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The Seven Deadly Process Efficiency Mistakes
How much do you really know about what happens in your business on a regular basis? With all the daily transactions running at any given moment in purchasing, accounting, logistics, production, marketing, and customer service processes, there’s no doubt things can get a bit complicated.
According to market research firm IDC, most companies have little to no knowledge of where hidden process weaknesses are wreaking havoc on their profit potential. In fact, IDC found 20-30% of revenue in most companies is lost due to that reason alone.
There are seven process efficiency mistakes we see regularly. Read on to see if your company is guilty of any of these:
1. Overlooking small errors
It happens to every organization. At some point you lose track of the little things and tiny errors sneak in. Sure, sometimes it’s necessary to go around the agreed process a bit or find loopholes. However, when these deviations are repeated they add up to a shocking amount of time and money wasted.
Think, too, about unintentional deviations from the agreed upon process steps left out, steps done in the wrong order, lack of appropriate approvals, long-running materials, or slow vendors. It’s easy to see how these can lead to an exponential amount of manual rework. Often these problems follow a pattern that can lead you to the root cause. And if you have a process mining technology solution at hand, you can easily uncover these patterns and find a straightforward solution that saves your organization valuable resources.
2. Sticking to stringent processes
We have seen with numerous large organizations that often processes are hidden and tucked away rather than out in the open where they can be seen, discussed, and fully understood. Instead, they are viewed as an inflexible set of rules that cannot be touched and because of that set culture, people don’t know to think how those processes could be improved.
In our experience, this is one of the primary reasons people don’t first investigate the process itself and see what could be made more efficient. In fact, 20-30% of the steps in those processes could be cut out or minimized to improve efficiency. Without transparency about the process itself, let alone how well it runs, there’s no opportunity to ensure everything is operating at full capacity.
3. Avoiding automation efficiencies
Automated processes can save you time and money and simplify your daily business. In many cases, however, there is still hidden potential just waiting to fully be exploited. We’ve recognized three different trends: No automation at all, with processes that are repetitive yet still done manually; Insufficient/incomplete automations in place, e.g., instead of automating the entire workflow, only automating goods receipt with an RFID scanning system; or Automation full of errors due to partial implementation or persistent, recurring loopholes.
Automations that are implemented correctly can be a blessing. However, incorrectly applied automation can result in enormous costs. That’s why many of our customers use Process Mining technology to evaluate automation potential before implementation and continue to monitor its success afterwards. This has proven particularly successful with robotics process automation (RPA), with Process Mining emerging as a critical tool for maximizing the ROI on RPA initiatives.
4. Mismanaging master data
Of course, for all the materials you order and the suppliers you have, there is master data information. The problem we have seen with some companies is pretty simple—master data is wrong or not up to date. If this master data is not accurate, this could, for example, cause your orders to have the wrong price points. This is a fairly common phenomenon that causes some big problems with companies and their suppliers.
Imagine you send out an order to your supplier with the information you have in your master data. You wait a few days for a response and if that data is not up to date, your supplier will tell you it’s not the right price. Here is where your process comes to a halt (e.g., imagine a manufacturing line waiting for components to be delivered). Often these issues can’t just be solved with just a quick phone call. In the end, this amounts to loss of time and money.
5. Underestimating internal benchmarking
One of the chief things larger companies want to analyze is why and how various regions, divisions, or areas of the company execute processes differently. That’s because this can lead to some confusion when employees in one area of the company are conducting processes in one way, while other employees are doing them completely differently.
Our advice here is two-fold:
Use automated conformance checking to see where the real processes deviate from the defined standard. Celonis can give you a prioritized list of harmful deviations and their impact on the process in terms of time and costs to your bottom line.
Conduct internal benchmarking to see, for example, how the process looks for Plant A and whether it differs from Plant B. Of course, with benchmarking you can also see which option has the best outcomes and define a new standard.
6. Increasing internal awareness
Many companies don’t think enough about this, but it’s crucial to engage your employees—no matter their position—to ensure your processes continue to operate at maximum efficiency. Think about your KPIs and how best to achieve them. Someone needs to own the process, monitor and drive improvement, and ensure that everyone involved understands how the process works. Even with a good process in place, if employees don’t see their role in it or the value in following it, it’s not going to work out well.
What can you do to improve awareness? Workshops or explicit instructions may help. Celonis provides an additional resource: a component that allows organizations and process owners to define objectives and assign responsibilities to teams and team members. Then, you can monitor your progress toward those objectives and ensure team members are taking responsibility. Furthermore, the Celonis conformance feature enables your employees to access the process, collaborate with it and understand the data. If someone sees exactly how the process works and is empowered to act on it, s/he will have a much better understanding of his/her own role in the organization and what kind of impact s/he can have.
7. Failing to plan
Let’s think about on-time delivery for a second. Many times, companies can’t adhere to their scheduled delivery times. At the root of this is poor planning, and it can move the timeline for your entire processes backward. To solve these issues, companies need to analyze them to track their history, the root cause of how things got to this point, and what they can do to correct it.
Planning failures don’t just apply to delivery, however, and when multiple processes are not up to par the impact is far-reaching. Time, money, satisfaction of both employees and customers—these are all affected by a lack of foresight. In the end, if your company is falling prey to this or any of these other inefficiencies, it could wipe away your advantage in the marketplace.
The good news is, with Celonis you can easily leverage your company’s existing data to uncover opportunities for improvement. Celonis also provides a spectrum of cutting-edge machine learning capabilities to make predictions and detailed forecasts, enabling you to meet your goals, delight your stakeholders and set yourself apart from your competitors.
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