed together in order to arrive at a consensus on the process steps. Joe and Martha chose the group interview method because it can be more accurate than other methods given that all stakeholders of the process steps have to simultaneously agree on how the process currently works. Additionally, the high degree of participation that this method requires generally increases the ownership that the group feels regarding the redesigned process map and, more importantly, the business process. ‘‘

’’

Elizor’s Raw Materials Purchasing Process

The manufacturing supervisor in Durham enters purchase requisitions into the EPT system, which triggers emails to the purchasing clerks. The purchasing clerks read the emails and decide whether the request is for a known or unknown part. If what is needed is a known part, and there is a preferred supplier for the material in the EPT system already, then a purchasing clerk emails a purchase order (PO) to the supplier for the item(s) requested. If what is needed is not a known part, then a purchasing clerk sets up a new part in the EPT system and performs traditional new vendor sourcing activities to determine an appropriate supplier for the material. Once these steps are complete, a purchasing clerk emails a PO to the chosen supplier. If no supplier exists for a known part, then a purchasing clerk must still perform sourcing activities and send the PO to the newly identified supplier. When the raw materials arrive, they are inspected for quality by the receiving department. If the quality is deemed substandard, then the goods are immediately sent back to the supplier. The raw materials passing quality inspection are then sent to the warehouse employees who count them for accuracy and prepare a receiving report. Warehouse employees then decide where a good place to store the materials in the warehouse might be and send the receiving report to the manufacturing supervisor as proof the raw materials have been received. The manufacturing supervisor will then sign the receiving report as confirmation the material has been received. Purchasing clerks receive supplier invoices in a variety of ways, but the process after receipt is always the same. First, they check each invoice for accuracy against the PO and make sure the appropriate pre-negotiated discounts and payment terms are included (e.g., 2/10 n 30). If there are any issues, they consult the supplier and make the corrections. The clerks then send the corrected invoice and PO to the accounts payable clerks in the accounting department. If there are no issues, then the supplier’s invoice is sent directly to the accounts payable clerks. Next, accounts payable clerks will assign GL account numbers (to show the increase in inventory [debit] and the accounts payable [credit]) and the cost center number (e.g., what job the material should be charged to) for management accounting purposes. Accounts payable clerks will then enter the information into CODE and a voucher number will be automatically generated. Supporting documentation is printed and filed in the accounts payable file folders until payment is due. REQUIRED ‘‘

’’

Requirement 1: As Is Process Map

Using standard process mapping symbols and referring to the example process map presented in Appendix A, draw a process map for Elizor’s raw materials purchasing process. Your instructor may require that you use a flowcharting package, such as Microsoft Visio, or may allow you to Journal of Emerging Technologies in Accounting Volume 12, 2015

Bradford and Gerard

172

draw the map by hand. Include phase symbol(s) to separate distinct phases in this process and label. For simplicity, the supplier swim lane may be omitted. Requirement 2: Business Process Reengineering (BPR) and Business Process Improvement (BPI)

Using the BPR and BPI information in Appendix B (in particular Tables 1 and 2) and the template below, list eight BPI process issues or BPR principles that need to be applied to the raw materials purchasing process. For each of these issues, describe a redesign that could be made to the raw materials purchasing process to improve efficiency, effectiveness, and/or internal control (two illustrative examples have been provided in the template to help you begin). Turn in the below template as the deliverable for this requirement. BPR Principle or BPI Process Issue

Example: BPI process issue: Paper records; non-value-added steps Example: BPI process issue: Manual steps; BPR principle: capture data once at its source 1. 2. 3. 4. 5. 6. 7. 8.

Elizor’s Process-Specific Issue

The receiving report does not need to be sent to the manufacturing supervisor. He/she should be able to see inventory availability in a system without a paper report. The cost center data should be entered once in the creation of the purchase requisition and automatically carried through to accounts payable without data rekeying.

REFERENCES Abubakker, H. 2010. Practical guide to creating better looking process maps. February 26 blog post. Available at: http://www.isixsigma.com/tools-templates/process-mapping/practical-guide-creatingbetter-looking-process-maps/ Adesola, S., and T. Baines. 2005. Developing and evaluating a methodology for business process improvement. Business Process Management Journal 11 (1): 37–46. Andrews, C. 2007. Drawing a map of the business. Internal Auditor 64 (1): 55–58. Bradford, M. 2015. Modern ERP: Select, Implement and Use Today’s Advanced Business Systems . 3rd edition. Raleigh, NC: Lulu Press. Carpenter, T. D. 2007. Audit team brainstorming, fraud risk identification, and fraud risk assessment: Implications of SAS No. 99. The Accounting Review 82 (5): 1119–1140. Damelio, R. 1996. The Basics of Process Mapping . New York, NY: Productivity Press. Dennis, A., T. Carte, and G. Kelly. 2003. Breaking the rules: Success and failure in groupware-supported business process reengineering. Decision Support Systems 36: 31–47. Hammer, M. 1990. Reengineering work: Don’t automate, obliterate. Harvard Business Review 68 (4): 104– 112. Hammer, M., and J. Champy. 1993. Reengineering the Corporation: A Manifesto for Business Revolution . New York, NY: Harper Business. Harmon, P. 2007. Business Process Change: A Guide for Business Managers and BPM and Six Sigma Professionals. 2nd edition. Burlington, MA: Morgan Kaufmann.



