Vice President, Shared Services
IKON Office Solutions, Inc.
70 Valley Stream Parkway
Malvern, PA 19355
November 12, 2001
To Whom It May Concern:
I very much appreciate the opportunity to briefly describe how instrumental Carl Cooper has been in two large, complex, and most important, successful process re-engineering efforts that I have had the privilege to lead.
In 1995, I was promoted to the position of Director and Controller of the Messaging Systems Products Group for Motorola, Inc. The Messaging Systems Product Group had $3 billion in revenue and was the world's largest manufacturer and distributor of paging systems with manufacturing in 13 countries including the U.S., Europe, Latin America, Japan, and China.
One of the challenges that became immediately clear was that this unit of Motorola had a very poor quality, high-cost global accounting close. The "as is" situation was:
- The accounting close took 14 days, including weekends
- 235 accounting associates were dedicated full-time to the accounting close
- The accounting close generated over 210,000 errors each month. The
accounts were able to detect and correct 200,000 of those errors prior
to those errors escaping into the published financial statements. However,
that left 10,000 escaping defects each month, many of them amounting
to millions of dollars.
- An average of 10,000 hours of overtime was worked by the accountants each
month during the close
Bottom line, the financial statements were un-reliable and to make matters worse, this unit of the company was producing one-third of the company's cash flow. As you can imagine, Corporate was very interested in improving the quality of the monthly financial statements.
At this time in Motorola's history, the link between cycle time, cost and quality had been established within our factories. However, very little process re-engineering using the techniques proven in manufacturing had been tried in administrative functions. Reasoning that an accounting close had all of the attributes of a manufacturing process, I asked Carl if he would be willing to help me try some of the techniques that he had pioneered over the years, especially in the area of cross-functional process mapping.
Well, if you know anything about Carl, you know that he relishes challenges of this sort.
The very first step in this re-engineering experiment was to bring Carl in for two-days to take the entire domestic accounting team of approximately 80 associates through cross-functional process mapping indoctrination specifically tailored to our requirements. Carl also facilitated many of our in-depth, two-week cross-functional process mapping sessions, and offered his expertise throughout the life of the project.
So, 18 months later, how did we do?
- We were the first large organization within Motorola to achieve a true one-day accounting close. The world-wide accounting organization started at approximately 7:00 a.m. on workday one, and the books were closed by 7:00 p.m.
- No material errors, defined as greater than $500k, were detected within the financial statements for over a year.
- No errors of any size were detected within the financial statements for over six months.
- Worldwide headcount dedicated to the accounting close was reduced by 100 associates, or 43%.
- Overtime during the close was reduced to 100 hours world wide, down from 10,000 hours.
- 65,000 financial statements were available to management at 8:00 a.m. on work day 2.
A few years later, I accepted the position of Vice President , Shared Services for IKON Office Solutions, Inc. At approximately $5 billion in revenue, IKON is the second largest value added re-seller of office equipment behind Xerox. The challenge at IKON was to consolidate the accounting distributed across 127 facilities into two shared service centers.
Again, my first call went out to Carl. Carl fashioned process re-engineering training tailored to the unique culture and situation at IKON and engaged with my organization over a span of one-year performing mission critical training and conducting numerous cross-functional process re-engineering sessions. So, two years later, what have we accomplished?
- All of the payroll, accounts payable, cash applications and general ledger accounting that was previously performed at 127 different locations, using numerous legacy systems with little commonality of practice and procedure are now processed in two centers.
- The efforts achieved a net reduction in overall accounting and administrative headcount of 306 associates yielding annualized savings of $15.4 million.
- One-time project costs were $6.3 million versus an approved budget of $19.2 million.
- Payroll costs per associate per year have gone from $500 to $170.
- Accounts payable invoice processing costs have gone from $30 per invoice to $5 per invoice.
- Cash applications invoice processing costs have gone from $3 per invoice to $0.80 per invoice.
- Overall internal control has been substantially improved.
I can't emphasize enough how critical it is to a large-scale, complex re-engineering effort to employ proven tools and methodologies. I am personally aware of literally dozens of re-engineering efforts that in my opinion, failed in large part due to not having the knowledge or willingness to employ the right tools. I can say with absolute certainty that the efforts that I briefly described would not have been successful without Carl's professional involvement, especially during the critical start-up phase. Carl's depth and breadth of logistics knowledge, combined with this extensive experience in all aspects of cross-functional process mapping, have made him a very integral part of these two successful projects.
The other aspect of Carl's involvement is that he puts a great deal of effort into tailoring his approach to the specific culture and situation. To quote Carl, "Culture eats strategy for lunch." I've seen too many consultants apply whatever their technique to vastly different problems without modifying their approach.
In summary, I can't speak highly enough of Carl's contribution to the process re-engineering efforts that I have lead. If you would like to speak with me further, please feel free to call me at 610-408-7106.
Vice President, Shared Services
IKON Office Solutions, Inc.
MASET, LLC P. O. Box 11663 Chandler, AZ 85248
Phone: 602-721-3680 Fax 480-802-4710