The project aimed to improve the purchase order cycle time at XYZ Company by addressing root causes such as excessive approval levels and long order entry times. Key solutions included simplifying the approval process to require only two signatures and redesigning order forms for efficiency, resulting in a decrease in purchase order lead time from 3 days to 2 days and increased confidence among requesters. Enhanced supplier relationships and monetary benefits were noted due to improved efficiency and the establishment of more preferred vendors offering discounts.

1. Purchase Order Cycle Time
Project Storyboard
by George Wong
XYZ Company
July 07, 2017

2. Executive Summary
Business Case
Root Cause Analysis
What are the critical findings/root causes that were discovered?
Solutions Implemented
Data showed the purchase order approving process requires too many levels
of approvers, a long time to check request codes, lots of time needed in
entering an order, not having the supplier listed in the PO system, and not an
easy way to re-order a specific item a previous order,
Graphical Display of Improvement
Insert a chart, graph or visual demonstrating process improvement
List key solutions that were implemented to address root causes
1. Created a new approval flow process that only two signatures are required.
2. Created a new form for ordering new item or services.
3. Created a new from for PO requester to efficiently collect necessary
information from a new supplier.
4. Re-designed the order form to allow a requester to select item(s) from
previous order.
Project Results
What is the importance of doing this project? (State in lost dollars,
productivity loss, customer dissatisfaction, cost avoidance, risk, etc.)
What are the measureable process improvements/wins?
Purchase order lead time has decreased from 3 days to 2 days. Order
entry time has decreased from an average of 5 hour to 4 hours or less.
Requesters have shown a higher level of confidence to inform requesters
that PO will be issued within 2 days. 10 more suppliers have become a
"preferred vendor" and offered 5% discounts on each purchase of value
>$500.
Reducing purchase order lead time will help our suppliers appreciate the
efficiencies of our PO process and allow them to deliver items to the
manufacturing plant in a timely manner. This can enhance the relationship
with suppliers and allows for negotiating better price for ordering material
items and services.
0
5
10
15
20
25
30
4 8 12 16 20 24 28 32 36 40 44 48
Frequency
Hours
Improved PurchaseOrder Lead Time
(Original LT= 72 hours)

3. Key Words
(Specific to XYZ Company)
• Purchase Order (PO) Lead Time: Total cycle time from the
moment the supplier provides the quotation to the moment they
receive the corresponding purchase order.
• Suppliers: Companies that provide specific parts and service to
XYZ Company
• Preferred vendor: A supplier qualified by the purchasing
department to be the primary source for ordering certain parts and
service. A vendor is considered preferred when it offers at least 5%
discount to stock items in each order.
• Stock item: An item that is readily available for shipment from the
supplier to XYZ company
• Purchase Order Approver: A person beside the purchase order
requestor to approve the issuance of a purchase order

4. Phase Planned Actual
Define: June 10th June 10th
Measure: Jun 15th June 17th
Analyze: July 10th July 12th
Improve: July 15th July 14th
Control: Aug 1st Aug 10th
Process Start: Position Person
Process End: Team Lead Production Manager 25%
In: Sponsor Plant Supervisor 15%
Team Member Finance Manager 15%
Out: Team Member Stock Rm Manager 10%
Team Member PO Entry Admin 10%
Deliver Purchase Order to supplier (via fax or email)
Parts required for manufacturing each product, process
steps, length of time for entering quotation into system
Replace existing electronic PO system, hiring more data
entry persons, order larger quantities in each order.
Goal Statement Timeline
Reduce the cycle time to deliver a purchase order to supplier from an
average of 3 days to 2 days or less. Reduce the time to enter quotation
information into the PO system from an average of 5 hours to 4 hours or
less by July 15th
Scope Team Members
Official quotation arrives from the supplier Time Commitment
Project Charter
Project Name: XYZ Company Purchase Order Cycle Time
Problem Statement Business Case & Benefits
In the last 3 months we have been receiving complaints from the parts suppliers
about how long it takes for them to receive a purchase order after sending us the
quotations. Current cycle time average is 3 days. If this continues we may not
have enough parts to manufacture our products and lose 5% discounts from our
preferred vendors. We could also lose revenue as some batches will not be
manufactured on time for our customers.
Purchase Order Cycle Time improvement would result in a faster response of
our suppliers to deliver parts to our manufacturing plant. Purchase Order time
reduction could also translate into monetary benefits because suppliers will
be willing to offer discounts for being qualified as a "preferred" vendor.