173

Jacka, M. J., and P. J. Keller. 2011. Business Process Mapping: Improving Customer Satisfaction . 2nd edition. Hoboken, NJ: Wiley. Mertins, K., and R. Jochem. 2005. Architectures, methods and tools for enterprise engineering. International Journal of Production Economics 98: 179–188. O’Leary, D. 2000. Enterprise Resource Planning Systems . Cambridge, UK: Cambridge University Press. Page, S. 2010. The Power of Business Process Improvement: 10 Simple Steps to Increase Effectiveness, Efficiency, and Adaptability. New York, NY: AMACOM. Paradiso, J., and J. Cruickshank. 2007. Process mapping for SOX and beyond. Strategic Finance 88 (9): 30–35. Porter, L. D. 2013. Process Mapping: Dissecting Processes for Optimal Performance . Presentation at the 2013 CUPA-HR Midwest Region Conference, May 20, Columbus, OH. Process Mapping Associates Inc. 2007. Process Mapping. Available at: http://www.processmaps.com/ mapping.html Rohleder, T., and E. Silver. 1997. A tutorial on business process improvement. Journal of Operations Management 15: 139–154. Samia M., G. Siha, and H. Saad. 2008. Business process improvement: Empirical assessment and extensions. Business Process Management Journal 14 (6): 778–802. Schniederjans, M., and G. Kim. 2003. Implementing enterprise resource planning systems with total quality control and business process reengineering—Survey results. International Journal of Operations and Production Management 23 (4): 418–429. Smith, M. L. 2010. BOLO (Be On The Lookout) List for Analyzing Process Mapping . Available at: http:// www.isixsigma.com/tools-templates/process-mapping/bolo-be-lookout-list-analyzing-processmapping/ Tønnessen, T. 2014. Business process reengineering. In Managing Process Innovation Through Exploitation and Exploration: A Study on Combining TQM and BPR in the Norwegian Industry, 33. Wiesbaden, Germany: Springer Gabler. Tradewinds Group, Inc. 2004. Business Process Reengineering and Improvement. Available at: http://www. tradewindsgroupinc.com/Tradewinds_Business_Process_Improvement_White_Paper.pdf

APPENDIX A Process Mapping Introduction to Process Mapping

A business process is a collection of activities that together add value to input and transform it to output (Harmon 2007; Paradiso and Cruickshank 2007). Business processes span multiple departments and in many cases traverse the boundaries of the organization, sharing information with business partners, such as suppliers and customers. Process maps are a system diagramming method that visually illustrates the essential details of a business process (in a way that written procedures cannot) by replacing many pages of words with 1 boxes and arrows. They provide a visual rendering of a business process from beginning to end, including the inputs and outputs of each activity, the sequence of activities, and the person or persons performing each activity, allowing stakeholders to see the process from start to finish (Damelio 1996). This visualization provides a powerful way to explore what activities work well, ‘‘

1

’’

This paper uses cross-functional process mapping symbols and terminology. We acknowledge that certain instructors may prefer other diagramming methods such as business process modeling notation, which is conceptually similar to process mapping. Instructors could feel free to substitute their preferred method for the diagramming method we use in this case.


Bradford and Gerard

174

which do not, and where there may be non-value-added steps, costs, or control issues ( Tradewinds Group, Inc. 2004). Specifically, process maps indicate:     

What is happening? Where is it happening? When is it happening? Who is doing it? How are inputs and outputs handled and distributed? ( Process Mapping Associates Inc. 2007).

Process Mapping Symbols

Figure 1 describes typical process mapping symbols ( Bradford 2015; Damelio 1996). The Role of Process Mapping in ERP System Implementations ‘‘

’’

Mapping out current as is business processes can help an ERP project team develop functional requirements for an ERP system (Andrews 2007). The as is process maps will also be compared to the to be ERP vendor-supplied process maps to see where change will occur as the organization reengineers to best practices in the ERP software. For example, during the ERP ‘‘

‘‘

’’

’’

FIGURE 1 Process Mapping Symbols



175

package selection stage, it would be critical to know that an organization ships line items on a customer order from different plants. The ERP system must support this functionality, which might not be evident until processes are fully mapped out. Sometimes, this exercise will generate responses such as Do we still do that? You mean, you guys don’t review that report after all? or Why are we doing it this way? As the team reviews the as is maps, it will begin to question why? and will find many opportunities for change ( Smith 2010). ‘‘

‘‘

’’ ‘‘

’’

’’

‘‘

‘‘

’’

’’

Guidelines for Drawing Process Maps

The following guidelines should be followed when drawing process maps:   





 





