eThesis - School of Business electronic theses

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Today’s highly competitive market environment forces companies to improve their work processes constantly leaving no room for errors. In order to improve customer satisfaction, it is a necessity to improve process lead time and quality. In addition quality efforts improve the bottom line and remain an important part in the continual quest for improving performance. Effective continuous improvement of quality can help in locating areas of development and implementing corrective and preventive actions to support the improvement of order correctness. This study explores the impacts of incorrect sales orders on the purchase order process in a global case organisation in the telecommunications industry. The focus was to find ways for the case organisation to minimize the number of incorrect sales orders released for purchasing. The objectives of the study aimed at describing the current situation to support decision-making, identify the errors in the incorrect sales orders, find out the number of incorrect sales orders and measure the lead time of handling the incorrect sales orders in the purchasing process

The theoretical framework describes how to improve quality, operational performance, and customer satisfaction by continuous improvement of internal processes, i.e. by minimizing the order processing costs and improving internal order correctness. The theoretical section introduces literature on Total Quality Management, Supply Chain Management, Process Management, Continuous Improvement and Performance Measurement.

The empirical research was carried out as a case study by collecting error related data from sales orders from 30th October to 31st December 2009. Research material was also collected through interviews, an inquiry and by participation-observation. The research results show that 33% of the sales orders were incorrect during the data collection period. In addition the incorrect sales orders lengthened the lead time of purchase order creation from the 1 day’s target to 3.2 days. Even the clean orders’ purchase order creation lead time was 1.7 days, resulting from the processing time spent on the incorrect sales orders with current resources. Based on the error categorization and empirical data analysis, 33% of the errors are related to incorrect configuration, and 40% of the errors could be eliminated by the case organisation itself. Empirical findings present strong evidence that the sales order correctness quality is poor, the impacts of incorrect sales orders show in extra work and costs of bad quality, and the process requires improvement. A new quality control method was implemented as part of the continuous improvement to improve the reporting of the errors and information flow quality.

The framework seems applicable for evaluating the implications of incorrect sales orders in the purchase process of a telecommunications company and could be applied to other industries’ internal order correctness process performance improvement efforts as well. Finally, management support is required to ensure that the empirical results are exploited in the continuous efforts toward improvement.