Improving the payment process of credit purchases from MLEX's meal vendors

This action research project focused on addressing the extreme delays in the payment process of credit purchases from meal vendors, particularly in the Finance Division of NLEX Corporation (NLEX). It aimed to improve the coordination among the employees involved in the payment process and the accounts payable management. The Lean Thinking Theory, particularly the Value Stream Mapping (VSM) Framework, allowed us to identify the waste which hampered Finance from achieving 100% payment efficiency. VSM Framework helped us to streamline our payment process to attain its desired future state. The payment delay issues negatively affected the efficiency of employees, which were transformed to increasing past due accounts, unaccounted meal purchases, additional manpower and representation costs, damaged supplier’s credit rating, and ultimately, a decrease in profitability. By conducting interviews with Finance personnel and users of credit lines, our team identified the main cause of the issue arose from the absence of policy and procedures which govern the meal purchases. Guided by frameworks and theories on VSM, Action Research, Policies and Procedures, Finance personnel and end-users collaborated to address the delays leading to policy creation. The creation and cascade of policy in Cycle 1 reduced the payment process turnaround time (TAT) from 84 to 63 days. In Cycle 2, we introduced an online payment scheme which decreased the TAT from 63 to 35 days. Also, this project improved the relationships among the employees which was vital in effecting change. It also proved that people are the key factors in process improvement as they are the ones carrying out the tasks. Hence, companies should have clear policies and procedures that guide their employees towards the accurate and efficient performance of their job. Moreover, policies and procedures are a good strategy for promoting change in the process and shifting the action and behavior of employees in the desired direction.