Have a clear purpose for mapping a process. Label the scope of the process at the top of the process map. Determine the roles that participate in the process. These become the swim lanes across the page. Identify the trigger, which denotes the start of the process. For horizontal maps, the trigger, designated with an oval, should be placed in the top swim lane left justified. The page shows the passage of time, so activities should generally move left to right and top to bottom. Label activities with active verbs such as input, correct, move, and order. Enter data, information, or physical goods flowing between activities directly on the process flow lines. Label decisions in the form of questions. Label process flow lines that branch out of decisions with the outcomes (e.g., yes/no). When activities are performed by multiple roles, the activity should span multiple swim lanes. (Abubakker 2010; Jacka and Keller 2011). ‘‘

‘‘

’’

‘‘

’’

‘‘

’’

’’

‘‘

’’

‘‘

’’

As an example, Figure 2 shows a narrative and a process map of the current state as is biweekly payroll process for Fit Gear, a manufacturer of fit apparel. This as is process map reflects the way Fit Gear currently conducts this process. By reviewing the process map, process designers can pinpoint redesigns that will make the process more efficient and effective. ‘‘

’’

‘‘

’’

APPENDIX B Business Process Reengineering (BPR) and Business Process Improvement (BPI) Business Process Reengineering

Many companies today use ERP and other technologies to reengineer their processes. This type of reengineering is known as technology-enabled business process reengineering (BPR)—the ERP system or other technology serves as the road map or engine of process automation for the reengineering initiative (O’Leary 2000; Tradewinds Group, Inc. 2004). When BPR occurs, it causes a fundamental, dramatic redesign in business processes. Companies embarking upon an ERP implementation generally are not changing their core competencies—the capabilities critical to a business in achieving competitive advantage—but instead are optimizing their business processes in order to make them more efficient and customer-centric ( Hammer 1990). These companies are striving for business processes that are streamlined, standardized, and of superior quality in order to better serve customers, increase employee morale, and improve the company’s ability to anticipate, manage, and respond to changes in the marketplace ( Hammer and Champy 1993). ERP systems and the reengineering that ensues facilitate the transformation of businesses from being functional-oriented to process-oriented. If a company succeeds with an ERP system ‘‘


’’

‘‘

’’

Bradford and Gerard

176

FIGURE 2 Example Narrative and Process Map (Fit Gear Bi-Weekly Payroll Process for Plant Employees) Panel A: Narrative Describing the Bi-Weekly Payroll Process for Plant Employees at Fit Gear

Panel B: Fit Gear Process Map Page 1 of 2

(continued on next page)



177

FIGURE 2 (continued) Panel C: Fit Gear Process Map Page 2 of 2

Bradford (2015) used with permission of author.

implementation, then there is a shift to a new way of thinking. Rather than focusing narrowly on activities within functional areas (such as accounting and purchasing), users are focused on crossfunctional processes (e.g., the entire purchase to pay process) ( Tønnessen 2014). ERP systems and BPR move the company from a silo mentality to a process-centric mentality, in the hopes of reducing costs, improving customer satisfaction, and ultimately creating shareholder value ( O’Leary 2000). Undertaking an ERP implementation and the resulting BPR is generally a complex and difficult task, and in the past has been met with a high failure rate. Thus, organizations should not implement ERP without a careful examination of all activities and phases of a current as is process (Dennis, Carte, and Kelly 2003; Schniederjans and Kim 2003 ). These should include the process activities, people’s jobs and reward system, the management system, and tools and technologies ( Tønnessen 2014). Last, it is necessary to investigate the underlying corporate culture that holds the beliefs and values that influence everyone’s behavior and expectations when embarking upon a BPR project 2 (Mertins and Jochem 2005). Hammer’s (1990) BPR principles are presented in Table 1. ‘‘

2

’’

Hammer’s (1990) BPR principles refer to clean-slate techniques, which does not predispose what the end solution (technology or system) for redesigning and automating processes will be. However, these principles are relevant to how an ERP system can benefit companies. The principles still allow for current-day technologies such as mobile computing and cloud computing.


Bradford and Gerard

178

TABLE 1 Business Process Reengineering Principles (Hammer 1990) 1. Have those who use the output of the process perform the process (reduce or eliminate handoffs). 2. Empower workers (give employees information and they can make decisions). 3. Treat geographically dispersed resources as though they were centralized (centralize data through a common database). 4. Link parallel activities instead of integrating their results (do not wait until the end of a process to merge the results). 5. Organize around processes, not tasks or functional area (use ERP systems, technology, and best practices). 6. Self-service; move cost and accountability for work to the beneficiary of a process (responsibility for information accuracy also transfers with self-service). 7. Put the decision point where the work is performed and build controls into the process (use automated controls in the process and transfer the responsibility for checking from management to the worker). 8. Capture information once at its source (data should be entered one time where it originates and then dispersed to those who need it).

