Business Analyst Report

Business Analyst Introduction

Presented By: B. Analyst

Executive Summary:

The purpose of this report is to evaluate the process for procuring indirect
materials and services to determine if the current method adequately meets the
requirements of the users and B.U.S. Company. Upon reviewing the data, the
steering committee will decide if we continue with our current process or
consider the solutions recommended in this document.

Currently the Indirect Materials and Services Procurement Department consists

of two employees responsible for procuring over $28M US of indirect materials
and services each year.

The volume of purchase requests have steadily increased and the employees are
finding it very difficult to manage. The process of procuring indirect materials
and services consists of 23 – 30 steps with the cost to B.U.S. Company to
process an average purchase order ranging between $150.00 to $220.00 dollars.
This process is paper-based.

B.U.S. company has a vision that includes being the most efficient, automated
company in their industry. They recently adopted a paperless strategy and
would like all departments to implement solutions in the near future. Any
solutions and improvements made within B.U.S Company must meet stakeholder
requirements.

A thorough analysis of the indirect material procurement process was conducted,

and several possible solutions generated, including:

- Requester emails the request to buyer, buyer emails purchase order to

supplier
- Complete automation of the requisition process including approval policy
- Complete automation of purchase order generation and transmission to
supplier including purchase order confirmation from supplier
- Total automation of both the requisition and purchase order process

After evaluating these solutions against company goals and objectives the
recommendation contained in this report is that B.U.S. Company implement a
completely automated process for the procurement of indirect materials and
services.

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Current Situation:

B.U.S Company has an Indirect Materials and Services Procurement Department

consisting of 2 employees. This department is responsible for the procurement
of all the indirect materials and services for a manufacturing plant of 150,000 sq
ft, with 1,400 employees and an annual spend in excess of $28M US dollars.

As a direct result of increased sales and the company’s expansion, the volume of
purchase requests placed on this department have steadily developed and the
employees are finding it increasingly difficult to manage.

The current process of procuring indirect materials and services consists of 23 –

30 steps, many of which are manual and involve several individuals across
various departments. This non-value added process is resulting in extra costs to
the company. Utilizing this method of procurement, the cost to B.U.S. Company
to process an average purchase order ranges between $150.00 to $220.00
dollars. These costs are being further inflated in situations where:

– A requester wishes to purchase a product from a supplier not currently

available in the system,
– A new supplier will not extend credit terms and requires cash in advance
or upon delivery
– The supplier is the only source for the product
– The product will not be purchased again (one time purchases)

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Current Process Flow:

Requester locates
product

Requester fills out

paper requisition

Requester takes
paper requisition
to supervisor for
approval
Requester takes Buyer date Buyer faxes
paper requisition stamps request Buyer prints Buyer signs purchase
Yes to Indirect and data enters purchase purchase order to
OK to Materials all information order order supplier
sign? Procurement from requisition
Department for into system
No
processing

Requestor
takes paper
requisition to
higher level
for approval

Buyer updates
Supplier Supplier reviews pricing Supplier signs Buyer receives purchase order in
receives and delivery, makes purchase order suppliers system based on
purchase changes if required and faxes back to confirmation of order confirmation
order buyer purchase order from supplier

Buyer approves
purchase order in Product Supplier Invoice
system, staples Supplier received Product is sends invoice received by
confirmation to ships by B.U.S. delivered to B.U.S. Finance
purchase order product Company to Company Department
and files requester

AP Clerk Invoice sent to Invoice

matches No Invoice indirect materials Buyer returned
invoice to Match placed procurement dept receives & Finance for
purchase on hold for resolution resolves processing
order
Yes

Process
invoice and
pay supplier

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Problem Definition:

Over the last quarter, the number of purchase orders for indirect materials and
services has significantly increased. The Indirect Materials and Services
Procurement Department is finding it increasingly difficult to manage the number
of requests.

Goal:

The desired end state is to have an efficient automated process in place to

procure indirect materials and services, thus eliminating paper requisition forms,
purchase order forms, duplication of work.

