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Value Stream Mapping and Process Optimization Strategy: A Case Study of Public Sector Organization Amjed Javed 1, (Irfan Anjum Manarvi)2, Syed Zahid Raza Rizvi1 Abstract Value Stream Mapping (VSM) tool helps in identifying critical time lag factors in process functioning; a major deterrent in process efficiency. This research focuses on value stream mapping applications to restructure the service provision criteria in public sector organization in Pakistan. A public sector organization is evaluated for constraint effects and proposes the lean thinking strategy for optimization. Data components include receipts, passed and rejected bills and number of days for disposing of bill; collected and evaluated. Pareto analysis and cause & effect diagram are established to measure the roots and intensity of problems. Moreover, process capability is structured to assess the process performance and trend. Results exhibit that the suitable cataloguing necessitate for improvement, hence lean thinking approach is adopted to illustrate waste free processes; valuable for organizations. Optimization strategy is presented to enhance the performance of the process in concurrent engineering environment. Keywords VSM, Process Capability, Optimized Strategy, Concurrent Engineering, Cause and Effect

1 Introduction Government of Pakistan allocates certain amount of budget to each District in development and non-development categories in the month of June. Focus of this case study is investigation of excellence in treasury unit working at District level.

1Amjed

Javed, Syed Zahid Raza Rizvi Department of Engineering Management, CASE, Islamabad, Pakistan 2Irfan

Anjum Manarvi () Department of Management Sciences, HITEC University, Taxila, Pakistan e-mail: [email protected] J. Stjepandic´ et al. (eds.), Concurrent Engineering Approaches for Sustainable Product Development in a Multi-Disciplinary Environment, DOI: 10.1007/978-1-4471-4426-7_83, Ó Springer-Verlag London 2013

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Non-development Budget includes the finances for the functioning of each public sector department. It includes the salary, pensions, allowances, medical / TA (Travelling Allowance) and contingency bills, etc. In development budget, the focus is on development activities, i.e. construction of schools, repair or construction of new roads both at district and Tehsil level (Tehsil Municipal Authority (TMA) and District Council). Moreover, another task assigned to treasury unit working at district level generally called District Account Office, is to maintain the monthly account. The significance of the monthly account is that it depicts whether the district is going in loss or generating profits. This documented phenomenon is very helpful for government to formulate its financial and developmental policies. Other services include the; supply of stamp vendor used in deed agreements; judicial stamps; vouchers; and keeping the record of judicial proceeding about the moveable and immovable property.

1.1 Stakeholders All Public Sector Departments Working at District Level including:  Non-Developmental Budget: Peon, Clerical staff, DCO (Dist. Coordination Officer) and Session Judge etc. (Salary, CC (Contingent Charges), TA, Med. etc.)  Development Budget: Building, Road, TMA & Planning etc. Contractors  Stamp Vendor (Deed Instrument)  Judicial Stamp Seller

2 Literature Review VSM, a visualization tool based on Toyota Production System, is used for supply chain, to facilitate lean system accomplishment [1].The use of VSM in the strategic planning provides a pragmatic approach typical of re-engineering that focuses on the organization’s objectives. Its blend with Allison and Kaye model allows the identification of the critical points in the value flow chain, and the suggested actions to reorder the core operations supportive for the development of the work placement service [2, 3]. B. Singh et.al sorted out the existing VSM literature into four categories as (1) conceptual work, (2) empirical/modeling work, (3) case studies, and (4) survey articles. Moreover, they concluded that VSM is an effective technique for identification and reduction of various types of wastes [4]. Melvin, A. and Baglee, D categorized the implementation strategy of VSM in food manufacturing industry as (1) defining the value of each process and relation to the product (2) identifying the resources and activities required to manufacture/produce and deliver the product (3) identification of the key suppliers (4)

