The first step in optimizing back-office operations involves educating the administrative staff on the benefits of implementing Lean in their domain and engaging them to apply Lean tools. Once this culture is fostered, a company can expect transformational results.
Lean Horizons Consulting collaborated with a highly diversified industrial corporation, whose revenue exceeds $150 billion, to optimize the company’s accounts receivable processes. Major challenges to overcome included: significantly reducing the occurrence of past-due receivables and improving cash flow, initiating a visual management system that clearly flagged inconsistent processes and introducing a culture of continuous improvement. By creating current- and future-state value stream maps, the corporation was able to identify critical path actions, from customer invoice through cash application. Using these maps, Lean tools were applied to eliminate waste and improve the value stream, develop a future-state implementation plan and mobilize the team. The results speak for themselves: 77% reduction in time to cash, 14.5% reduction in past due receivables in just 45 days, 20% increase in accounts receivable turns during a single quarter.