Using BPM to Meet Today’s Supply Chain Challenges

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In today's demanding business environment that prioritizes flexibility, speed, quality, efficiency, effectiveness and innovation, a competitive supply chain strategy and its operational execution is critical. Business Process Management (BPM) helps an enterprise achieve these characteristics in its supply chain strategy – and in its execution of that strategy. Applying the BPM discipline achieves process improvements that lead to organizational performance improvements – such as a Supply Chain.

Supply Chain & Logistics Challenges

  • Aligning supply chain operational execution with strategic business initiatives for growth and profitability
  • Increasing operating efficiency in order to support growth targets
  • Improving supply chain design and execution to help strengthen the company’s competitive position in its target markets
  • Minimizing errors and speeding up processes to save time and money • Improving the prioritization of the allocation of critical resources
  • Monitoring if resources are actually being allocated and deployed as suggested
  • Satisfying the customers’ desire to get what they want, where and when they want it — and at the best price

Aligning Supply Chain Process Performance to Business Strategy

Supply chain and logistics processes are identified and targets are set for each process. The key process metrics are in terms of time, quality, cost, and productivity. The targets are established during workshops with suppliers, partners and customers. Industry benchmarks are used to define best-in-class targets. Cause and effect relationships are then established for each process so that the achievement of that process performance target can be mapped to the achievement of a particular business strategy – either a customer target or a financial target. Leading indicators are defined for each process target so that an early warning can be provided to indicate when a desired performance target is in danger of not being met. Root-cause analysis is used to identify the underlying reason for not achieving the process performance target. Process improvement initiatives are defined and implemented and subsequent assessment is done to identify the process improvement achieved. The cause-and effect relationship is then examined to determine the quantitative impact that the improved process had on the customer and financial metric. New process improvement targets are then set to achieve the desired customer or financial target.

Increasing Operating Efficiency in order to support growth targets

A variety of tools and techniques are used to discover insight into current performance. Process analysis identifies bottlenecks, duplicate efforts, causes of defects and waste. For example returns are a huge problem for many manufacturers and retailers. You can track each shipment process from the time it was handed off to your third-party logistics provider. If there were a problem delivering the shipment on the first try, instead of the shipment being automatically scheduled for re-delivery the next day, the process would now be notified – and would send a task to a call center agent’s desk, so the call center person could contact the customer and try to save the shipment. By keeping the package in the field instead of coming back to the dock, the company saves hundreds of dollars per item. A cause-and effect relationship for the returns process is then examined to determine the quantitative impact that the improved process had on the customer and financial metric. New process improvement targets are then set to achieve the desired customer or financial target. Continuous improvement of the returns process lowers overall supply-chain costs. This logistics process improvement results in a sustainable competitive advantage that yields increased customer orders.

Minimizing Errors and Speeding up Processes to Save Time and Money

One of the characteristics of a supply chain is that end-to-end processes cross multiple departments within and across organizations – a lot of handoffs have to occur. Improving the management of those handoffs ensures better consistency and timely execution. This speeds up processes and minimizes errors – reducing/optimizing inventory, and saving time and money. A more complex supply web of partners and suppliers is replacing the simple supply chain. This more complex supply web requires a continuous information flow and attention to detail at the process level among its members – manufacturers, suppliers, partners and retailers. It is this attention to supply chain processes that enables companies to discover errors and time delays at a process level – and use BPM methods to improve them.

For example, there are key supply chain processes such as customer relationship management, demand management, order fulfillment, manufacturing flow management, product development and returns management. Each of these processes executes sub-processes and activities that accept inputs, update information and create outputs. BPM enables one to have visibility into the execution of these sub-processes and activities to more precisely manage timely execution, accurate information creation, and quality outputs – and streamlining coordination and collaboration with sub-processes and activities from other supply chain processes, sub-processes and activities. It is this more precise sub-process integration that enables companies to improve speed and quality beyond what they can achieve without intensive process management.

Managing by Process can Increase Visibility Across Suppliers and Partners

Imagine that a large retailer places an order for 100,000 items – and it needs these widgets by a certain aggressive date. Imagine you have 200 suppliers, but only 20 of them supply this item. You would first enter the item information and the supply chain would know which partners were certified to supply that item and it would then initiate request quotes process from those suppliers. Because the supply chain understands process, it understands which of the 20 already have quotes in process and can find three trading partners who can supply the quantity of that item in the allotted time. Managing by process satisfies the customers’ desire to get what they want, where and when they want it — and at the best price.

Process Measurement and Monitoring

Process analysis defines metrics and a management discipline to improve how a process is monitored. This service puts that design into practice. It establishes: 1) who is responsible for capturing the metric, 2) who is responsible for responding to the metric and 3) under what timeframe that response is required to be made. As required, pilot implementations can be run to reconfirm that the redesigned process performed as expected. A program is implemented to obtain process users’ feedback on the efficiency and effectiveness of the new process. This feedback is used to make any immediate corrections. An ongoing assessment will be implemented to obtain information about the value, quality and performance of the process and to establish a new baseline for subsequent improvement efforts.

Business Value

Practicing a BPM discipline provides value throughout an organization by:

  • Using process-enabled achievement of strategic objectives
  • Accelerating time to market
  • Delivering improvements in cost, productivity, timeliness and quality
  • Improving customer service levels and increasing customer satisfaction
  • Transferring knowledge to ensure that customer teams achieve the necessary competence and autonomy to maintain and develop future capabilities
  • Simplifying business processes to drive effectiveness, efficiencies and agility
  • Managing risks and meeting compliance regulations
  • Providing greater visibility into your organizational performance
  • Introducing new process designs faster
  • Reducing costs and improving revenue streams

BPM: Supply Chain Performance

Business process management (BPM) can help enterprises view their supply chains comprehensively and optimize them for better performance. BPM can provide those benefits not just throughout an individual enterprise, but to outside suppliers, partners and other key parties as well. Ultimately, BPM can improve efficiency, visibility, control, and accountability throughout the entire supply chain.

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