Analyze the process – Case 1
BW Fishing Inc. (BWF) sells fishing supplies mainly to businesses across the country. The company has grown steadily over the last 10 years. BWF found a strategic niche in taking orders and fulfilling them immediately around the clock. Since BWF’s customers order supplies at unusual hours, BWF’s “always open” mantra has received customer praise. This practice, along with competitive pricing, has allowed BWF to build a loyal network of customers.
BWF uses process mining to visualize data about its order-to-cash cycle. Several functional areas use process mining, including:
Your tasks are to understand the basic process at BWF and then perform the basic analysis that each functional area listed above would perform.
Order-to-cash cycle at BWF
BWF has previously documented its typical order-to-cash process in a narrative and flowchart, as covered in the EYARC Innovation mindset – Process mining – Document the process case. These have been provided in Appendix 1 and Appendix 2, respectively, for easy reference. Carefully review this information so you have a full understanding of the standard process that BWF’s management wants all employees to follow for the order-to-cash cycle.
Process mining dashboards for the order-to-cash cycle
A special process mining data analytics team prepared several dashboards for a set of BWF’s transactions. You can assume that the team competently extracted all data from the BWF system and included all transactions for your review. The team extracted the first 1,000 transactions for you to review.
Dashboards can be viewed in a Celonis cloud environment at this link.
The team created the following dashboards:
Guidance on the functionality of the Celonis dashboards:
Note that the Timeframe shown here is Custom. Keep in mind that the other standardized options that are available (e.g., Last 30 days) are based on the current date and, therefore, they are not appropriate for use in the case.
A sort does not carry across dashboards. To remove a sort, click on the sorting icon until it no longer appears.
Review the Celonis dashboards and answer the following questions.
Management has significant concerns about invoicing customers because recently there has been an increase in customer complaints about billing. Management has asked the Internal Audit Department, Corporate Accounting and Finance Department, and the Information Technology Department to look into the issue around customer invoicing. Each department is examining different aspects of this issue. Recall that descriptions of how each department uses process mining visualizations was provided earlier in this case. You are required first to answer general questions about the invoicing process and then address the specific questions each department would investigate.
General customer invoicing questions
Internal Audit Department questions
The process for billing customers at BWF requires the accounting clerk to review the sales invoice before the system emails the invoice to the customer. This is done to keep customers happy by billing them correctly the first time. It also saves BWF from managing customer inquiries. Internal Audit has been asked to look into the compliance with this procedure.
Corporate Accounting and Finance Department questions
Management is concerned about the costs, in terms of time and money, associated with not sending invoices to customers. Address the following questions related to this issue.
Information Technology Department questions
The Information Technology Department is tasked with understanding why customers are not receiving emails. To that end, investigate the following questions.
Order-to-cash process at BW Fishing Inc.
BW Fishing Inc. (BWF) sells fishing supplies mainly to other businesses across the country. The company has grown steadily over the last 10 years. BWF found a niche in taking orders and immediately fulfilling them around the clock. BWF’s customers work at unusual hours and it has been able to build loyalty with its “always open” mantra. This practice, along with competitive pricing, has allowed BWF to build a loyal network of customers.
BWF processes most sales digitally; yet, employees still perform a valuable role in the process. The sales process at BWF involves employees working in four different roles: sales clerks, sales managers, inventory clerks and accounting clerks. There are multiple employees who function in each of these roles, and all employees in a role can perform the activities related to their role. Because the process is highly digitized, it is common to have many different employees perform the tasks related to one transaction.
The process begins when BWF receives an order from a customer via phone or online. For a phone order, the sales clerk enters the customer information into the computer system and then the system automatically creates a purchase order and logs the information in the sales database. For an online order, the customer’s information is digitally captured in the computer system, then the system automatically creates a purchase order and logs the information in the sales database. Most of BWF’s customers are businesses, so it does not collect payment at the time of the order. Instead, BWF bills them after the customer receives the inventory they have ordered.
The sales clerk reviews the order and determines whether the customer’s credit should be approved by the sales manager to make the sale. The credit approval process requires judgment. All sales more than $3,000 must be approved by the manager. Sales less than this threshold may require approval, depending on the sales clerk’s judgment.
If the order needs sales manager approval, the sales clerk digitally sends the order to the sales manager. The sales manager reviews information in the sales database and uses their professional judgment to decide if the customer’s credit is sufficient. If the customer does not have sufficient credit, the sales manager updates the digital purchase order to show that the order is rejected (which is logged in the sales database). The sales manager then notifies the customer that the credit is not approved and the process is ended.
If the customer’s credit is approved, the sales manager digitally signs the purchase order in the sales database. The system then creates a digital picking ticket. If the customer did not need credit approval, the system automatically creates the digital picking ticket upon the approval of the sales clerk. Once the picking ticket is created, the sales database is automatically updated.
Inventory clerks in the warehouse receive notification of the digital picking ticket and use the digital picking ticket to pick and package the inventory. The inventory clerks open the digital bill of lading and print a copy of the digital bill of lading and packing slip, which are included with the inventory sent to the customer. The inventory clerk digitally signs off that they performed the task. If the warehouse does not have all of the ordered inventory, the company ships the goods it does have and the system creates a new digital picking ticket for the non-shipped items. The company then fills the new digital picking ticket once the inventory is in stock.
Once the inventory clerk has finished entering their information into the sales database, the system automatically creates a digital sales invoice. An accounting clerk reviews the digital sales invoice for completeness and accuracy by comparing the sales invoice to the purchase order and the picking ticket. If the information does not match, the accounting clerk notifies the sales manager, who investigates and corrects the problem. If the sales invoice is accurate and complete, the accounting clerk digitally signs that the review is complete. The system automatically sends the customer the approved sales invoice via email.
The process continues when the customer pays for their order. Customers can make an electronic payment (automated clearinghouse or wire transfer) or pay with a check. When the customer pays with a check, two accounting clerks open the mail and immediately endorse the check as “for deposit only” and then enter the check details and the information from the remittance advice into a digital cash receipts pre-list, which is stored in the sales database. Two clerks open the mail together to prevent one clerk from misappropriating assets, creating a kiting scheme or other fraudulent activities. If the customer pays electronically, the system automatically enters the information into the sales database. The accounting clerks also scan any remittance information, which is stored in the sales database, and the physical remittance document is shredded. Scanning and shredding are noted in the database when they are completed.
All endorsed checks are sent to the sales manager. The sales manager prints a deposit slip and takes the deposit slip and endorsed checks to the bank on the same day the cash is received.
Daily, the bank sends an email acknowledging all deposits for the day. The sales clerks verify that the bank deposit amount (excluding electronic deposits) matches the amount on the cash pre-list. If it does, the sales clerk adds their digital signature that they reviewed the match. If it does not, the sales clerk immediately notifies the controller for further investigation and follow-up.
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