Using Process Mapping to Reveal Process Redesign Opportunities during ERP Planning Marianne Bradford 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 purchasing process during the planning for an enterprise resource planning (ERP) system implementation and then to have students determine issues inherent in the process that will necessitate process redesign. Students will learn the difference between two types of process redesign?business process reengineering (BPR) and business process improvement (BPI)?synthesize this knowledge in order to identify process issues inherent in the case, and suggest process redesigns that an ERP system will need to provide so that the purchasing process is more efficient, effective, and controlled. The case has broad appeal for faculty teaching ERP systems and/or business process management. Keywords: enterprise resource planning (ERP) systems; business process improvement; business process reengineering; process mapping; purchasing process; expenditure cycle; case study. INTRODUCTION Elizor Co. (''Elizor'') is a mid-sized manufacturer of modern office furniture, 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. Elizor has also established a customer-facing web presence for business-tobusiness (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 existing functionality because they want to implement an enterprise resource planning (ERP) 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: g..d@business.fsu.edu 169 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 time, Elizor's processes have developed organically, with very little attention 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 this process: CODE, a financial accounting system that maintains the general ledger (GL), accounts payable/cash disbursements, accounts receivable/cash receipts, and produces the financial statements; and EPT, a procurement system that handles vendor management, inventory 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 requirements for a new ERP system and identify current process ''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 Martha will begin documenting current ''as is'' processes, engaging key business 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 process reengineering (BPR), which involve major overhauls of processes to achieve 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 tweak processes prior to the implementation (BPI). BPI is also something that is done 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 170 Bradford and Gerard Journal of Emerging Technologies in Accounting Volume 12, 2015 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 Using Process Mapping to Reveal Process Redesign Opportunities during ERP Planning 171 Journal of Emerging Technologies in Accounting Volume 12, 2015 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 Elizor's Process-Specific Issue Example: BPI process issue: Paper records; non-value-added steps 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. Example: BPI process issue: Manual steps; BPR principle: capture data once at its source 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. 1. 2. 3. 4. 5. 6. 7. 8

Redesign Opportunities during ERP Planning Marianne Bradford 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 purchasthe process during the planning for an enterprise resource planning (ERP) process that will necessitate process redesign. Students will learn the difference between two types of process repphigh- business process reengineering (BPR) process issues inherent in the case, and suggest process redesions that an ERP system will need to provide so that the purchasing process is more efficient, effective , and controlle process management broad appeal for faculty teaching ERP systems and/or business Keywords: enterprise resource planni prise resource planning (ERP) systems; business process improve- ment; business process reengineering; process; expenditure cycle; case study. INTRODUCTION lizor Co. ("Elizor") is a mid-sized manufacturer of modern office furniture, specializing in stats, and cubicle spaces. mpany 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. Elizor has also established a customer-facing web presence for business-to- business (B2B) sales and is considering e-commerce solutions for its suppliers. is 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 de inced a great deal of growth and is in the process of expanding its production and storage capacity and adding a new line of ergon new line of ergonomic office furniture. Because of this, management is interested in obtaining an understanding of its current business processes and existing functionality because they want to implement an enterprise resource planning (ERP) 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: ggerard@ business.fsu.edu 169 170 Bradford and Gerard ensure their business processes are as effective and efficient as possible (e.g., non-value-added steps faces are: d), and maintain better internal controls over operations. Current business issues Elizor . long cycle times for key business processes, including raw materials purchasing; * desire for growth, in particular the laun particular the launch of a new product line; . need for advanced functionality and technologies; and . too many outdated business systems supporting business processes. Over time, Elizor's processes have developed organically, with very little attention 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 this process: CODE, a financial accounting system that maintains the general ledger (GL). accounts payable/cash cash disbursements, accounts receivable/cash tatements; and EPT, a helpis, and produces the financial a procurement system that hand management, purchase requisitions, and purchase orders. Elizor's top manag management has formed an ERP project team, which will play a critical role in the uccess 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 plann system implementation is to mentation is to document the "as is" processes to help determine requirements for a new ERP system and identify current process "pain points" that he 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 so 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 Martha will begin documenting current "as is" processes, engaging key business process owners to brainstorm ways to improve key business processes, and incorporating these e" processes that will be supported by the new ideas into new "to be" processes that orted 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. the system implementation can bring radical, dramatic changes to processes, known as business process reengineering (BPR), which involve major overhauls of processes to achieve 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 w new ERP system. This type of change is known as business process improvement (BPD). whi 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 tweak processes prior to the implementation (BPI). BPI is also something that is done 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 e 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 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. that Joe and Martha compiled after a lengthy group interview session in which manufacturing, purchasing, accounts payable, receiving, and wareho ing, 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 riggers 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 rial 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 supplier for the material. Once these steps are complete, a purchasing clerk emails a PO to the chosen supplier. If no supplier exist ties andmo 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 inspect spected for quality by the receiving 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 the and prepare a receiving 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 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 acco accounting department. If there are no issues, hen 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 n Appendix A, draw a process map for Elize 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 172 Bradford and Gerard 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 BPD Using the BPR and BPI information in Appendix B (in particular Tables 1 and 2) and the emplate below, list eight BPI process issues or BPR principles that need to be applied to the raw laterials purchasing process. For each of these issues, describe a redesign that could be made to the amongpurchasing process to improve efficiency, effectiveness, and/or internal control (two examples have been provided in the template to help you begin). Tum in the below template as the deliverable for this requirement. BPR Principle or BPI Process Issue Elizor's Process-Specific Issue Example: BPI process issue: Paper he receiving report does not need to be sent to the records; non-value-added steps manufacturing supervisor. He/she should be able Example: BPI process issue: Manual steps; BPR principle: capture data the purchase requisition and automatically carried through to once at its source accounts payable without data rekeying. REFERENCES