Transforming Accounts Payable at Nordstrom through Lean Principles
Client
Nordstrom is a leading American fashion retailer, renowned for its commitment to providing exceptional customer service and high-quality products across its stores and online platform. With over a century of experience, Nordstrom has built a reputation for innovation, customer-centricity, and a dedication to creating seamless, enjoyable shopping experiences.
Lis, John, and Sebastian reduced their processing time by 80% by leveraging flow principles to streamline their processes, significantly boost productivity, and enhance team morale through continuous improvement and clear role definitions.
In this clip, Lis, John, and Sebastian reflect on how they made time to improve their processes.
“I just started scheduling the meetings to carve out the time. We are gonna see the benefits later down the line, we’re gonna see it, but we just have to do the upfront work, it’s gonna take some time right now.”
The Whole Story
Introduction
Nordstrom's Accounts Payable (AP) team faced significant challenges in their invoice processing workflow. The existing process was cumbersome, with many manual steps, frequent defects, and extended delays in response times. Recognizing the need for improvement, Nordstrom partnered with the kaaspass team to implement lean principles traditionally used in manufacturing to enhance their administrative processes.
Challenge Faced
High Defects and Inconsistencies: Frequent errors in invoices, such as missing purchase order numbers, led to delays and rework.
Fragmented Workflow: The team relied on multiple email folders (over 10) and surge resources to keep up with the workload, causing inconsistency and frustration among team members.
Extended Processing Time: The process often exceeded the targeted service level agreement (SLA) of five days, resulting in inefficiencies and delayed responses to vendors.
The Approach
Nordstrom's AP team embarked on a continuous improvement journey using lean and flow principles facilitated by Cost Pass:
Process Mapping and Pain Point Identification: The team mapped their existing process, revealing complexities and identifying key areas causing delays and defects.
Workflow Restructuring: The process was redesigned with clear roles and responsibilities:
Gatekeepers to filter and manage incoming emails.
Sorters to categorize invoices.
Keyers to handle manual data entry.
Implementation of Decision Trees: Clear decision-making frameworks were developed to guide team members and ensure consistency in handling invoices.
Standardized Language and Reduced Tools: The team standardized communication and reduced the number of tools and folders, creating a streamlined workflow.
Cross-Training and Continuous Feedback: Team members were cross-trained to handle various roles, and regular feedback loops were established to refine the process continuously.
Results and Impact
500% Increase in Productivity: The team achieved a dramatic increase in total process efficiency.
80% Reduction in Processing Time: Weekly processing hours were reduced from 100 to 20.
300% Increase in Manually Keyed Invoices: Invoices keyed per hour rose from 11 to 45.
Enhanced Team Morale and Engagement: As you can tell by listening to interview, the improvements resulted in less frustration, more collaboration, and a significant boost in team morale.
Key Learnings
Lean Principles in Action: This case demonstrates that lean principles can be effectively applied beyond manufacturing to optimize administrative processes.
Empowered Teams Drive Success: By involving the team in problem identification and solution development, Nordstrom’s AP team created a culture of ownership and continuous improvement.
Scalable Results: Nordstrom's success with their AP team has sparked interest from other departments, like Accounts Receivable, to adopt similar methods.
Conclusion and Call to Action
Nordstrom's transformation showcases the impact of lean thinking in any process-oriented environment. By aligning with lean principles through structured experimentation, clear role definitions, and continuous feedback, they achieved remarkable efficiency gains and created a more joyful, engaging workplace for their team members.
Curious to learn more? Click here to watch the full interview.