Ford Motor Company Re-engineers Procure to Pay Process

Case Code: CLIT011 Case Length: 5 Pages Period: 1980-1982 Pub Date: 2021 Teaching Note: Available

Price: Rs.200 Organization: Ford Motor Company Industry: Automotive Countries: Americas Themes: Information Systems, Reengineering, Process Improvement , Enabled Redesign

Abstract

The period between 1980 – 1982 saw a recession in the USA which also caused trouble to the American automobile industry. Ford, Motor Company an American automobile corporation was affected as well by the slowdown. The situation triggered a search by Ford executives for ways to reduce overhead and administrative costs.

The executives at Ford realized that they had a large headcount in their accounts payable department and the procure to pay process for purchase orders was also very error prone. To make the department lean and process more accurate, the company decided to bring about a radical change in the process by re-engineering the entire system.

Ford introduced invoiceless processing in procure to pay process which was simple and also reduced discrepancy errors in invoice clearance. Through the new system Ford was able to reduce the headcount by 75% and also improve vendor relations

Issues

• Understand the use of business process re-engineering
• Understand the benefits of re-engineering a business process

Introduction

The period between 1980 and 1982 saw a recession in the USA, which hurt the American automobile industry hard. American automobile corporation Ford Motor Company was affected as well by the slowdown. The situation triggered a search by Ford executives for ways to reduce overhead and administrative costs. Executives at Ford realized that they had a large headcount in their accounts payable department and that the ‘procure to pay’ process for purchase orders was also extremely error prone. To make the department lean and the process more accurate, the company decided to bring about a radical change in the process by re-engineering the entire system.

Ford introduced ‘invoiceless processing’ in the procure to pay process, which was simple and also reduced discrepancy errors in invoice clearance. Through the new system Ford was able to reduce the headcount by 75% and also improve vendor relations.

Keywords

BPR, Ford Motor Company, purchase-to-pay

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