Business Process Modeling Recommendations

Date:  

TO:  Vice President of Finance

CC:  CEO, CFO

Subject:  Business Process Modeling Recommendations

Hello Vice President of Finance,

        I am in charge of the Spartan Billing Department and realized there are some queues building up in several places of the invoices and billing process. I did the simulation to analyze the situation and got some recommendations to improve the efficiency of the process, and the data table of each Case I made is at end of the email.

        Comparing with the Case 1 as the base case of current process, I reduced the working duration of both Register AR and Financials and Verify Bills in Case 2. The modification decreases the wait time of both Register AR and Financials and Verify Bills to 2.51 minutes for Register AR and Financial and 0.07 minutes for Verify Bills. And also, this modification decreases the average total cost per Normal Bill to $1.34 and per Contract Bill to $1.84. There is a little increase in total cost of system. The system number out goes up to 7,179 with the same arrival rate in Case 1.

        In Case 3, I increased the labor costs of Senior Biller to $20 per hour and Account Biller to $14 per hour, because in order to improve efficiency of the process, we need to raise the labor costs to attract the better skilled workers. The wait time of both Register AR and Financials and Verify Bills stays the same as Case 2, but the average total cost of both per Normal Bill and per Contract Bill increased to $1.61 and $2.35. The total system cost increases from $22,137 (Case 2) to $27,537 with the same system number out and same arrival rate in Case 2, which is $5,400 higher than that in base case due to the Labor Cost Adjustment.

        In Case 4, there is an increase in demand of both normal and contract bills because of our business expansion due to consolidation of the billing departments from two regions. I modify the arrival rate to be 5 minutes for Normal Bills Arrive in Department and to be 13 minutes for Contract Bills Arrive. The result is the wait time of both Register AR and Financials and Verify Bills increases a lot compare to Case 2 and 3, and the average total cost per Normal Bill and per Contract Bill does not change much in the analysis. The total system cost rises to $27,679, which is increased to compare to that in Case 1, 2 and 3. Obviously, there is a meaningful raise in system number out (increase to 9,077) because of the increase in customer demand of both normal and contract bills.

        Based on the four cases I analyzed, my recommendation is the Case 3. Although the Case 2 has the lower total cost than that in Case 3, it is not realistic. Because the increasing efficiency needs to increase labor cost to attract the better skilled workers, however the Case 2 only increased the efficiency. In the Case 4, it has the most system number out due to the assumption of increasing customer demand, but the system total cost is highest in the four cases. And also, the wait time of Register AR and Financials and Verify Bills in Case 4 are longer than that in Case 3. The Case 3 does better in system number out part and wait time of both Register AR and Financials and Verify Bills part than Case 1, although the system total cost in Case 1 are lower than that in Case 3. For the increase in demand of the bills, I suggest do some adjustment to improve the efficiency for the process so that work can be done on time, and it is very significant that hire better skilled workers to reduce the wait time for increasing efficiency.