Lean as a method for process improvement in P2P: A step-by-step guide

Streamlining processes is crucial for companies that want to optimize resources for competitiveness and profitability, benefiting both customers and employees. Methods such as Lean and Six Sigma, originally from the manufacturing industry, are now also used in administrative and service-based businesses. Other methods used today are often a combination of the two. These methods can also be combined with agile ways of working, which share several basic principles with Lean. For companies that want to work in a structured way on process improvements, for example in the management of their supplier invoices, Lean is an effective choice for identifying and eliminating wasteful use of resources.

This article provides an introduction to Lean for process improvement with examples from a company's purchase to pay process.

These are some advantages regarding when and why Lean can be a good choice:

• Focus on customer value: Lean creates maximum value for the "customer", i.e. all stakeholders in the process, including suppliers and employees.
• Improved flow and simplicity: Lean simplifies processes by standardizing workflows and eliminating unnecessary steps.
• Effectiveness and commitment: The method involves the whole organization in the improvement process, leading to rapid, incremental progress.
• Rapid improvements: Lean allows for quick identification and elimination of waste, resulting in faster profits.
• Continuous improvement: Lean is based on continuous improvement for long-term sustainability.

Here is a step-by-step guide to get started with Lean and improve your processes.

Step 1: Analysis - Identifying problems and understanding the causes

To improve a process, it is crucial to understand what problems exist and why they occur. In this step, tools such as value stream mapping and the 5 Whys method are used.

Value stream mapping

Value Stream Mapping is a key tool for mapping all the steps in a process, from start to finish, and identifying which steps add value to stakeholders. An effective way to structure the analysis is to use swim lanes, where each lane represents a role or function, making it easier to spot bottlenecks and handovers.

Questions that can open up insights in the analysis are:

• Why are we doing this activity? Does it add value for stakeholders?
• Could the activity be combined with another one?
• Is this the right time to carry out the activity?
• Is the right user performing the activity?
• What happens if we remove it?

Example of waste in a Purchase-to-Pay process

According to Lean, there are seven types of waste and they can all occur in a Purchase-to-Pay process:

1. Overproduction: when we do things that don't need to be done, such as creating documents or reports that are not used.
2. Waiting time: delays, such as invoices waiting for approval or unnecessary communication.
3. Transportation: unnecessary movements, for example of information between systems or via e-mail.
4. Overwork: Double-checking and recording in several systems.
5. Warehousing: unnecessary storage of old information or paper invoices.
6. Unnecessary movements: switching between several systems to perform a task.
7. Defects: incorrect invoices that require correction.

Understand the root causes with 5 Why

5 Why is a method that helps to identify the underlying cause of a problem by asking the question "why" repeatedly - often five times, but it can be more or less depending on the situation. As each answer leads to a new 'why' question, it takes you deeper into the root cause analysis, moving beyond superficial explanations to the root problem. Once the root cause is clear, actions can be taken to solve the problem in the long term.

Step 2: Actions and improvements

Once the root cause of a problem is identified, the next step is to find and implement the right solution. In Lean, the A3 method is often used to develop and evaluate solutions. The A3 approach is based on a structured analysis and solution process documented on a single A3 page, and it involves the whole team in problem solving.

The A3 approach follows these steps to find the right solution:

1. Identify possible solutions - Involve the team in brainstorming possible solutions based on the identified root cause.
2. Choose the best solution - Analyze the proposals and choose the solution that has the greatest potential to solve the problem without creating new challenges.
3. Test and evaluate the solution - Feel free to use the PDCA (Plan-Do-Check-Act) cycle to test the solution on a smaller scale before full implementation. The PDCA cycle ensures that the solution truly eliminates the root cause and is sustainable.

The A3 method, together with PDCA, helps to structure the problem-solving process and ensure that solution proposals are well thought out before they are fully implemented.

Prioritizing actions

Once possible solutions have been identified, it is important to prioritize them according to their potential to solve the problem in an efficient and sustainable way. In Lean, there are several methods and principles to determine which solutions should be implemented first:

1. Customer focus: Prioritize solutions that directly improve the customer experience for suppliers and internal users.
2. Pareto principle (80/20 rule): Focus on the 20% of causes that solve 80% of problems for faster results.
3. Prioritization matrix: Use the matrix to assess actions based on impact (positive effect) and feasibility (difficulty of implementation).
4. Quick Wins: Small, quick improvements that build momentum and increase team motivation.
5. Long-term sustainability: Prioritize resource-intensive solutions if they provide sustainable improvements over time.

Standardize improvements

Once an improvement has proven effective, it is standardized to ensure that it is maintained over time. This means that:

1. Document the new procedure.
2. Train staff to ensure that everyone works in the same way.

Step 3: Monitoring and continuous improvement

Once the improvement measures are in place, follow-up is important to ensure that the changes really produce the desired results and are maintained over time.

Follow-up

Define key performance indicators (KPIs) to measure the impact of the improvements. Regular reviews and analysis ensure that targets are met and that adjustments can be made if necessary.

Creating a culture of continuous improvement

Lean is based on the idea of continuous improvement. Regular improvement meetings, where ideas and feedback are discussed, help to maintain a dynamic improvement culture. This ensures that the team is always striving to develop and optimize processes.

Success factors for Lean and process improvement

Creating long-term value from Lean requires more than just tools and methods.

Here are some success factors:

1. Understanding the big picture - Everyone needs to see how their part affects the overall process.
2. Consensus on overall goals - Having common goals ensures that the team is working in the same direction.
3. Avoid conflicting objectives between departments - Objectives that support each other make the process more efficient.
4. Leadership and commitment from management - When management actively supports Lean, it creates commitment across the team.
5. Focus on learning and sustainability - Small improvements over time contribute to big changes and strengthen the organization's improvement culture.
6. Systematic follow-up - Standardize and follow up the improvements to create sustainable results.

Want to know more about how Lean can help your organization streamline processes and improve supplier invoice management? Conrab Opto has extensive experience in implementing smart solutions that make your business more competitive and we are happy to help you streamline a process from purchase to payment. Don't hesitate to contact us for a discussion on how we can support you on your way to a more efficient business.