Business Process Improvement

Another method companies use to redesign processes to prepare for ERP (or after ERP implementation to tweak new processes to make them even more effective and efficient) is known as business process improvement (BPI), which is the gradual improvement to business processes over time. Whereas BPR is radical and revolutionary, BPI is incremental and evolutionary. While BPR is necessary for a successful ERP implementation, BPI is simply not enough. The scope and intensity are much smaller for BPI than BPR, but the goals are very similar: strive for business processes that are streamlined, standardized, and of superior quality in order to better serve customers, increase employee morale, and improve the company’s ability to anticipate, manage, and respond to changes in the marketplace ( Page 2010). A general rule is that if an existing process is somewhat close to expectations, then maybe it can be improved. If not, then maybe the current process is fundamentally broken and radical change is necessary ( Rohleder and Silver 1997). Figure 3 presents a model for BPI. First, goals and objectives of the process improvement plan must be identified and the appropriate organizational support must be obtained. A process improvement team should also be assembled. The next step is to compile a process inventory, identifying key processes, including their sub-processes and activities. A process inventory is a list of business processes that a department or area owns. Processes can be identified by reviewing the work done by a department, analyzing job descriptions, or talking to colleagues to ascertain their roles and responsibilities (Adesola and Baines 2005). From this process inventory, a list of processes in need of change can be determined and prioritized. Those processes that have a big impact on the business and will net the largest return if improved should be ranked first. The feasibility of making the change should also be considered. Benchmarking with competitors can often help determine processes in need of improvement. As a result of these steps, the first process will be selected for improvement ( Samia, Siha, and Saad 2008; Rohleder and Silver 1997). Next, information must be obtained about the process from process owners and experts. It is usually necessary to include knowledgeable sources from various departments for a complete view Journal of Emerging Technologies in Accounting Volume 12, 2015


179

FIGURE 3 Business Process Improvement Model

‘‘

’’

of a process. The BPI team should also document the as is process so that everyone involved understands how the process currently works. The process documentation should be verified with stakeholders to make sure it correctly reflects the existing process ( Page 2010; Rohleder and Silver 1997). The next step is to analyze the process to pinpoint any problems. The BPI team should also attempt to take measurements of the process, such as costs and cycle times. It will be useful to elicit feedback from users to make sure all problem areas are noted. Additionally, the potential benefits from improving the process should be carefully considered ( Rohleder and Silver 1997). Once the current process has been analyzed and measured, it is time to improve the process. The team should use brainstorming techniques ( Carpenter 2007) while challenging everything. New prototypes of process flows, policies and procedures, and reporting requirements should be developed. The team should also consider where errors and other risks can occur in the new process, and design internal controls, such as segregation of duties ( Page 2010). The team should also use technologies and tools to automate steps where appropriate and create new metrics to show if the process works as planned. When implementing changes, the team should effectively communicate with all key stakeholders about why the new process is needed, what it is, how things will be different and better, and what will happen when the new process is in operation. Performing a walkthrough of the new process is one way to build a detailed understanding of the process and see how it will work ( Porter 2013). Last, the company should embrace the new mindset and drive continuous improvement. Rather than thinking of process improvement as a project that has a beginning, middle, and an end, it should be envisioned as an ongoing activity that is tied to all technology and business activities critical to enterprise operations. At regular time intervals, the team should gather data on the performance of the new process to measure its success ( Porter 2013; Rohleder and Silver 1997). Note that BPR might be necessary at two points in Figure 3. When defining and understanding the process, it may surface that the process is persistently and profoundly broken. At this point, BPR might be necessary. Additionally, if BPI techniques are applied and the process continues to be of key concern, then BPR is generally the next step ( Rohleder and Silver 1997). ‘‘

’’


Bradford and Gerard

180

Table 2 lists common issues found in business processes that can result in non-value-added costs and long cycle times. As an illustration, Table 3 contains an explanation of the business process issues evident in the Fit Gear example introduced in Appendix A.

TABLE 2 Business Process Improvement Process Issues (Smith 2010) Authority ambiguity

When two or more people are providing approval, this may be unnecessary as it reeks of bureaucracy and increases cycle time of the process.

Bottlenecks

When a number of information flows lead to a single activity, the process may be hindered by insufficient resources dedicated to the roles and events downstream. Bottlenecks can limit the performance or capacity of the entire system, delaying or completely stopping the process.

Cycle time

The time consumed during the entire process flow should be at the heart of performance measurement, providing focus on the length of time it takes from start to finish.

Data duplication

Occurs when multiple groups involved in the process begin maintaining their own separate information systems. Consequently, the same data are then kept in multiple places.

Handoffs

Involve the transfer of responsibility from one role to another, providing the opportunity for mistakes, miscommunication, and delay.

Intermediaries

Words such as pass it by me include an intermediary step. Consider if this step is value-added.

Manual steps

Technology and systems could be implemented to take the place of manual steps, which are labor-intensive and add to cycle time and errors.

Old ways

Technology and systems are available but not used because employees have not been trained (or have been trained and do not want to use them). Employees revert to old ways of doing things.

‘‘

‘‘

’’

’’

Quality control

Quality control is when someone else checks work, not when someone checks his/her own work. Is the quality control really needed? Can the work be mistake-proofed to make it impossible for the defect to pass on? Prevention is better than detection.

Paper records

Question whether the current process is adding, maintaining, or eliminating paper records. Storing data in electronic form is optimal as the data then become easier to share.