Problem Analysis:

A Cause and Effect Diagram was chosen to identify the sources of the problem
with the current procurement process

Machine People
Procedures

Procurement of
Indirect Materials
& Services

Materials Measurements

Causes:

Procedures – very manual and duplicated; hand written requisitions and data
entry of same information into system by buyer

Machine – use of several different machines; computer, printer, fax and phone

People – involves several individuals across various departments; requester,

Supervisor, Department VP, buyer and accounts payable

Materials – two types of preprinted forms; requisitions and purchase orders

Measurements – number of requests received each day, number of orders

processed each day, number of people in the Indirect Materials and Services
Department

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 Possible Solutions:

Several solutions were proposed during a brainstorming exercise, however using

of the Multi Voting Form, only four solutions were selected for further analysis.

The following criteria were chosen to evaluate the recommended solutions:

- Process automation
- Implementation feasibility
- Time/cost efficiency
- Approval hierarchy policy

Each team member received three (3) cards to vote for the best solution.

The results from the voting revealed the following four solutions:

- Requester emails request to buyer, buyer emails purchase order to

supplier
- Complete automation of the requisition process including approval policy
- Complete automation of purchase order generation and transmission to
supplier including purchase order confirmation from supplier
- Total automation of both the requisition and purchase order process

Although these four (4) solutions have potential, the Priority Worksheet was
selected to evaluate them.

Possible Implementation Time/Cost Reduction Policy Total

Solutions Feasibility Efficiency of Manual Adherence
Processes
Scale of 1 Long 1 Low 1 Low 1 High Risk
1 -4 2 Medium 2 Medium 2 Medium 2 Moderate
Rating 3 Short 3 High 3 High 3 Low
Email
Requests & 3 1 1 2 7
PO’s
Automate
Requisition 3 1 2 2 8
Process
Automate PO
Process 3 1 2 3 9

Automate
Procurement 2 3 3 3 11
Process

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Business and Functional Requirements:

The solution had to meet the following requirements for the requester, approver,
buyer, and supplier.

- Stop the duplication of work and data entry by buyer

- Remove the manual paper processes
- Follow internal approval policy
- Eliminate preprinted forms
- Reduce the amount of equipment used and toner consumed by Indirect
Material and Services Procurement Department
- Ensure purchase order is received by appropriate individual at suppliers
end for accurate and timely processing
- Ensure receipt of order confirmation from supplier to buyer

Solution Worksheet:

The tool selected to assist in demonstrating which solution best satisfied the
requirements of the B.U.S. Company, was the Solution Worksheet:

Solution Worksheet
Possible Elimination Eliminate Eliminate Adheres to
Solutions of Duplicate Manual Pre Printed Internal
Work Processes Forms Approval Policy
Email
Requests & X
PO’s
Automate
Requisition X X X
Process
Automate PO
Process

Automate
Procurement X X X X
Process

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Proposed Approach:

To facilitate the development and implementation of the automated procurement

process, B.U.S. Company will:

- Review current requisition module with purchasing

- Establish modifications to accommodate purchasing requirements
- Determine modifications to accommodate internal approval process and
hierarchy
- Determine modifications to transmit purchase orders via email to suppliers
- Complete required modifications
- Test the new process to ensure all requirements have been met
- Deploy and test the new process internally (requester to buyer)
- Deploy and test the new process externally (buyer to supplier)
- Facilitate user acceptance testing
- Provide training to all parties involved

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Proposed Process Flow:

Requester Requester Request is stored Approver checks

locates product inputs request in system & notifications.
directly in forwarded to Reviews all requests
system appropriate and approves or
individual for denies.
approval

Buyer runs report in Buyer converts all Buyer emails Supplier receives
system to retrieve all approved purchase purchase order and
“approved” requests requisitions to order to emails confirmation
purchase orders supplier of order to buyer

Buyer updates Supplier Product Product Supplier

purchase order in ships received delivered to sends invoice
system based on product by B.U.S. requester to B.U.S.
order confirmation Company Company
from supplier

Invoice AP Clerk Yes Process

received by matches Match invoice and
Finance invoice to pay supplier
Department purchase
order
No

Place invoice on
hold

Forward to indirect
materials procurement
dept for resolution

Invoice sent
back to Buyer receives
Finance and resolves

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Request for Approval:

We are requesting approval to proceed with the proposal to modify our current
procurement system and implement a completely automated process for the
procurement of indirect materials and services.

The following objectives are based on the current project requirements and
preliminary work estimates:

Objective Target Resources Estimated Costs

Completion
Date
Initial Planning
Design Phase
Development Phase
Testing
Training
Implementation
Project Completion

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