5. VOC Translation Matrix
Key Take Away: Project needs to address Purchase Order Lead time which
will impact on delivery times as well as suppliers relationship.
Customer Comment
(What Are They Saying?)
Gathering More Understanding
(Why Are They Saying it?)
Customer Requirement
(What Do They Want?)
Frequently we were asked to send out the
supplies before receiving an official
purchase order.
Person from the Purchase department
does not want to follow the established
procedures.
A purchase order has to be received by the
supplier 100% of the time before any item
will be shipped.
We love to do business with you, but the
need to provide a quotation for the same
item each time for the same item is counter-
productive.
The supplier has spend a lot of time to
provide the company an official quotation.
A repeat order of the same item within the
same month does not require the supplier
to provide a quotation.
Sometimes the purchase order does not
include the correct item numbers listed in
the quotation
Some purchase orders have not been
entered correctly.
Each item number has to match the one
listed in the quotation to avoid mistakes
and re-work.
Ishouldn't have to wait over three days to
receive a purchase order after providing
you a quotation, especially if the quotation
has not changed from the last order.
The supplier wants to start processing the
order and start billing the company as soon
as possible.
Purchase orders need to be received by
the suppliers in 2 days or less after the
quotation.
Don't ignore our email follow up
Questions on the purchase order are not
being addressed promptly.
Reply to supplier's questions on purchase
order within 24 hours.

6. Key Take Away: The scope of this project goes from the point of receiving
the quotation to the point at which the purchase order is sent to supplier
S I P O C
Suppliers Inputs Process Outputs Customers
Parts vendor
Customer Requirements
On-Time
(Delivery of Purchase Order within 2 days after
receiving quotation)
Accurate
(Items number in PO match quotation)
Fast resolution
(Provide response to supplier's questions within 24
hours)
Requirement for delivery
(PO has to be issued before supplier will ship)
Print out
Purchase
Order
Email PO to
supplier
(or pickup)
SIPOC: Quotation received to Purchase Order issued
Supplier issues
quotation
Sent out
Purchase Order
Approved
budget
Enter
the quotation in
PO systemFinance budget
Manufacturing
Parts Supplier
Production
manager
approval
Official
quotation
Production
order and
requirement
Route request
to resp. dept
Send to
approver(s)

7. “As Is” Swimlane Map
Key Take Away: Requirement for multiple levels of approvals and checks
leads to a lot of hand-offs and overall cycle time
Purchase Order Cycle Time
Requestor
Purchase Dept
Production
Finance
Operations
Receive
supplier
quotation
Finance
Supervisor
approval
Check
approved
budget
Re-check
production
requirement
Enter item
codes and
quantities
Purchasing
Supervisor
approval
Inquire and
Create new
item code &
info as needed
Production
Supervisor
approval
Department
VP
approval
Fax or email
PO to
supplier

8. Data Collection Plan
Key Take Away: Data collection was spread out among different groups
covered a 6-week period – most data can be retrieved by a query.
Measure
Data
Type
Operational Definition
Stratification
Factors
Sampling Notes Who and How
PO Entry Lead
Time
Minutes -
Continuous
The time the supplier quotation arrives at
Requestor's desk to the time the Purchasing
personnel starts to enters into system (not
when the quotation was delivered to
Purchasing).
By Item type
(receivable vs service)
By requestor
Sample every 2nd receivable
and every 3rd service
quotation.
Purchasing entry personnel
will calculate the time
based on time stamp
requestor puts on quotation.
Purchasing
Approval Time
Minutes -
Continuous
The clock time that the PO was sent to the
approver to the time it was approved. The time
will be captured automatically by the PO
system.
By Approver Name
By the time PO was
sent for approval
(AM/PM)
Sample every purchase order
request for the next 6 weeks.
Purchasing entry personnel
perform a query on PO
system.
Production
Approval Time
Minutes -
Continuous
The clock time that the PO was sent to the
approver to the time it was approved. The time
will be captured automatically by the PO
system.
By Approver Name
By the time PO was
sent for approval
(AM/PM)
Sample every purchase order
request for the next 6 weeks.
Production personnel
perform a query on PO
system.
Finance
Approval Time
Minutes -
Continuous
The clock time that the PO was sent to the
approver to the time it was approved. The time
will be captured automatically by the PO
system.
By Approver Name
By the time PO was
sent for approval
(AM/PM)
Sample every purchase order
request for the next 6 weeks.
Finance personnel perform
a query on PO system.
Total PO Entry
time
Minutes -
Continuous
The total amount of time to complete entering
items from quotation to the time a PO is sent to
the first level approver
By Item Type
By category whether
the quotation items
were ordered before
(Yes/No)
Sample every 2nd receivable
and every 3rd service quotation
for six weeks.
Production personnel
perform a query on PO
system
Overall PO
Lead Time
Minutes -
Continuous
The amount of time (in hrs and minutes) it
takes from the moment the quotation received
to the purchase order r is delivered.
By Item type
(receivable vs service)
By requestor
Sample every 2nd receivable
and every 3rd service quotation
for six weeks.
Purchasing personnel
perform a query on PO
system.
Data Collection Plan

