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Last week, we established how important process maps are in developing policies and procedures. In the course of this series, we will present seven types of process maps, which include the 7 types of flow in accounting. This week we will discuss three types: High-Level, Low-Level, and Cross Functional or “Swim Lanes” Maps.
High-Level Process Map
A High-Level Process Map describes all of the core processes within an organization. For example, ISO 9001 requires that the sequence and interaction of the Quality Management System processes are determined. One way to demonstrate that processes are “determined” is through a high-level process map.
Figure 1 shows nine core processes that make up the Order-To-Cash Cycle, their sequence and interaction, thus fulfilling the basic ISO 9001 requirement. The color coded boxes show the three main process flows or cycles in your business:
- Red is your Order Cycle (Purchasing + Production < Sales);
- Blue is your Just-In-Time (JIT) Production Cycle (Shipping = Receiving + Production); and
- Green is your Cash Cycle (Inventory + A/R – Payables > 0); which taken together make up your Order to Cash Cycle.
Inputs/outputs are labeled, information flows are indicated with a dotted line, and the material flow is a solid line (black for inventory and red indicating the primary material flow). If you need more detail, then each of the nine processes can further be explained separately in a lower-level process map. The term “process map” does not refer to the scope of a process being high-level, low-level, or very detailed. A process map is focused on the activity flow, order, or sequence and interaction.
7 Types of Flow in Accounting
What are the seven types of flow? In the Order to Cash Cycle we see a number of implicit and explicit flows.
- Order Flow – Customer to Sales to Production to Purchasing to Supplier.
- Quote Flow - Same as the Order Flow.
- Material Flow – Supplier to Receiving to Production to Distribution to Customer.
- Information Flow – The dotted line.
- Cash Flow – Customer to Accounts Receivable to Inventory (Purchasing) to Accounts Payable to Supplier.
- Disbursements Flow – Purchasing PO to Accounts Payable to Supplier
- Collections Flow – Customer PO to Sales to Distribution to Accounts Receivable to Customer
Low-Level Process Map
The main difference between a high-level and low-level process map is one of scope. The process flow has not changed, just the scope of what we are looking at. The Order-To-Cash Cycle has nine processes identified but each process can be further subdivided into sub-processes. Each sub-process makes up a low-level process map or process flow chart. A low-level process map is an area of a high-level process map that we have zoomed into for more detail.
For example: the Accounts Receivable (A/R) Cycle is comprised of customer billing, credit, and collections. If we take a look at just the credit approval portion (Figure 2) of the whole A/R cycle we see that there are five main steps: sales call, order entry, credit check, review A/R balance, and calculate credit terms. There are three UML symbols used: square for process steps, diamond for decisions and an odd looking square with a curved bottom representing data. Decision diamonds produce an alternative flow that here represents either an “OK” or “Bad Credit” decision, which requires a new sales call to resolve.
Low-level process maps can provide a lot of detail for analysis and can be used in place of textual procedures for simple processes. If you want to “lean out” your documentation for ISO 9001 then flowcharts can simplify your procedures and reduce unnecessary paperwork. Organizations with highly trained employees can benefit by using simple process maps.
One problem with low-level process maps is that sometimes it is hard to determine who is responsible for which activity. Another is that they may not conform very well to the SIPOC format we prefer. In this case a Cross Functional or “Swim Lanes” Map can be used to convey individual responsibilities or departmental roles within an organization.
Cross Functional or “Swim Lanes” Map
Cross Functional process maps have the same UML flowchart symbols used in the low-level process map example. Only now, four cross functional swim lanes have been used to identify who is responsible for each element, decision or data. You can have any number of swim lanes in your map, although as a practical limit you may want to make it fewer than ten for clarity.
In Figure 3, the first band, the customer is clearly responsible for making a “buying” decision and must complete the credit form. The sales department is the second band and must respond to sales calls, receive the credit information (form), enter the order, and produce an order form. The order form is sent to the credit department, which compares the data to the credit criteria issued by management. If everything looks “OK” then credit reviews the customer’s existing A/R balances for credit capacity, and then calculates the credit terms. Management is responsible for preparing a “credit issued” report and overseeing the credit approval process.
Swim lanes are really good at depicting responsibilities and with no loss in the low-level process flowchart information. Suppliers and customers are obvious and it does conform to our SIPOC format. Although, we still see alternative back flow present in the “bad credit” decision. The problem with alternative flow is they can make it hard to follow the process. A better method would be to use “single-piece” flow (the path a single product takes without alternative flows) and eliminate alternative flows such as in a Document Map. We will present Document and Value Stream maps next week in part II.
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