Ford Achieved 75% Reduction In Head Count In Its Accounts Payable Department By Reengineering. What Did Ford Reengineer?

1100 words - 5 pages

1.Ford achieved 75% reduction in head count in its accounts payable department by reengineering. What did Ford reengineer?2.What are the features of this reengineering and how has IS contributed to it?3.Besides the reduction in headcount, what are other benefits, if any, of this reengineering? Explain your answer.1. These remarkable results were achieved not by applying automation to the existing process but by using shared data and database technology as an enabling tool to completely redesign the way vendor accounts are paid.In the old system, when Ford's purchasing department wrote a purchase order, it sent a copy to its accounts payable department. Later, when material control recei ...view middle of the document...

When the goods arrive at the receiving dock, the receiving clerk checks the database to see if they correspond to an outstanding purchase order. If so, they are accepted and a transaction is entered into the computer system. If not, the shipment is returned to the vendor. Since the system matches the goods received with the purchase order, there is no need for the vendor to send an invoice --- the system is able to send out a cheque immediately, with no discrepancies.Through reengineering, Ford cut the required number of manual accounting transactions and reconciliations associated with processing and paying for the goods it used from nine to three, thereby producing "a 75% reduction in head count, not the twenty percent it would have got with a conventional program."2. Some of the principles of reengineering are listed as follows and the fundamentals of Ford's reengineering process relate to them closely:Principle: Design jobs around outcomes, not tasks.One of the inherent problems of Ford's old model was that it created separate jobs for different people to essentially perform a similar function, which was to perform the final job of issuing payment for goods received. Ford's new model combined these logically-related tasks into a single process, using a shared database, accessible to all. This was essential for the accounts payable department to retrieve information and perform payments quickly. It is now possible for one customer service representative to collate all information and have this information at hand should a customer need it.Principle: Capture information once and at the source.This is one of the key features of Ford's new process. Information that was required, when making the payment for goods, was immediately captured and locked into the central database. This information is stored there and there are no physical invoices flying around leading to confusion. It is also essential that the information is entered at the source because there is less risk of inaccuracy as a result of time delay.Principle: Subsume information-processing work into the real work that produces the information.Ford's old model had its accou...


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