A purchase request is initiated when an employee at the company fills in and signs a form on paper. The purchase request includes information about the good to be purchased, the quantity, the desired delivery date, the approximate cost. The employee can also nominate a specific vendor. Employees often request quotes from vendors in order to get the required information. Completing the entire form can take a few days as the requestor often does not have the required data. The quote is attached to the purchase request. This completed request is signed by two supervisors. One supervisor has to provide financial approval, while the other supervisor has to approve the necessity of the purchase and its conformance with the company’s policy (e.g. does a requested software form part of the standard operating environment?). Collecting the signatures from the two supervisors takes on average five days. If it is urgent, the employee can hand-deliver the form, otherwise, it is circulated via internal mail. A rejected purchase request is returned to the employee. Some employees make some minor modifications and try in a second attempt other supervisors in order to get approval.
Once a purchase request is approved, it is returned to the employee who initiated the purchase requisition. The employee then forwards the form to the Purchasing Department. Many employees make a copy of the form for their own record, in case the form gets lost. The central purchasing Department checks the completeness of the purchase request and returns it to the employee if it is incomplete. Based on the attached quotes and other information, the purchasing Department enters the approved purchase request into the company’s Enterprise System. If the employee has not nominated any vendors, a clerk at the purchasing Department will select one based either on the quotes attached to the purchase requisition or based on the list of vendors (also called Master Vendor List) available in the company’s Enterprise System. Sometimes the initial quote attached to the request has expired in the meantime. In this case, the updated quote is requested from the corresponding vendor. In other cases, the vendor who submitted the quote is not recorded in the company’s Enterprise System. In this case, the purchasing Department should give preference to other vendors who are registered in the Enterprise System. If no such vendors are available or if the registered vendors offer higher prices than the one in the submitted quote, the purchasing Department can add the new vendor into the Enterprise System. When a vendor is selected, a purchase order is automatically generated by the Enterprise System. Then, the fax is generated and sent to the vendor. A copy of the purchase order is sent to the Accounts Payable Office, which is part of the Financial Department, which uses an accounting system that is not integrated with the Enterprise System. The goods are always delivered to the Goods Receipt Department. When a good is received, a clerk at this Department selects the corresponding purchase order in the Enterprise System. The clerk checks the quantity and quality and (in the positive case) generates a document called goods receipt form from the purchase order stored in the Enterprise System. The goods are then forwarded to the employee who initiated the purchase requisition. A printout of the goods receipt form is sent to the Accounts Payable Office. If there are any issues with the good, it is returned to the vendor and a paper-based note is sent to the Purchasing Department and to the Accounts Payable Office. The vendor eventually sends the invoice directly to the Accounts Payable Office. A clerk at this office compares the purchase order, the goods receipt and the invoice—a task that is usually called “three-way matching”. Three-way matching can be quite time-consuming. If there are any discrepancies as it has to be investigated if it was an error of the vendor or a data entry error. The duration of the payment process, unfortunately, takes sometimes so long that the discount for paying in a certain period expires. A bank transfer is finally triggered and a payment notice is sent to the vendor. Some vendors explicitly indicate in their invoice the bank account number where they want the transfer to occur. It may happen that the bank account number and name indicated in the invoice differs from the one recorded in the vendor database. Sometimes payments bounce back, in which case the vendor is contacted by phone, e-mail or postal mail. If new bank details are given, the transfer is attempted again. If the issue is still not resolved, the Accounts Payable Office has to contact again the vendor in order to trace the cause of the bounced payment.

1. What type of process is the above one: order-to-cash, procure-to-pay or issue-to resolution?
2. Who are the actors in this process? Who is/are the customer(s)?
3. What value does the process deliver to its customer(s)?
4. What are the possible outcomes of this process?
5. Taking the perspective of the customer, what performance measures can be attached to this process?
6. What potential issues do you foresee this process might have? What information would you need to collect in order to analyze these issues?
7. What possible changes do you think could be made to this process in order to address the above issues?