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identification of non- values addition activities (5) suggestions to reduce waste [5]. S. Vinodh et.al focused on lean operations to discover the variety of issues while concentrating on ninth waste as environmental waste. [6]. P. Kuhlang et.al proposed a systematic approach by blending VSM and Methods-Time Measurement (MTM) to extract unique advantages of reducing lead time and increasing productivity [7]. M. Eswaramoorthi et.al devised a survey based approach to investigate the conditions i.e. the existing level of lean practices, reasons for inadequate priority to lean concepts, type of lean tools employed, perceived level of different wastes, and the common difficulties [8]. Abdelmalek and Rajgopal focused on the opportunities for various lean techniques feasible for continuous and discrete process elements to contrast the ‘‘before’’ and ‘‘after’’ scenarios in detail [9]. Comparison of pre and post-improvement performance by model simulation is a valuable framework of lean techniques implementation strategies for Mass customization (MC) manufacturing [10]. VSM Function Analysis System Technique (FAST) base modelling is an effective procedure for measuring performance and improvement in car industry [11]. B.J. Hicks identified four kinds of wastes as failure demand, flow demand, flow excess and flawed flow in the context of information management and suggested four generic techniques to eliminate them as value stream, flow, pull and continuous improvement with the aim of improvement concerned with efficiency, quality and overall management of the processes [12]. P. Schwarz et.al utilized VSM as a tool to classify waste and performed prospective analysis before and after the implementation of optimized processes [13]. Implementation of the customized and flexible e-integration approach boosts the efficiency and effectiveness [14]. The preliminary integration of FEA (finite element analysis) and DFMA (design for manufacture and assembly) as proactive tools will reduce the production time and cost and increase the product quality [15]. An efficient strategy is developed by putting together the FA (function analysis) and trimming method into the conceptual design activities of NPD (new product development) [16]. The mathematical model having execution mechanism to split system-level optimization and disciplinary-level optimization for the investigation of MPP (most probable point)-based reliability analysis under MDO (multidisciplinary design optimization) have capacity to attain efficiency [17]. Inspiring by the research work towards process excellence, the objective of this paper is to trace out the impurities in the functioning of the public sector organization process by applying valuable tools and thus take appropriate measures to get rid of them. The execution and strength of the operational ladder is analyzed and appropriate model is suggested for the optimization of the process.

3 Research Methodology Research methodology is divided into two subsections for appropriate comprehension and enquiry as:

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1. Manual process functioning analysis 2. Post SAP (Systems Applications and Products) installation analysis Data is collected on the basis of manual and post SAP installation in terms of receipt, passed and rejected bills, and number of days for disposing of bills. Both kind of processes’ performance is analyzed over the period of one year. Analysis scheme encompasses the tools essential for exemplification to reach a suitable elucidation. VSM is applied on each step in flow chain with the aim of careful and critical analysis for the identification of waste. Furthermore, cause and effect analysis is developed for the recognition of number of problems. This phenomenon is further reinforced by applying Pareto analysis to assess the essence and effect of problems. In the last part of analysis Process capability is applied to determine the competence and trend of the process. The row of activities ‘before’ and ‘after’ implementation of SAP is assessed for designing optimization strategy. Data is analyzed with the help of Minitab.

3.1 Manual Process Functioning Manual process functioning is mapped to describe the work flow activities before the implementation of SAP (fig.1). The operation starts from the submission of bill by stakeholder. It is preliminary step to check on the bill in which DDO (Deputy District Officer) stamp, signatures and fill up of budget column is ensured. Bill is then inscribed with token/ diary number and send to the related official. Head of account (HoAs), proper budget draft, quotations, sanctions etc. are verified and deductions of general sales tax (GST) and income tax (IT) are made. The bill is then furnished with pay order (P.O) having final amount to be approved and forwarded to review section. At this stage, examination of the P.O, proper deductions and government restrictions related to the category of bill are made. Next, bill is forwarded to District Accounts Officer (DAO) for final approval. At this stage, initials and reviewer comments are examined and decision is made for objection or rejection of the bill. In case of passing, the bill is allocated a scroll number. The scroll number is confirmation for the bank to pay amount to the bill holder. In flow chart W is representing waste/ delay in the process. This delay is classified due to the following external and internal factors:       

Token inquiry of last passed/rejected bills. Intentional delay in forwarding bills: Element of corruption Pay order without checking budget: Procrastination Wrong pay order: Procrastination/ Element of corruption Improper maintenance of budget register: Procrastination Irrelevant quotations or Wrong Head of Account Incomplete Sanction or Insufficient Budget

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Fig. 1 Manual value stream mapping with (W) as waste

3.1.1 Cause and Effect Diagram To determine the number of problems, cause and effect diagram (fig. 2) is sketched, showing core causes of rejection. The concept is to sketch both internal and external causes. Six in number of external factors are identified and three are of due to internal working conditions and hazards.