Rework

This refers to people spending time fixing errors or remediating problems. The source of the errors should be investigated and modification to the process made to eliminate the potential for errors.

Role ambiguity

Denotes lack of clarity about the expectations, norms, and behaviors associated with a particular job. Ambiguity can lead to inefficiencies in processes.

Segregation of duties violations

Employee should not be in the position to perpetrate and to conceal fraud. In general, duties to be segregated among employees are: (1) custody of assets; (2) authorization or approval of related transactions affecting those assets; (3) recording or reporting of related transactions.



181

TABLE 3 Redesign Opportunities in the Fit Gear Bi-Weekly Payroll Process BPR Principle Not Followed/BPI Issue

Explanation

1. Capture data once at its source; Data duplication; Non-value-added work

Data are collected on timecards, entered into Excel, and then entered again into TEMS. Data should be collected just once and entered into the system. A time and attendance module that integrates with TEMS so time card machine is not used.

2. Self-service; Those that use the output of the process perform the process

Instead of the payroll clerk entering master data updates, we should consider using self-service for this function by allowing employees access into the system to update their master data.

3. Segregation of duties; Authority ambiguity; Intermediaries

Payroll clerk should not be entering employee master data updates. HR manager or someone in HR should be doing this. Also, HR manager should not be approving payroll.

4. Handoffs

For such a simple process, there are too many handoffs. A question might be why the receptionist is involved in this process.

5. Bottlenecks

The receptionist is a bottleneck with the ability to hold up or completely stop the payroll process.

6. Rework; Quality control

There appears to be a lot of time spent on fixing errors and remediating problems.

7. Paper records

Use direct deposit instead of paper checks; this will also help with internal control. Use electronic time cards not paper time cards.

8. Manual steps

Payroll is one process that is outsourced in many companies. Fit Gear should perform a cost/benefit on whether they should outsource this function. Payroll is not their core competence.


Bradford and Gerard

182

CASE LEARNING OBJECTIVES AND IMPLEMENTATION GUIDANCE Classroom Motivations, Purposes of the Case, and Learning Objectives

To stay competitive in the global marketplace, businesses are under constant pressure to increase quality while controlling costs. Many companies implement ERP systems, which cause both dramatic changes to business processes (i.e., business process reengineering [BPR]), and also less-dramatic changes to processes prior to implementation and after go-live (i.e., business process improvement [BPI]). The widespread adoption of ERP has implications for university curricula, and many universities have formed alliances with specific ERP software vendors such as SAP (see e.g., Watson and Schneider 1999; Hawking, Ramp, and Shackleton 2001 ). However, some ERP-related issues, such as BPR, BPI, and process mapping, supersede specific software concerns and apply to all ERP implementations. Therefore, the purpose of this project is to improve students’ abilities to identify relevant BPR and BPI opportunities by requiring them to: (1) map a business process using process mapping techniques; and (2) suggest ways to improve or reengineer the business process. Process mapping is a powerful analytical tool that can be used in any sector and business or organizational environment (Paradiso and Cruickshank 2007). It is used in industry to help document and understand complex processes and for training purposes. It is also applied in the context of ERP implementations as processes are the focal point of these initiatives ( Bradford 2015). Process mapping is a key technique used in ISO and Six Sigma quality programs and is a valuable tool for establishing performance objectives (Paradiso and Cruickshank 2007). Additionally, the accounting profession makes use of process mapping to document controls for compliance with Sarbanes-Oxley Act of 2002. As a result of Section 404 of the Act, management at publicly traded companies must: ‘‘

 

’’

establish internal controls and procedures over financial reporting; and document, test, and maintain those internal controls and procedures to guarantee their effectiveness.

Process mapping is ideally suited to helping organizations achieve SOX compliance and more so because the technique is efficient, effective, economical, multidimensional, and multifunctional (Paradiso and Cruickshank 2007). One of the key benefits of SOX is improved documentation of controls and control process evaluation. Combining BPR/BPI with SOX internal control efforts allows companies to benefit from redesigned processes that result in fewer controls and better downstream business performance (D. Campbell, M. Campbell, and Adams 2006 ). Process mapping is beginning to be seen in AIS (e.g., Romney and Steinbart 2015) and ERP texts (e.g., Bradford 2015) and is similar to system flowcharting (even some of the symbols are the same); however, system flowcharting is more oriented to the physical nature of representation. For example, system flowcharting uses different symbols for a manual or computer process, whereas in process mapping a process is simply an activity. For accounting students who are going into the internal or external auditing professions, there is an expectation that they can understand business processes and the key controls within those processes, including the purchase-pay-process, the subject of our case. Section 404 of Sarbanes-Oxley focuses on information used to produce financial statements and internal controls. As part of compliance efforts, many organizations use detailed narratives and diagrams to document business processes ( Andrews 2007). Process mapping adds one more tool in the toolbox for these students (Bradford 2015). To our knowledge, this is the only case that explicitly ties together ERP, process mapping, and BPR/BPI. However, there are related cases. Borthick, Schneider, and Vance (2010) created a case in which students construct a flowchart and a business process diagram from a narrative. After ‘‘

