By: Patricia Panchak
When Quad Graphics, a printing and distribution company based in Sussex, Wisconsin, decided its first digital transformation project would be to streamline its invoicing process in a bid to speed the order-to-cash cycle, a lot of employees were skeptical. Fixing a back-office function didn’t seem important enough.
However, Quad Graphics had leveraged acquisitions to grow from a single location, founded in 1971, to become the 21,000-employee, 54-facility, $4.1-billion global company it is today. Each acquired company had come with its own unique cultures and processes—including myriad ways of invoicing.
Though the company’s founder believed in the “one process, one system, one company philosophy,” the practicality of getting every company on the same systems broke down as the company grew. “This is reality,” said Steve Jaeger, the company’s CIO. “ You can’t go that way, because that would cost way too much money and take too long. We were forced to do things a little differently.”
Instead, the company started looking at ways to automate and achieve process integration and optimization across company facilities. “We had to get some consistency and we had to do it fast,” Jaeger said. “so we looked at the business value equation.” The CFO strongly believed if the company could bill faster and more accurately, it would reduce costs for the company and eliminate annoyances for its clients, so they’d pay faster.
“So our first challenge was, being that we’re capital intensive, and we had all these acquisitions, we’ve got all these plants, how do we invoice our customers in the most timely and accurate way, even though we don’t have our Smart Tools (the company’s branded proprietary ERP system) at all the plants,” Jaeger explained. “The challenge was laid out to us: Find a way to do this faster,” Jaeger said.
CAPTION: The business value equation sums up the thinking behind Quad Graphics’ goal to automate and optimize the invoicing process using business process management software.
Enter Digital Process Automation (DPA)
Leveraging its strong foundation in lean management, the company set about digitizing the invoicing process. The company’s existing continuous improvement group helped map and improve the process. Then the team implemented Pegasystems’ business process management (BPM) tool “as the enterprise workflow tool to grab data from all these different systems and enable a consistent workflow across the U.S. and globally.” It then used an Agile process implementation methodology, with its series of short sprints, to quickly implement the new digital invoicing process.
Jaeger noted how all these approaches come together. “BPM goes hand-in-hand with lean,” he said, adding that “Agile is just the I/T flavor of lean, but we like Agile because it was all about velocity: ‘How do we deliver velocity and make sure we deliver the right things? ”
The Results
In the first year, when the system wasn’t yet fully deployed, Quad Graphics’ free cash flow grew to $215 million, from $154 million the year before. In 2016, free cash flow grew to $246 million, and “we’re still continuing to exceed that,” Jaeger said. Meanwhile, the time it took the company to invoice dropped from 17 to 18 days to just under two days. As important, clients began paying more quickly, because they understood the bill.
Non-financial benefits include increased employee satisfaction, “because some of the simple mundane work they hate doing has gone away.” And Client satisfaction has shown noticeable improvement.
Lessons Learned
Go Narrow and Deep: “Like anything in I/T or BPM, I would encourage everyone to start narrow and deep,” Jaeger said. By zeroing in on the order-to-cash pilot project the company was able to quickly learn the nuances of the technology—both from a business and I/T perspective—while still gaining significant business and financial benefits.
Leverage Lean: BPM is a perfect fit for companies that practice lean across the enterprise, with its focus on understanding the current state and visualizing the future state. “If you’re going to do this, you better understand your current process, but more importantly, what’s your future state process going to look like,” Jaeger said, adding “because automating chaos is not good for any of us.”
Make Decisions Based on Data: With a founder whose mantra was “if you can measure it, we can improve it,” the company “was doing IoT before ‘IoT’ was coined,” Jaeger said, noting that the company had PLCs on presses to measure things such gas and ink consumption, paper waste and run counts to name a few. He advised: “Don’t let your emotions get in the way; let the data guide you to the best decision.”
Think Speed—Velocity-- and Agility:
“It’s all about agility, speed, in the process enablement,” Jaeger said. Doing the same processes faster, by digitizing them, delivers more business and financial benefits than you might imagine.
Focus on Process Consistency
Finding a way to standardize processes can yield big benefits. New digital tools, such as DPA and BPM can pull data from multiple systems, allowing companies to standardize without the cost and hassle of implementing ERP systems at each company facility.
Patricia Panchak is an independent business journalist, editor and public speaker. She can be reached at ppanchak@roadrunner.com.
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