Historically, manufacturers have worked with management consultants to improve their IT-driven processes and core operations such as purchasing, logistics, and production. The practice is often lengthy and expensive. They also typically rely heavily on the existing operations teams to collect data and provide context often resulting in significant disruption to the organization and processes being analyzed.
Thankfully, a more efficient and affordable method for driving business optimization has emerged: Process Mining, a new type of Big Data Analytics. Powered by machine learning and artificial intelligence, Process Mining technology leverages the digital footprint manufacturers leave behind in their IT systems and provides complete transparency into how processes are working in real life. For instance, it can pinpoint delays in invoicing after an order has been shipped. It can also identify where automation would help speed up delivery and reduce cost, or where vendors are not meeting their commitments and the specific resulting impacts.
Process Mining is essential for ambitious, fast-growing manufacturing organizations because it can reduce inventory costs, identify production bottlenecks, improve on-time delivery, optimize logistics between production sites, distribution centers and end clients, and reduce reworked and scrapped inventory due to mistakes or failures in the process. Additionally, Process Mining can improve manufacturers’ capital and team utilization by ensuring materials are available when they’re needed to avoid downtime.
Initial Implementation Steps
In order to determine if they need Process Mining, a manufacturer should ask themselves a series of questions:
- Are your key performance indicators (KPIs) sufficient to remain competitive?
- Are your KPIs measuring the necessary metrics to ensure achievement of business commitments to customers or are your KPIs driven by what is easily measurable?
- Is your data quickly and easily retrievable to measure and monitor your KPIs?
- Will your processes be sufficient to support your product roadmaps and will they be agile enough to respond to changing market conditions?
Getting started with Process Mining is easy. Start by picking a few core processes and then let the software do the difficult work of visualizing the processes and highlighting specific variances impacting KPIs such as throughput times. For instance, process mining may highlight the fact that specific vendors are not meeting their lead-time commitments and the ripple effect is causing significant production delays. Perhaps it will highlight the “maverick buyer” in your organization that is purchasing materials and then inputting the PO after the delivery is on dock. Alternatively, maybe aging or faulty equipment isn’t being correctly identified as needing to be replaced, or maybe changes in end-customer requirements are driving new demands that your current processes can’t support. By overhauling processes such as Purchase to Pay, Order to Cash, Production, Logistics, Accounts Payable or Accounts Receivable with Process Mining, faults and/or inefficiencies in any of these areas can be immediately identified and resolved.
In addition to gaining real-time visibility into existing processes and the ability to pinpoint any issues that might impact KPIs, manufacturers that successfully implement and maintain Process Mining stand to gain a variety of company-wide benefits. Any loops or bottlenecks can be identified and processes immediately updated, and time sinks for employees can be determined and corrected. Also, areas that could be easily automated to reduce mistakes and labor costs can be flagged, and adjustments can be made to purchasing to better align with actual historical lead times (rather than simply trusting lead times quoted by vendors).
No matter how the technology is applied — from optimizing procurement processes by identifying invoicing problems or issues with outsourcing costs in specific locations, to better focusing accounting, customer service and e-commerce operations by determining which orders took too long, which had more interactions, and which were the most inefficient — Process Mining offers manufacturers the incredible power of uncovering hidden inefficiencies while also providing prescriptive recommendations on how to fix them in real-time.
Embracing Process Faults
Incorporating new technologies into existing, complex infrastructure can feel overwhelming at first, and some business process owners might understandably feel reluctant about having their process issues highlighted via Process Mining. However, this technology is compatible with a variety of legacy systems and its resulting business process intelligence has the ability to transform routine jobs and immediately make daily tasks easier and more productive.
So, rather than ignoring the problems and inefficiencies in your manufacturing processes, embrace them. Make 2017 the year your organization adopts Process Mining. In doing so, you’ll achieve complete operational transparency and gain a greater understanding of your existing operations, enabling your organization to truly capitalize on the promise of digital business transformation.
Alex Rinke is the co-founder and co-CEO of Celonis.