’’



183

students create their diagrams, two diagrams are distributed to the students, one representing the current system and one representing a proposed system. The students then answer diagram construction questions and look for consistencies and inconsistencies in the two types of diagrams. Bradford, Samuels, and Wood (2008) created a case in which students develop a process map to understand the current process in order to design a relational database to replace a legacy system. Fleak, Harrison, and Turner (2010) created a case in which students evaluate internal control weaknesses using the Committee on Sponsoring Organizations (COSO) framework and make related recommendations to mitigate risk, which is a goal of both BPR and BPI. Although we are unaware of any teaching cases tying together ERP, process mapping, and BPR/BPI, Okrent and Vokurka (2004) describe six core processes that are relevant to ERP implementation and give suggestions for how process mapping could be used to facilitate ERP implementation. While Okrent and Vokurka (2004) do not cover specific process mapping notation, instructors could provide the article to students as a supplemental reading. The current case is a business process case, which does not contain any assumptions regarding prior process mapping experience or business process analysis. The case has three primary learning objectives that are linked to Bloom’s taxonomy ( Bloom, Englehart, Furst, Hill, and Krathwohl 1956; Anderson and Krathwohl 2001). Students will be able to 

appropriately use process mapping notation according to the process mapping conventions contained in this paper (Bloom’s applying level); analyze a process map and identify opportunities to increase the effectiveness or efficiency of operations via BPR and BPI (Bloom’s analyzing level). ‘‘



’’

‘‘

’’

The case deliverables are (1) a process map of the raw materials purchasing process at Elizor Co. (a hypothetical mid-sized manufacturer of office furniture); and (2) a listing of eight opportunities for redesign of the process (which may take place during, or prior to, an ERP implementation) mapped to BPI process issues and BPR principles. Course Use and Prerequisite Knowledge/Skills

This case is appropriate for use in an undergraduate or graduate course focusing on ERP and/or business process management. Depending on the particular university, such courses may be offered in departments of accounting, management information systems, and/or management. To complete the process map, students should have a basic understanding of the purchase-to-pay process, which is discussed in AIS, auditing, and supply chain courses. Some familiarity with other flowcharting methods may prove beneficial, although our Fit Gear example is generally sufficient as an introduction to process mapping. While the process map may be completed freehand as a paperbased exercise, we require students to use flowcharting software. Several flowcharting packages offer trial downloads including Microsoft Visio (http://www.office.microsoft.com/en-us/visio/ ), Lucidchart (http://www.lucidchart.com ) and Smartdraw (http://www.smartdraw.com ). Many universities offer Visio free to students under their Microsoft site license. We do not expect students to be familiar with BPR and BPI concepts, but Appendix B and the Fit Gear example generally provide students with enough background to satisfactorily complete the Elizor Case. We suggest that instructors go over the Fit Gear example in class and allow students to work in groups to think of BPR/BPI ideas. To get the most out of the BPR/BPI possibilities in the case, students would benefit from familiarity with existing and emerging technologies and business practices, also included in many AIS texts. These include material requirements planning (MRP), electronic data interchange (EDI), radio frequency identification (RFID), and vendor managed inventory (VMI). However, if students are having trouble identifying BPR/BPI ideas, then we provide prompts in the Teaching Notes that instructors can use to stimulate thinking. These ‘‘

’’


Bradford and Gerard

184

prompts generally help students to start thinking about what they have learned in other classes that they can apply to this case. While Requirement 1 of the case requires students to complete a process map, this could be extended by requiring students to do a second to be process map after they have developed their BPR/BPI ideas in Requirement 2 of the case. There is no key for this to be map because how it looks would depend on what BPR/BPI redesigns were chosen. Ideas for simplifying the case for an introductory class include: (1) reviewing the raw materials purchase-to-pay process with students, (2) walking students through the Fit Gear example, (3) providing students with a process map swim lane template with key roles and perhaps a few symbols to help students get started (this can be extracted from the process map solution that we have provided in the Teaching Notes), and (4) using the question prompts that we provide in the Teaching Notes to help elicit BPR/BPI ideas from the students. Based on our experience, instructors should budget one 75-minute class meeting to go over the Fit Gear example and introduce the Elizor Case. Instructors may also wish to direct students to research the purchase-to-pay process if they are not familiar with it. When this case is part of the grading components of our classes (and not an in-class project), we generally count it as 5 percent of the total course grade. Instructors can choose how much to weight the process map versus the process issues and suggestions for remediation; however, a suggested grading rubric is provided in the Teaching Notes. ‘‘

’’

‘‘

‘‘

’’

’’

