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CASE STUDY III-1
Managing a Systems Development
Project at Consumer and Industrial
Products, Inc.
Late Friday afternoon, T. N. (Ted) Anderson, director of
disbursements for Consumer and Industrial Products, Inc.
(CIPI), sat staring out the wide window of his 12th-floor
corner office, but his mind was elsewhere. Anderson was
thinking about the tragic accident that had nearly killed
Linda Watkins, project director for the Payables Audit
Systems (PAS) development project. Thursday night,
when she was on her way home from a movie, a drunken
driver had hit her car head on. She would survive, but it
would be months before she would be back to work.
The PAS system was a critical component of a group
of interrelated systems intended to support fundamental
changes in how billing and accounts payable at CIPI were
handled. Without Watkins, it was in deep trouble. Deeply
committed to the success of these new approaches,
Anderson did not know exactly what he could do, but he
knew he had to take drastic action. He picked up his phone
and told his secretary, “Please get me an appointment with
IS Director Charles Bunke for the first thing Monday
morning.” Anderson would have the weekend to decide
what to do.
The Origin of the PAS Project
Consumer and Industrial Products, Inc., is a Fortune 100
manufacturer of a large variety of well-known products for
both individuals and industry. Headquartered in the United
States, CIPI is an international company with facilities in
Europe, Asia, and North and South America.
The PAS project was one of several interrelated
projects that resulted from a fundamental reevaluation
of CIPI’s accounts payable process as part of CIPI’s
companywide emphasis on total quality management
(TQM). Anderson recalls:In late 1991 we began to look at what we were
doing, how we were doing it, the costs involved, and
the value we were adding to the company. We real-
ized that, even with our computer systems, we were
very labor-intensive, and that there ought to be
things we could do to increase our productivity and
our value added. So we decided to completely
rethink what we were currently doing and how we
were doing it.
Since we were a part of the procurement
process, we needed to understand that total process
and where accounts payable fit into it. We found that
procurement was a three-part process—purchasing
the goods, receiving them, and finally paying for
them. And we concluded that our role was pretty
extensive for someone who was just supposed to be
paying the bills. We were spending a lot of effort try-
ing to match purchase orders with receiving reports
and invoices to make sure that everyone else had
done their job properly. We typically had about
15,000 suspended items that we were holding up pay-
ment on because of some question that arose in our
examination of these three pieces of information.
Many of these items spent 30 to 60 days in suspen-
sion before we got them corrected, and the vast
majority of the problems were not the vendor’s fault
but rather the result of mistakes within CIPI. For
some of our small vendors for whom we were a dom-
inant customer, this could result in severe cash flow
problems, and even bankruptcy. With today’s empha-
sis upon strategic partnerships with our vendors, this
was intolerable.
We finally recognized that the fundamental
responsibility for procurement rests with purchas-
ing, and once they have ordered the goods, the next
thing that is needed is some proof that the goods
were received, and we are outside that process also.Copyright © 2000 (revised) by Professor E. W. Martin. No part
of this case study may be reproduced, stored in a retrieval system, or
transmitted in any form or by any means without the permission of the
author.
This case was prepared by Professor Martin as the basis for class
discussion rather than to illustrate either effective or ineffective handling
of an administrative situation. Its development was supported by the
Institute for Research on the Management of Information Systems
(IRMIS) of the Indiana University Kelley School of Business.