3.1.2 Pareto Analysis To examine the root causes and potential of problems/waste/delay/rejection in the process, data is processed and sketched in the form of Pareto analysis (fig.3 (a)). It illustrates that the rejection/ objection of bills is due to: 1. 2. 3. 4. 5.

Insufficient budget Wrong deductions Sanction not mentioned Quotation not attached Wrong head display

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Insufficient budget is categorized as the budget not assigned or disbursed in previous transactions. Wrong deductions encompass the incorrect calculation of the percentage of amount subtracted from original amount under government rules and regulations plus no subtraction is made. These deductions are made in the form of GST, IT and PT (Property Tax etc. Sanction embraces the adjusted approvals attached with the bill from budget assigning authority. Quotations include the willingness to supply in the form of proposals provided by suppliers. Wrong head purports the incorrect claim while drawing the bill. Responsibilities of Stakeholder/Client Signature /Stamp of DDO Wrong GST/ I. Tax deduction Wrong Head Display

Budget not mentioned Sanction not mentioned Quotation not attached

Rejection

Missing of Record Budget not Assigned on Record Book Govt. Restrictions not conveyed

Responsibilities of Public Organization

Fig. 2 Cause and effect diagram of manual disposition

3.1.3 Process Capability To investigate the potential of manually functioning process, process capability (fig.3 (b)) is measure. The weight age of rejected bills is converted according to specification limits of three days. The resulted information is then plotted with fixing upper specification limit (USL) at ‘3’. The process is showing slight positive skewness trend with mean shifting from ‘1.5’ to ‘3.31’ and standard deviation of ‘0.78’. Moreover, it is observed that about 50% of the whole bills received are passing within the specification limits. The weak performance is due to intentional and natural hazards.

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3.2 Post SAP Scenario In 2008, SAP was installed in all treasury offices with the purpose of:  Accomplishing accounting & auditing practices according to international standard.  To reduce the time of disposal of bills, Maintenance of Civil Account properly.  Do Budget was authorized to disburse budget.  To increase proficiency in disposing transactions.  To refine the process of rendering services.  To reduce the anxiety of Pensioners, GPF holders, Contractors, PLA Holders, Revenue deposit holders, Stamp vendor consumers, etc.

Fig. 3 Pareto analysis (a) and process capability (b) of manual disposition

Process functioning is mapped to explain the work flow activities in fig. 4. Current scenario is exhibiting parallel functioning of both manual and through SAP disposal. So, additional steps have to follow to complete the transactions. After the manual approval, Bill is brought into SAP for punching. Related officials are allocated with user login to access the SAP. He has to follow certain steps, as mentioned in the flow chart, according to HoAs for punching of bill. The bill is then forwarded to review section in which each feature is analyzed in sequence. The bill is then forwarded to DAO log for final approval through SAP. After final approval, bill is sent to check section in which check is issued with necessary symbols for payments from bank. W is representing waste/ delay in the process. This delay is classified due to the following external and internal factors:    

Wrong Head, Insufficient Budget, Budget not uploaded. Iterative Process of Budget Releasing. Wrong Punching of Bills, Cost Center not mentioned. DDO Code note Mentioned, Vendor not mentioned.

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 Dysfunctioning of computers, Problem in Networking.  User Failure to open Account, Delay in saving the punching statistics. ‘Budget not uploaded’ is categorized as the budget is not entered in the SAP log for proper punching of bills. The process of releasing budget is iterative and gradually feeding the HoAs due to DO budget restrictions and budget estimation.

Fig. 4 Post SAP value stream map with (W) as waste

A DDO code, Cost Center and Vendor number are assigned to each department working at District level for convenient classification in SAP. Similarly, dysfunc-

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tioning of computers, problem in networking of computers, user failure to open his allocated user log for punching of bills, sometimes delay in saving of bills due to electricity problems or data travelling problem and no access of password for certain assigned activities on SAP cause delay/waste in the process.

