Internal controls, like multiple levels of approvals for say Purchase Orders or Paying Invoices, are all necessary, but in many business processes they are the bane of Lean Process Improvement.
From a Value-adding point of view, Internal Control hardly adds any value to the end customer, but may add value to the organization itself. In classic Value Stream Analysis terms Internal Controls may be a gray area at best and a total waste, at worst.
Internal Controls are more like Insurance Policies whose need will be felt only in the case of contingencies. Their need is felt acutely when there is fraud, or embezzlement in the organization. So doing away totally with them is not such a good idea.
Internal controls may, however be accommodated quite well with a little bit of creativity, as well as the help of technology.
Document Management, Workflow, Business Rules Engines, and Email can all speed up parts of a business process that have to do with Internal Controls.
First off, Internal Controls need not be applied uniformly to all transactions. Credit Card charges these days at supermarkets do not require a signature of the amount charged is less than $25! Similarly for almost all business processes, transactions can be divided up based on the amounts of money or risk involved. Business Rules Engines can handle a lot of these divisions, then document management, and workflows can divert the workflows in different directions needed. Email approvals may be a simpler way to automate the same thing.
Internal controls need not be in conflict with Lean Improvement as long as the balance of internal control needed is maintained with speeding up the business process and cutting down the waste in movement, effort, rework and people!
Trust, but Verify – Ronald Reagan
