This article was written by Gabriele Kaltenbrunner, who is a subject matter expert on supply chain management
Large manufacturing firms with global operations have been leaders in the adoption of business process concepts and enterprise resource planning systems. Rapid response to changing customer orders, supplier integration, introduction of new technologies and products, product sourcing across multiple geographies, and the list goes on – in short, manufacturing is at the forefront of process optimization. Not surprisingly, global manufacturing firms are also at the leading edge of large, multi-year transformation projects. The following is a synopsis of our observations from one of our large, global manufacturing clients.
Some of the typical challenges large transformation projects face are:
- process standardization/harmonization,
- data standardization/harmonization,
- performance measurement.
Diving a little deeper, let’s look at the next level of detail surrounding each of the challenges we listed.
Standardization: Business schools like to describe manufacturing as punching out widgets in a stable environment to achieve the lowest cost. In fact, manufacturers are constantly challenged to adopt and adapt to new systems, technologies, and suppliers to achieve affordable costs, high quality, with minimal turn-around-time and efficient inventory levels. Standardization is one key to achieving those goals with repeatable, definable processes across manufacturing lines and locations. However, the following are common challenges in achieving acceptable levels of standardization:
- Rigid, difficult to change legacy systems which are not easily modified to replaced, hindering the sustainability of competitive processes
- Across multiple global locations, processes lack standard design and discipline in execution
- What should be common processes across multiple locations often are in fact unique are overly-customized in separate geographic business units
- Business Unit processes, though perceived to be on a common ERP platform such as SAP, are actually implemented differently within SAP and on different ERP versions. Or, key elements of the manufacturing processes are supported outside the ‘standard’ SAP ERP implementation (legacy systems).
Data, Reporting Analytics: Supply Chain Management is easy to say, and difficult to accomplish across business units, geographies, and functional organizations. Given the dynamic nature of manufacturing, accurate real-time data has critical benefits at many levels of manufacturing management. We find the following are still all to common in large, global manufacturing organizations:
- Meaningful, real-time analytics are difficult to pull from non-standard systems, and as a result are limited in scope and relevance,
- Unless the organization truly operates on standard systems and processes, decision-makers constantly are forced to make decisions while lacking critical, real time information.
- And, efforts to achieve standardization and global decision-making are frustrated by incomplete and inaccurate data reporting. Until standard reporting is in place, management’s success in moving toward integrated solutions is limited by the ‘forest for the trees’ data torrent.
Performance measurement: A Baldrige Award winner once said, “If you don’t keep score you are only practicing.” Manufacturing organizations have never lacked for measurements, however as a manager of multiple manufacturing locations across many time zones, the lack of common key value metrics can be crippling. As one of the early practical steps to impose some level of structure and strategy into a global organization, defining and implementing KPI’s tend to provide shape and direction to standardization and improved performance management. We still find and assist clients to overcome the following performance management issues:
- Lack of a system of key value drivers (key performance indicators/KPI’s) to drive process standards and performance
- Lack of standardized KPIs, due partially to non-standard systems and individual management priorities across locations and business units.
Large global organizations have a number of internal and external stakeholders. Since business transformation challenges are addressed by various stakeholders with different and at time competing agendas within the company, transformation projects require strong executive commitment and sustained involvement. Successful transformation across an enterprise must use process to implement process transformation. We find a process-based approach is a key requirement for the success of a large-scale transformation.
One of our global manufacturing clients (DuPont) is involved with a massive transformation project with the objective of defining and implementing agile processes. They have adopted an aggressive system design and implementation strategy, predicated on a process-centric approach. Their approach has enabled:
- Built extensive and integrated DuPont process framework and process assets
- Defined system process design requirements
- Emphasized reporting and process analysis to:
- Understand and evaluate integrated process and process resource (system, data, roles, etc.) views
- Analyze and improve global, regional, functional process deltas
- Created a test and simulation environment (lab) to define a process and system design template for standardized/harmonized roll out.
Increased BPM (Business Process Management) penetration to enable shared understanding and fostered goal achievement:
- Broader BPM perspective and audience to encompass:
- Increased process communication across a large number of process users
- Producers (Modelers)
- Consumers (process subject matter experts (SMEs), project roles, etc.)
Performance measurement: Aligned goals and metrics of processes to drive performance and agility across locations and functions to:
- Align global strategy / metrics / processes
- Align standard, global metric-controlled process design to process execution (monitor /control)
Summary: Large-scale transformation initiatives in global manufacturing organizations resemble the often used example of changing the tires on race car while the car is on the track. Why undertake such a fundamental change in business operations? We find the benefits far outweigh the sizable costs in these transformation projects with improved goal setting, performance measurement, communications, and bottom-line results. For those directly involved with transformation initiatives, within IT and their internal customers, we highlight the following benefits:
- Improved and shared understanding of business-process oriented system approach across involved roles/groups:
- IT roles and business roles
- Internal and external (system integrators)
- corporate, global, regional groups involved
- End-to-End process view results in:
- Tightly integrated design of process, roles, system, data
- Global, regional, functional standardization/harmonization
- Process deliverables drive project deliverables – using BPM methods to improve confidence and probability a improvement project is successful.
- Requires active use of process methodology across all projects.
For additional information, please feel free to read our case study, “Global Standard Process Design and Implementation. Alternatively, take a look at our framework for implementing large scale business transformation—the Confiance Transformation Framework℠