9. Baseline Data – PO Lead Time
Key Take Away: The baseline shows that for purchase orders, the Lead Times
for both receivable items and service were above the 48 hr requirement.
PO Lead Time (Receivable)
PO Lead Time (Service Order)
0
5
10
15
20
25
30
24 30 36 42 48 54 60 66 72 78 84 90
Frequency
Hours
Purchase Order Lead Time
(Receivable Items)
0
5
10
15
20
25
30
18 24 30 36 42 48 54 60 66 72 78 84Frequency
Hours
Purchase Order Lead Time
(Services)
Average: 53.70 h (2 days 5.70 h)
Standard Deviation: 13.08 h
Minimum: 24 h
Median: 54 h
Maximum: 90 h
Average: 48.42 h (2 days 0.42 h)
Standard Deviation: 12.16 h
Minimum: 18 h
Median: 48 h
Maximum: 84 h

10. Fishbone Diagram
Key Take Away: Initial brainstorming indicates that excessive approval
signature requirement and PO entry times might be potential root causes
Fishbone Diagram
The current software only has limited
licenses for adding more approvers
Systems
The systemrequires routine back-ups
and becomes available at night
Order Type
Receivable items take
longer time than Service
An item is not
Some items need clarifications
fromrequestor
Too many
approval levels
No easy template
for new item
Stepw ise only - instead
of concurrent tasks if
Approver did not see
notice to review PO
Out of office
Not able to
delegate authority
Process Approver
Purchase
Orders Take
Too Long to
provide to
Suppliers
A new item requires extra
time to repeat basic entry
information
Too many hand-off to allow
supervisors to approve
Approver did not send notice to
Finance after approval
Does not consider approval
as priority

11. 5 Whys
Key Take Away: Root Cause Analysis will focus on verifying hand-off to
approver in each department impacting Purchase Order Lead Time
Why? Because Why? Because Why? Because Why? Because Why? Because
Why do
Purchase
Orders take
so long to
deliver to the
supplier?
Because it
requires
approval
from many
departments
Why does it
require
approval for
Purchasing,
Production
and
Finance?
Because
each
department
needs to
verify
accuracy
and purpose
of each PO
request
Why does
the PO
accuracy
verification
take time?
Because
each PO
needs the
department
supervisor to
approve
Why do a
PO needs a
supervisor to
approve
Because the
plant
manager
agree to the
approval
requirement
Why does
the plant
manager
agree to the
plan?
Because it
was agreed
in a meeting
five years
ago.
Why 1 Why 2 Why 3 Why 4 Why 5
The current sof tw are only has limited
licenses f or adding more approvers
Systems
The system requires routine back-ups
and becomes available at night
Receivable item
longer time tha
An item is not
Some
f rom r
Too many
approval levels
No easy template
f or new item
Stepw ise only - instead
of concurrent tasks if
No
del
Process
A new item requires extra
time to repeat basic entry
inf ormation
Too many hand-of f to allow
supervisors to approve

12. Process Analysis
Key Take Away: Many steps are non- value adding or non-value-adding but
required – lots of opportunity to remove “waste” including approval times

