By Martin Smith
Contact Martin Smith at email@example.com.
Abstract: This project is an example of business process
improvement, or re-engineering as it is sometimes called. The
corporation was not radically re-structured; instead, one
department achieved significant gains in efficiency and
quality of service by re-designing several processes. A small
team of front-line supervisors and managers did the design
work and then carried out the implementation of the new
process design. Two internal consultants supported the team.
The project was characterized by a disciplined approach,
strong executive support and quantified results.
Situation: The setting was the Accounting Department of a local telephone company.
The department had about 500 employees. Most were assigned to two work centers. 3.5
million bills were issued each month to business and residence customers.
Critical Business Issue: Reduce expenses by 8-10% in each of the next five years.
Intervention: Re-design the CASH PROCESS. This process involves receipt of the
customer’s payment, crediting the customer’s account and depositing the amount in the
Exhibit 1. Relationship Map Specific to Cash Process
Re giona l Te le phone Com pa ny
Loca l Te le phone Compa ny
Accounting De pa rtme nt
Coin Collections Public
Sum m ary cations
Dishonored Check s
Dishonored Check s
Reports Revenue Bank
Data Office Cash Unit Unidentified
Investigation Paym ents
Requests Paym ents
Notify of Out
Proof for Investigation Requests Service
Sum m ary
Balance Refund Data
Sheet Data Paym ents
Exhibit 2. Schedule for Design Phase
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
1. Train the Team Start: Sept 17
2. Plan the Project
4. Build IS Map
6. Patch or Re-
7. Define Attributes
8. Build SHOULD
14. Decide What to
End: Dec 15
NOTE: The Project Team worked full time for 4 weeks and part time for 10 weeks.
Exhibit 3. Flowchart for Sub-Process, Dishonored Checks, BEFORE the Re-design
1 24 Daily Bank Stat ement
Di shonored Check 3 Bank Fi les 32 Process
Rec eived from End Updated Payment
Bank Customer's Bank
Upda ted Custom er Mem o Card
Check Account Data
2 19 Yes
4 7 12 14 No
6 Prepare Enter 30 43 44 45
Our Prepare Yes 17 21 Bal ance 31
No Resident Form to Adjus tment System 16 Alert Dai ly Cash 20 Fi le 33 41 Enter Note in Enter Note 46
Cus tomer Yes Form to Corr ect Dai ly Bal ance Yes Pul l Funds Mai l
of XYZ Adjust i nto Busi ness Correctly Service Sheets (Form Mai l Copy di shonored End No Busi ness in BOSS
? Re-bill Err or Bank ? Check and Availa ble Check to
Central State? Customer's Office Support Updated? Rep 508) Prepared Checks Office Support and
Cus tomer Statement Cal l Bank ? Cus tomer
Cash Unit Account System to Reflect System Prepare
Di shonored Memo
No No Correction Checks Card
Form Acco unt
26 29 35
Ca sh Prepare 27 Veri fy Printout No Corr ect
Re-bal ance Batch
O pe ration Tra nsaction Printout Corr ect? Err ors
Form 508's 508's
Transact ion Ticket B atched
Forms 36 Corrections
Da ta Entry 28 Batch
Key Data Data
Group Li sting
Electroni c Tran smission
Com pute r 9 Run 1
Roo m Execute
Yes Notificatio n to Return Custom er Check 50
Custome r 18 38
No Check No 40 Cus tomer
ser vice Electroni c Tran smission Contact Re-
Returned End to Resol ve
Cente r Cus tomer deposit?
Busi ness 51 48 49
10 Cash Busi ness Busi ness
Systems Service System Office Office
Order Support Support
System System System
NOTE. Do not try to read the content of the process steps but rather understand the diagramming conventions.
Rows represent work groups or computer systems. Boxes indicate steps where work is performed. Diamonds are
decision points. Lines crossing the boundaries between rows represent hand-offs from one function to another.
Compare Exhibit 7 to Exhibit 3. The old design had 50 steps compared to the 24 steps in the new design.