Case Feedback

This case has been used in multiple sections of undergraduate and graduate advanced AIS courses focused on ERP systems by three accounting instructors at three large U.S. universities. Students using the case include Bachelor of Accounting, Bachelor of Business Administration, Master of Accountancy (M.A.C.), and M.B.A. students. The data reported here are based on instructors’ experiences across seven course sections (two undergraduate, two M.A.C., and three M.B.A.).3 Before the students began working on the Elizor Case, the instructor informed them that it was being classroom-tested and explained the university-approved informed consent process. Students could volunteer, under conditions of anonymity, to complete two questionnaires (a pre-test and a post-test); students who chose to volunteer then signed the consent form. Out of a total pool of 169 students (49 undergraduate and 120 graduate), a total of 150 students (49 undergraduate and 101 graduate) volunteered to participate. There were 133 students who filled out the questionnaire prior to the case, and 150 who filled out the questionnaire subsequent to the case; the reason for this difference is that for the very first class administration only used the post-questionnaire and we decided to develop the pre-questionnaire for the subsequent class testing. 4 The pre-questionnaire was designed to assess student knowledge and experience with process mapping and redesigning of processes. These characteristics are reported in Table 4. As expected, students reported limited knowledge of, and experience with, process mapping and BPR/BPI. For example, 68 percent of respondents indicated either no knowledge, poor knowledge, or fair knowledge of process mapping. Knowledge of BPR and BPI was less: 90 percent of respondents indicated either no knowledge, poor knowledge, or fair knowledge of BPR; and 88 percent indicated the same with BPI.

3 4

The designation is M.B.A., but M.A.C. IT concentration students comprise the majority of the class. Including or excluding this first group of participants does not significantly change the post-questionnaire results. Furthermore, there were no significant differences across universities, or level of student, so all data is reported in the aggregate.



185

TABLE 4 Pre-Questionnaire of Student Knowledge and Experience Characteristic

n

%

My current working knowledge of systems flowcharting: No knowledge Poor knowledge Fair knowledge Good knowledge Very Good Knowledge Excellent Knowledge

2 23 59 40 8 0

1.52 17.42 44.70 30.30 6.06 0.00

I have read systems flowcharts to understand a process: Never One or two times A few times Many times

4 44 65 20

3.01 33.08 48.87 15.04

I have created systems flowcharts to describe a process: Never One or two times A few times Many times

27 62 38 5

20.45 46.97 28.79 3.79

I have used systems flowcharts to look for ways to improve a process, such as correcting process errors, reducing risks, or suggesting improvements or enhancements: Never 56 42.75 One or two times 53 40.46 A few times 20 15.27 Many times 2 1.53 My current working knowledge of process mapping: No knowledge Poor knowledge Fair knowledge Good knowledge Very Good Knowledge Excellent Knowledge

9 23 58 35 8 0

6.77 17.29 43.61 26.32 6.02 0.00

I have read process maps to understand a process: Never One or two times A few times Many times

10 65 48 9

7.58 49.24 36.36 6.82

I have created process maps to describe a process: Never One or two times A few times Many times

36 68 23 5

27.27 51.52 17.42 3.79

(continued on next page)


Bradford and Gerard

186

TABLE 4 (continued) Characteristic

n

%

I have used process maps to look for ways to improve a process, such as correcting process errors, reducing risks, or suggesting improvements or enhancements: Never 65 49.62 One or two times 45 34.35 A few times 18 13.74 Many times 3 2.29 My current working knowledge of business process reengineering methods is: No knowledge 21 Poor knowledge 53 Fair knowledge 46 Good knowledge 12 Very Good Knowledge 1 Excellent Knowledge 0

15.79 39.85 34.59 9.02 0.75 0.00

My current working knowledge of business process improvement techniques is: No knowledge 16 Poor knowledge 50 Fair knowledge 51 Good knowledge 15 Very Good Knowledge 1 Excellent Knowledge 0

12.03 37.59 38.35 11.28 0.75 0.00

My current working knowledge of the type of duties in a process that need to be segregated among people is: No knowledge 9 6.77 Poor knowledge 33 24.81 Fair knowledge 51 38.35 Good knowledge 33 24.81 Very Good Knowledge 6 4.51 Excellent Knowledge 1 0.75 This data is based on 133 respondents; missing data accounts for characteristics that sum to less than 133. Percentages are rounded to two decimal places.

The post-case questionnaire was designed to measure students’ impressions of the case. The results of this questionnaire are reported in Table 5. The scales for the questionnaire were anchored at 0 (strongly disagree) and 100 (strongly agree). All responses were above 50 indicating agreement with the questionnaire statements (the range of means was 74.9 to 88.0); t-tests of the null hypothesis M ¼ 50 on all responses indicated that the responses were all statistically greater than the midpoint of the scale (all p-values were , 0.001). It is worthwhile to note that the highest mean response was for the statement The case was a beneficial learning experience (M ¼ 88.0) followed by The case was understandable and The case was relevant in identifying process issues (M ¼ 87.7 and M ¼ 84.9, respectively). These responses map favorably to the learning objectives. The lowest mean responses were for the following statements: The case was interesting (M ¼ 74.9), The case was relevant in identifying specific controls to protect firm resources (M ¼ 75.0), and The case increased my working knowledge of reengineering principles (M ¼ 75.4). We also elicited written, qualitative comments about the case. Specific examples of student perceptions of the value received from mapping the process include: I liked that it was a more ‘‘

’’

‘‘

’’

‘‘

’’

‘‘

’’

’’

‘‘

‘‘

’’