3.2.1 Cause and Effect Diagram Cause and Effect diagram (fig. 5) is exhibiting the increase in number of problems after SAP installation. This increase in problems is due to additional obligations embedded with SAP functioning such as ‘cost center’, vendor number, DDO code and DO budget etc. Therefore, ‘12’ problems are identified as compared to ‘9’ in manual process functioning. Responsibilities of Stakeholder/Client Signature / Stamp of DDO Wrong GST/ I. Tax deduction

Budget not mentioned Sanction not mentioned

Wrong Head Display

Budget not uploaded Budget not Assigned on Record Book

Govt. Restriction not conveyed

Rejection

Quotation not attached

DDO Code not mentioned Vendor not mentioned

Missing of Record

Responsibilities of Public Organization Fig. 5 Cause and effect diagram of post SAP process

3.2.2 Pareto Analysis Pareto analysis (fig. 6-a) is illustrating that the rejection of bills has increased in some categories and decrease in other categories after installation of SAP i.e. the rejection of CC bills increased from 139 to 163 due to wrong deductions and of W&S decreased from 121 to 101due to insufficient/ no budget.

3.2.3 Process Capability The process of disposing of the bills (fig. 6-b), after SAP installation, is showing right skewness trend with mean shifting from ‘1.5’ to ‘3.36’ with standard deviation of ‘0.72’. Moreover, it is observed that about 42% of the whole bills received are passing within the specification limits of three days of the disposing of bills.

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The numbers of steps to complete a transaction are increased due to additional number of nodes and checks. Post SAP scenario is demonstrating additional number of problems (impediment/ Waste). Cause and Effect diagram and Pareto Analysis blended with value flow chain expressing the overt and covert impediments and there potency, influencing the process functioning. Process capability is exhibiting the performance of the process both in manual and post SAP scenario conditions. The decline in the performance of the process is observed due to parallel working of both processes and also due to increase in the number of steps to accomplish the transaction. Process capability is illustrating the rightly skewed trend in the process.

Fig. 6 Pareto analysis (a) and process capability (b) of post SAP disposition

Rightly Skewed trend in both processes (manual and Post SAP Scenario) is observed mainly due to ‘June Factor’ and consequently, assignable causes are observed in the process functioning. Delay/Waste is observed in the Process due to number of factors described in section ‘3’. Bills rejection phenomenon is observed due to insufficient budget, wrong deductions, sanction not mentioned, quotation not attached and wrong head display etc. Moreover, Process is exhibiting right shift both in manual execution and after SAP implementation execution. So, there is deterioration in the performance of the process and there is a crying need to take further steps for the improvements in the process and to satisfy stakeholders. This phenomenon is covered in recommendations with optimized model.

4 Conclusions VSM is valuable tool to describe value flow chain and in identifying waste/ delay in the process. Cause and Effect diagram is worth full instrument in determining number of problems visually. Pareto analysis is an outstanding technique to describe the intensity of problems and delays. Process Capability is an excellent method to evaluate the performance of the process. Moreover, the implementation of

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VSM coupled with Cause and Effect diagram, Pareto Analysis and Process Capability is a viable scheme to assess the potential of process. The manoeuvring of these tools assists to reach the optimized solution for process excellence.

5 Recommendations Model in fig. 7 is proposed to achieve optimization in process excellence.

Fig. 7 Proposed optimal strategy to achieve efficiency

1. SAP (Systems Applications and Products) may be installed at each office for proper information flow and data processing. 2. Training of Accountants/Employees is essential to manage and control the automated system. 3. Budget allocation process needs to be made convenient and speedy. The allocation is usually made on the basis of previous year expenditure. However, this criterion is unable to meet the current requirements. The stakeholders have to tolerate such circumstances and this factor is creating a big waste in the process. 4. Much of delay/waste is observed in the budget uploading, need to be reduced by direct access to automation networking. Every department should be authorized to upload their budgets after ensuring all safety measures. However, these kinds of circumstances can be removed by authorizing efficient and righteous professionals at head office and Sub head office level. Another important aspect is of worth mentioning that these kinds of conditions can be minimized by appointing professionals at District Account offices. 5. Uploading and dispatching of each Transaction should have multi channels for inspection: to achieve the goal of reduced waste in the process and improve-

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ment in the criterion of disposing of bills. Such strategy would be critically helpful because the inspection of allocating and uploading the budget will be made at different levels. Moreover, this tactic will be significantly helpful in assessing stakeholder requirements during each monetary year.

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