13. Hypothesis Confirmations (I)
Key Take Away: Data shows that Production supervisor takes 7 hours to approve a PO, while PO delivery
takes <2hous. i.e approving time is an issue, not PO delivery time
Histogram of Production Approval Time Histogram of PO DeliveryTime
0
5
10
15
20
25
30
1 2 3 4 5 6 7 8 9 10 11 12
Frequency
Hours
Hypothesis 3 (TRUE): Production
Approval Time – (Before Change)
0
10
20
30
40
50
0.25 0.5 0.75 1 1.25 1.5 1.75 2
Frequency
Hours
Hypothesis 6 (FALSE): PO Delivery
Time (Before Change)
Sample size: 100
Average: 6.49 h
Standard
Deviation: 2.10 h
Sample size: 100
Average: 0.79 h
Standard
Deviation: 0.29
Hypothesis # Possible Root Cause (x) Root Cause Hypothesis Result
1 PO data entry time
It takes a very long time for Purchasing to enter items from Quotation into PO
system
FALSE (1.69h)
2 Purchasing approver time The Purchasing supervisor has taken a lot of time to approve PO. TRUE (6.46h)
3 Production approver time The Production supervisor has taken a lot of time to approve PO. TRUE (6.49h)
4 Finance approver time The Finance supervisor has taken a lot of time to approve PO. FALSE (0.85h)
5 Operations approver time The Operations supervisor has taken a lot of time to approve PO. FALSE (2.00h)
6 PO delivery time to supplier The final approved PO was not sent to supplier immediately. FALSE (0.79h)

14. Hypothesis Confirmations (II)
Histogram of Data Entry Time Histogram of Purchasing Approval Time
Histogram of Finance Approval Time Histogram of Operations Approval Time
0
10
20
30
40
50
0.25 0.5 0.75 1 1.25 1.5 1.75 2
Frequency
Hours
Hypothesis 4 (FALSE): Finance Approval
Time (Before Change)
0
10
20
30
40
50
0.5 1 1.5 2 2.5 3 3.5 4
Frequency
Hours
Hypothesis 5 (FALSE): Operations
Approval Time (Before Change)
0
5
10
15
20
25
30
1 2 3 4 5 6 7 8 9 10 11 12
Frequency
Hours
Hypothesis 2 (TRUE): Purchasing Approval
Time (Before Change)
Sample size: 100
Average: 6.46 h
Standard Deviation: 2.11 h
Sample size: 100
Average: 0.85 h
Standard Deviation: 0.30
Sample size: 100
Average: 2.00 h
Standard Deviation: 0.59 h
0
10
20
30
40
50
4 4.5 5 5.5 6 6.5 7 7.5
Frequency
Hours
Hypothesis 1 (FALSE): Data Entry Time
(Before Change)
Sample size: 100
Average: 5.19 h
Standard Deviation: 0.56 h

15. Impact Effort Matrix
Key Take Away: The team decided not to send out approval notices to Purchasing and Production, eliminated two
approval requirements and designed a new item PO information form.
Objective:
Sponsor:
Stakeholder:
Hard Easy
Eliminate approval requirements for
Purchasing and Production
Supervisors in System
Do not send out approval
requirement email to Purchasing
and Production
Design a form for Requestor to
provide necessary information for
new order item
Use only fax to send out PO to
supplier
Send out approved PO to supplier
within 30 minutes
Low Impact
Do not require final VP approval
Reduce Purchase Order Lead Time from 3 to 2 days
Production Manager
Department VP
High Impact

16. Risk Management
Key Take Away: Calling the supplier to confirm delivery dates would lead to
lower risk of running out of parts for production
May 1st (Rev.): May 6th
Process
Step/Input
Potential
Failure Mode
Potential Failure
Effects
Potential
Causes
Current
Controls
Action
Recommended
Resp.
Actions
Taken
Ordering
from a new
supplier
May not
deliver
ordered
items on
time
Run out of parts in
Production
10
Not carrying
proper
quantities 8
Inventory
check in
stock room 10 800
Give vendor a
30-day trial
Production
Manager
Provided
notice to
stock room
on May 5th
10 6 10 600
0 Have vendor
call to confirm
delivery date
Production
Manager
Instituted on
May 5th
10 4 1 40
0 Impose
penalties for
missed items
Production
Manager
Instituted on
May 6
10 6 10 600
Responsible: Manager FMEA Date (Orig.):
FMEA Form
Process/Product Name: Items delivered to Production On time Prepared By: Team Lead
DETECTION(1-10)
RPN
What is the
process step
or feature
under
investigation?
In w hat w ays
could the step
or feature go
w rong?
What is the impact on
the customer if this
failure is not
prevented or
corrected?
What causes the
step or feature to
go w rong? (how
could it occur?)
What controls
exist that either
prevent or
detect the
failure?
What are the
recommended
actions for
reducing the
occurrence of the
cause or
improving
detection?
Who is
responsible
for making
sure the
actions are
completed?
What actions
w ere
completed (and
w hen) w ith
respect to the
RPN?
SEVERITY(1-10)
OCCURRENCE(1-10)
DETECTION(1-10)
RPN
SEVERITY(1-10)
OCCURRENCE(1-10)