‘‘



187

hands-on experience with process mapping. I learn better by practicing and doing so that is an effective type of assignment for me and I liked the experience and practice I got making a process map. I felt as if I better understood all the steps of the process by the time I finished the map. Examples of comments pertaining to the process redesign part of the assignment include: [The case] helped me to understand Elizor’s process and think critically about how to improve it and Elizor [Case] increased my comfort level greatly by increasing my skill level of suggesting improvements or reengineering ideas. Our analysis of the qualitative comments revealed some overall trends. First, students had a favorable impression of the case. Second, they thought that the case was realistic and logical. Third, students felt that their process mapping skills increased. Finally, student feedback was mixed on ability to identify BPR/BPI ideas; some students expressed feelings of confidence, whereas a few stated that they would like to have more practice (although the objective responses reported in Table 5 indicate that students felt that they increased their knowledge of identifying process issues). ’’

‘‘

’’

‘‘

’’

‘‘

’’

TEACHING NOTES AND STUDENT VERSION OF THE CASE

Teaching Notes and the Student Version of the Case are available only to non-student-member subscribers to Journal of Emerging Technologies in Accounting through the American Accounting Association’s electronic publications system at http://www.aaapubs.org/ . Non-student-member subscribers should use their usernames and passwords for entry into the system where the Teaching Notes can be reviewed and printed. The Student Version of the Case is available as a supplemental file that is posted with the Teaching Notes. Please do not make the Teaching Notes available to students or post them on websites. If you are a non-student-member of AAA with a subscription to Journal of Emerging Technologies in Accounting and have any trouble accessing this material, please contact the AAA headquarters office at [email protected] or (941) 921-7747. ‘‘

’’

TABLE 5 Post-Case Student Feedback Question

M

SD

The case increased my working knowledge of process mapping.

83.6

15.2

The case increased my working knowledge of process issues (problems).

80.8

14.3

The case increased my working knowledge of reengineering principles.

75.4

18.5

Process mapping is important to my professional development.

78.1

20.3

Pointing out reengineering ideas could be important to my future career.

83.4

17.1

The case was relevant in identifying process issues.

84.9

14.4

The case helped me understand the importance of reengineering.

79.2

15.9

The case was relevant in identifying specific controls that protect firm resources.

75.0

17.8

The case was relevant in identifying processes to achieve effective/efficient operations.

80.7

15.2

The case was interesting.

74.9

18.3

The case was relevant because it was based on a real-world process.

82.6

16.6

The case was understandable.

87.7

13.0

The case was a beneficial learning experience.

88.0

12.4

These statistics are based on a group of 150 respondents (the greater number of respondents compared to Table 4 is because the first administration of the case did not use the Table 4 questionnaire; excluding this subset of data does not significantly change the results). The response scale was anchored at 0 (strongly disagree) to 100 (strongly agree).


Bradford and Gerard

188

REFERENCES Anderson, L. W., and D. Krathwohl. 2001. A Taxonomy for Learning, Teaching, and Assessing: a Revision of Bloom’s Taxonomy of Educational Objectives . New York, NY: Longman. Andrews, C. 2007. Drawing a map of the business. Internal Auditor 64 (1): 55–58. Bloom, B., M. Englehart, E. Furst, W. Hill, and D. Krathwohl. 1956. Taxonomy of Educational Objectives: The Classification of Educational Goals . Handbook I: Cognitive Domain. New York, NY: Longman. Borthick, A. F., G. P. Schneider, and A. O. Vance. 2010. Preparing graphical representations of business processes and making inferences from them. Issues in Accounting Education 25 (3): 569–582. Bradford, M. 2015. Modern ERP: Select, Implement and Use Today’s Advanced Business Systems . 3rd edition. Raleigh, NC: Lulu Press. Bradford, M., J. A. Samuels, and R. E. Wood. 2008. Beta auto dealers: Integrating disparate data to solve management problems. Issues in Accounting Education 23 (2): 309–328. Campbell, D., M. Campbell, and G. Adams. 2006. Adding significant value with internal controls. The CPA Journal 76 (6): 20–25. Fleak, S. K., K. E. Harrison, and L. A. Turner. 2010. Sunshine center: An instructional case evaluating internal controls in a small organization. Issues in Accounting Education 25 (4): 709–720. Hawking, P., A. Ramp, and P. Shackleton. 2001. IS’97 model curriculum and enterprise resource planning systems. Business Process Management Journal 7 (3): 225–233. Okrent, M. D., and R. J. Vokurka. 2004. Process mapping in successful ERP implementations. Industrial Management and Data Systems 104 (8): 637–643. Paradiso, J., and J. J. Cruickshank. 2007. Process mapping for SOX and beyond. Strategic Finance 88 (9): 30–35. Romney, M. B., and P. J. Steinbart. 2015. Accounting Information Systems . 13th edition. Boston, MA: Pearson. Watson, E. E., and H. Schneider. 1999. Using ERP systems in education. Communications of the Association for Information Systems 1 (9): 1–48.


Using Process Mapping to Reveal Process - Redesign Opportunities in ERP Planning

Recommend Documents