Exhibit 7. Flowchart for Sub-Process, Dishonored Checks, AFTER the Re-design
Cycle Ti me (7 Days) (1 Day) (1 Day)
Ba nk, 2 3
Payment 1 Check Can 5 6
Dis honored Yes Yes Checks &
Proce ssing Presented Returned Check Be Debits
Agent, o r Second Time Again? Auto- Listed
Ele ctronic for Payment debited?
No 7 List and
Transfe r End No List Che ck s
13 17 19 20
9 12 Daily $5 Charge
Cus tomer Total 18 21
Res ident Yes
Account Entered on Data Entered Bank Statements Debited to End
Cash of XYZ
Debited Daily into Business St at ement Filed Customer's
Worksheet Office Support Balanced Account
Tra nsaction List
Work sh eet 22
Data En try Batch Listing
Group Run 1 Transmitted
Compute r 23
Pos ted to 15
Treasury Treasury End
Cash Business 24
Exhibit 4. Categories of Disconnects (total of 62)
• Duplication of effort
• Steps that should be performed by other departments
• Discrepancies between the two processing centers
• Unnecessary steps
• Cycle time delays
• Opportunities for automation.
Exhibit 5. Categories of Recommendations (total of 32)
• Automation of manual activities
• Work elimination
• Transfer of responsibilities and personnel from one department to another
• Job redesign
• Measurement plan for tracking process performance
• Documentation of work procedures
• Training to cover the new procedures
• Re-arrangement of the work force
Exhibit 6. Design Attributes for “Dishonored Checks” Sub-process
Inputs • Automatic check debiting
• All checks processed twice by the bank
• Non-company check volume reduced
Processing • No re-depositing of checks
• Fewer hand-offs
• Manual forms eliminated
Outputs • Debit reflected ASAP
• “Uncollectables” reduced
Implementation: 29 of the 32 recommendations were implemented within 12
months of the executive decision to proceed. A year-to-year comparison yielded
the following results.
Exhibit 8. Results
Process Steps • 44% Reduction from 422 to
Manually Processed Payments • 90% reduction from 42,000 to
4,000 per month
Unplaced cash (payment cannot • 43% reduction
be credited to an account)
Customer Queries about • 44% reduction
processing of payment
Force • 45% fewer employees assigned
to Cash process
Operating Expense • $930,000 reduction in annual
Postscript: the General Manager commissioned another project at the time this
project entered the implementation phase. Over the next two years, two additional
projects were undertaken. Together, these projects encompassed about 75% of the
department’s work activity.
Exhibit 9. Lessons According to the Project Team
• Start with a small process, something that can be done in a short timeframe.
• Set clear time lines. Keep them firm. Keep short intervals between target dates.
This policy reinforces accountabilities and maintains momentum of the project.
• Don’t dissipate resources over too many projects. Limit the organization to
two projects at one time, one in design and the other in implementation.
• Include key stakeholders on the project team. Work units responsible for the
process must be represented on the team. The staff who maintain the supporting
computer systems should also be represented.
• Focus on short term pay-offs. Pay-offs should be quantified in terms of
financial, cycle time and customer service results.
• Use a PC for all flowcharting and documentation. Capture entries on the PC
while the team is working out the design on the easel. Edit the draft off-line.
• Manage the on-going process immediately. Don’t wait for all the changes to
be implemented. Collect measurement data as soon as practical. Schedule
process reviews as part of the GM’s staff meeting at least once a month.
Exhibit 10. Lessons According to the Author
• The support of the General Manager and the senior management team was
essential. They enforced strict adherence to the project schedule. They attended
the same training as the team. They met at decision points with the project
team. The GM initiated quarterly sessions with all management and
representative non-management personnel to review the status of each of
several processes. Measurement trends and improvement plans were reviewed
for each process.
• Any given change effort requires coordination with other change efforts to
ensure adequate resources.
• Another alignment issue was the coordination of the process change with
departmental strategy on one hand, and job-level design on the other hand.
Bisson, B., Folk, V. and Smith, M.E. (2000). Case study: How to do a business
process improvement. Quality and Participation, 23 (1), pp. 58-63.