17. To Be Swimland Map
Key Take Away: New process flow reduces two approvals and allows
for concurrent inputs in multiple departments.
Purchase Order Cycle Time
Requestor
Purchase Dept
Production
Finance
Operations
Receive
supplier
quotation
Finance
Supervisor
approval
Check
approved
budget
Re-check
production
requirement
Enter item
codes and
quantities
Inquire and
Create new
item code &
info as needed
Department
VP
approval
Fax or email
PO to
supplier

18. Before & After Time Data
Key Take Away: Implemented solutions significantly decreased the
PO Lead time
Purchase Order Lead Time – Before and After (including Receivable and
Services)
0
5
10
15
20
25
30
18 24 30 36 42 48 54 60 66 72 78 84 90
Frequency
Hours
Purchase Order Lead Time
(Before Change)
0
5
10
15
20
25
30
4 8 12 16 20 24 28 32 36 40 44 48
Frequency
Hours
Purchase Order Lead Time
(After Change)
Sample size: 100
Average: 23.64 h (1 day)
Standard Deviation: 8.72 h
Minimum: 4 h
Median: 24 h
Maximum: 48 h
Sample size: 200
Average: 50.97 h (2 days 2.97 h)
Standard Deviation: 12.98 h
Minimum: 18 h
Median: 54 h
Maximum: 90 h

19. Monitoring & Response Plan
Key Take Away: The monitoring plan factors in both the times for data entry
into PO and Finance approval, along with the overall PO Lead Time
Monitoring Plan Response Plan
Name of the Measure
Input,
Process or
Output?
What is the
Target?
Method of Data
Capture
Checking
Frequency
Person
Responsible
Upper/Lower
Trigger Measure
Who Will
Respond?
Reaction Plan
Items in supplier's
quotation entered into
PO
Process less than 4 hours
Time lapse between
first item entry to
completion of all
entries into PO
Every other
quotation
Purchasing
manager
No longer than 4.0
hours
(Upper Control
Limit)
Purchasing
Manager
Check if entry person has difficulty because of a new item.
- Retrain entry person in entering new items
Finance Dept Approval
Time
Process 6 hours or less
Time stamp on notice
email to Finance
Approver to time
stamp when PO is
approved by Finance
Every other
PO
Purchasing
analyst
No longer than 6.5
hours (Upper
Control Limit)
Purchasing
Manager
Inform Finance supervisor that the approval time is longer
than 6.5 hours
- Request Finance supervisor to assign a backup person to
approve PO if he/she anticipates to need more time to
approve
Total Purchase Order
Lead Time
Output
Less than 40
hours
Time stamp on
quotation received to
time stamp when PO
is sent to supplier by
Finance
Every PO Finance analyst
No longer than 48
hours
Upper Control Limit
Finance
Manager
Determine if there is a specific cause for the delay. Make the
corrections.
- Are the checks still being performed on simultaneously by
Purchasing and Production? Is there a problem in the
approver notification system?

20. Innovation Transfer
Opportunities
Key Take Away: Most of the improvements can be transferred to non-US
XYZ manufacturing sites for reducing PO lead time
Process
Innovation/Addition/Change/Removal
(Describe the solution)
Process Benefits
(Describe measurable plus intangible
benefits of the change)
Area/Department/Business Unit
(Indicate the area that could
benefit from innovation transfer)
Utilize the revised template for
new order item
Faster time to enter item into PO Non-US XYZ locations
Reduce required approval
signatures to two
Eliminate non-value added approval
time
Non-US XYZ locations
Perform checking tasks in
Purchasing and Production
simultaneously
Reduce non-value added hand-off
time
Non-US XYZ locations
Use another form to efficiently
collect necessary information
from a new supplier
Faster time to enter new supplier
info to PO
Non-US XYZ locations
Use the new form to efficiently
order items from previous PO
Faster entry times for repeated
orders
Non-US XYZ locations
Innovation Transfer Opportunities