P-cards: Small changes can create significant process improvements

When we think about making process improvements, we think about new systems or reinventing the wheel, but sometimes, little changes can produce big results. We began a p-card process review in January of 2019 as a part of our continuous improvement program.

We all know that P-Cards are a more efficient method in which to make small purchases, but when was the last time that you really looked at your P-Card process? We conducted an extensive cross-departmental study and found that “auto coding” P-Card transactions under $75 led to extensive time savings.

The city process-mapped what we thought was a fairly standard process. Then we invited departmental subject matter experts to add their unique steps to the process. After we filled up an entire whiteboard, we realized that the City spent a great deal of time prompting the approval process.

Opportunity

Where we thought outside the box and what we would like to share with you is “automatically coding” P-Card transactions. The concept that we started with was that small purchases (<$75) took up a large percentage of the work volume but carried very little financial value/risk. Collecting data, we confirmed that these transactions, <$75 (the sweet spot) accounted for 46 percent of our Citywide transactional volume and only accounted for 3% of the P-Card spend (approximately 0.3 percent of our M&O budget).

Solution

Partnering with I.T., we requested a technology solution and found out that not only was it possible, but it was a fairly easy program to create. This auto-coding program would need a crosswalk created. A crosswalk works by coding our City account number to each transaction, based upon the MCC code of the purchase. With MCC codes, each product sold has an MCC code assigned to it. For instance, liquor has been assigned MCC Code 5921 and P-card purchases are blocked when this code is used.

Fraud

To prevent fraud, one of our I.T. people created an email notification for transactions within the sweet spot. Whenever a participant purchases an item within the sweet spot range, they receive an email with a description and cost, notifying them that the purchase was made against their card. If the purchase is fraudulent, they simply notify our team and we will shut down that card/transaction. If the participant doesn’t respond, the transaction is considered approved and they are accountable for the purchase.

Benefit

A few courageous managers were willing to give it a try and we started with them. The results were immediate, we didn’t kill anyone’s budget, the small-dollar transactions weren’t visible when they looked at their budgets, and the time savings were noticeable. The average current process time takes 4.5 minutes and our current volume is 32,000 transactions per year.  Removing 46% of transactions has the opportunity to give us back 1200 labor hours/yr.   Currently, we have five groups using the process and expect the full roll out to take us one year.

Where do you go from Here?

We recommend that you search for Process Mapping videos (like this), get a small team together and start with something small. Learn how you are processing p-cards, most departments are surprised by the results. On our first review, we discovered that 5 people were retaining copies of the same receipt, that was easy to fix and a big win. Understanding your actual processes will identify some low hanging fruit, you should pick that fruit and take an easy win, this will build credibility for your team as you take bolder steps. Lastly, know that change takes time & don’t be afraid to fail, because that will be a valuable lesson that you take to your next project.

Colin Millar began his public service career with the City of Boise in 2007. With over 30 years of purchasing and materials management experience, Colin now manages the Procure to Pay team, with a staff of 10 members.