Happy Days Greeting Card Company recently completed a best in- class benchmarking activity for its accounts payable operations. It benchmarked against Johnson & Johnson, a leader in this activity. The results were distressing. Jason Wright, the company change manager, has been tasked with taking the results of the study and seeing if improvements can be made in operations at Happy Days. The results of the study are in the table below.

Looking at these results, Jason decides to put in place a continuous improvement program. He decides to monitor only two of the performance metrics for the first year: time to process an invoice and cost to process an invoice. He decides to use a rolling average approach, using three months as the baseline. That leaves him with 10 observations for the continuous improvement study. The results of the yearlong effort are in the table below. He has set the goal of taking 25% off of the processing time and 30% off of the processing cost.

REQUIRED:

a. Do a trend analysis chart for the two measures.

b. Calculate the rolling average performance level for each of the 12 months of the first year. Use the first three observations as your starting benchmark, then update your average each month by adding on one month of observations and dropping o the oldest month. You will have 10 observations.

c. Does it appear that Jason’s fulfillment operations are improving? Specifically, did the operation meet Jason’s goals? Why or why not?

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Performance Metric Johnson & Johnson Happy Days Time to process an invoice 5minutes 20 minutes Percentage of discounts taken Number of payments paid on first pass 99% 60% 99% 80% Percentage of errors in payments 0.5% % Cost to process an invoice $8.00 $25.00