Process Mining in the Supply Chain - Recommended first use cases of process mining in supply chain organizations - Barkawi Management ...
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Process Mining in the Supply Chain
Process Mining
in the Supply
Chain
Recommended first use
cases of process mining
in supply chain
organizations
April 2021
© 2021 Copyright Genpact. All Rights Reserved -1-
Process Mining in the Supply Chain Process mining in the supply chain: here’s where to begin Process mining technology is entering the business scene and is quickly showing that there is a lot of value to be unlocked. Business leaders can now, Business leaders are often unaware of how for the first time, see how their processes really run seldom processes run as they should in their full complexity. Deviations from the standard, rework, errors (e.g. wrong price), timing Only ~60% of the instances of a process run and duration of steps, inefficiencies – all are now first-time-right transparent and can be analyzed and improved. Process mining is a technology that enables It is not uncommon that the order-to-cash businesses to not only deal with complexity but process has upwards of 100,000 variants embrace it and thrive in it by reaching and sustaining a new higher performance baseline. Applications in finance, mostly in invoicing, were Process mining can unlock value in all the first to be implemented and remain popular. dimensions of the supply chain trade-offs With proven successes delivering cash flow benefits in the order of $5 to $20 million for a ~$20 billion revenue company, the appetite to find process mining use cases in supply chain is growing. The supply chain use cases will help businesses increase customer service level by 2%- 10%, release 5%-10% of capital tied in inventory and reduce manufacturing and logistics costs by 5%-10%. Process mining applications in the supply chain are very promising but the benefits will not be unlocked all at once by a single use case. Supply chain leaders need to understand the different use cases, estimate the value that can be unlocked and gauge whether the supporting digital systems are mature enough for process mining to exploit them. We have put together an overview of use cases and criteria on how to select them to assist supply chain Process mining is a technology that reads leaders in kicking off the process mining journey. time stamped data to build a chain of Supply chain use cases activities. It provides full transparency and Process mining use cases fall into one of two analytical insights into the process in question. distinct value propositions: execution performance and planning performance. Execution performance use cases use process mining to attain transparency into the thousands of daily transactions in the operation’s systems (e.g. A data generated warehouse management system, transportation process map management system, manufacturing execution shows the real system, enterprise planning system, etc.), process determine root causes of underperformance and proactively bring potential issues to the staff’s © 2021 Copyright Genpact. All Rights Reserved -2-
Process Mining in the Supply Chain
attention. In more advanced cases, transactions How to select a use case
may be automatically adjusted to optimize
Supply chain leaders’ pick of use case to begin
performance.
their organization’s process mining journey is
Planning performance use cases focus on mid- extremely important as this will test the technology
term supply chain planning and use the data from and shape the decision whether to implement
the operation’s systems to correct planning further use cases. This first use case should be
parameters based on demonstrated process valuable for the organization and be relatively easy
performance so that plans are executable (leading to implement.
to less firefighting) and result in higher overall
The value to the organization will naturally
business performance. In advanced cases, process
depend on business priorities. Customer service,
mining can be applied to the advanced planning
however, is widely regarded as a top priority so use
system to enable decision mining for a higher
cases that unlock value by increasing service levels
performing planning process (S&OP/IBP) and
are strong candidates.
planners. This use case is covered in a separate
article. To gauge ease of implementation, supply chain
leaders need to evaluate the digital maturity of the
The referenced article on the decision mining use
system (or systems) that will be mined. If the
case can be found here.
source system has few data errors and event logs
The figure below provides an overview of the use are rigorously created at a granular level, then
cases with an indication of where the benefits are implementation of a process mining use case will
more concentrated and an assessment of the take less effort. Moreover, if the source system is
typical data engineering effort required for widely used (e.g. the leading enterprise resource
implementation. planning systems), then there is a high likelihood
Note: the OTIF management use case requires low effort if no link is established to the
transportation management system, otherwise it requires medium effort.
© 2021 Copyright Genpact. All Rights Reserved -3-Process Mining in the Supply Chain
that the process mining technology vendor has very popular application of process mining and
already developed data connectors that can be likely one for which the process mining technology
reused with little effort. vendor already has functioning applications or
services. Once in place, a good use case candidate
Our recommendation in most of the cases is to
to continue the process mining journey in the
begin with the OTIF management use case since it
supply chain is inventory management
fulfills the two conditions mentioned above. In
optimization.
addition, the OTIF management use case
leverages the order-to-cash processes, which is a
© 2021 Copyright Genpact. All Rights Reserved -4-Process Mining in the Supply Chain
Case study: a consumer electronics
manufacturer’s first process mining step
Over the past years, a European branch of a global The team extracted data from the Enterprise
consumer electronics manufacturer experienced Resource Planning system. Soon after, the full
very strong sales growth. The ability to deliver process map was visible. Within six weeks, the first
could not, however, scale with sales. Customer insights on what was causing low On-Time-In-Full
claims of poor service mostly in the form of long delivery (OTIF) came in. This allowed the team to
delays and miscommunication, had grown to design improvement initiatives.
unacceptable levels.
Excerpt of top issues found via process mining:
Growth momentum was at risk if operational
excellence was not brought to the order ▪ One in every three orders uniquely deviated
management process. It had grown in complexity from the standard process, there were over
and had become too inefficient. 100,000 process variants
▪ About 60% of orders had significant high-effort
The CEO of the affected European branch set out manual process changes or rework that
to tackle this problem together with supply chain increased lead time from 14 days to 39 days on
and operations leaders. The team hit a roadblock average
almost immediately. The means to make sense of ▪ Erroneous credit holds and delivery blocks
the dataset, and thereby fix the root causes of caused delays that on average reduced OTIF
delays, were not there. Performance couldn’t even by 12%
be measured to confirm the customers’ claims. ▪ Long-term reserved product reduced OTIF by
16% even though material would have been
The team brought in the help of Barkawi required for short-term delivery
Management Consultants. The team identified
three key objectives: Benefits identified:
▪ Achieve process transparency by ▪ OTIF improvement of 14% by 1) increasing
understanding the reality of their order the first-time-right rate from 40% to 80%, 2)
management process in its full complexity rule based automated correction of credit hold
▪ Increase customer service level by and delivery block errors and 3) optimization of
identifying and fixing the root causes of late or product reservation logic
incomplete deliveries and unnecessary process ▪ Average lead time reduced by 10 days, from
complexity 29 days to 19 days by reducing rework and
▪ Sustain the achieved benefits even as sales lengthy manual activities
and complexity continue to grow ▪ Increase in the ratio of order lines managed
per employee, from 11,000 to 30,000 via
And the means to achieve them: process mining automation, error correction, streamlining of
technology. process steps and implementation of new
policies
© 2021 Copyright Genpact. All Rights Reserved -5-Process Mining in the Supply Chain
Process mining enables a new competitive We recommend supply chain leaders focus on the
advantage – thriving in complexity use cases that will bring considerable and visible
benefits at the lowest implementation effort. From
Extreme levels of customization enabled by digital there, new use cases will become more accessible.
technology and equally extreme customer demand In most cases, the strongest use case to start with
are increasing the complexity that businesses must is OTIF management – the application of process
deal with. Those who do not act will see their mining to the order-to-cash process to
margins lost to this complexity. Businesses that systematically find and correct the root causes of
adopt process mining technology are developing a OTIF underperformance.
new kind of competitive advantage – the ability to
thrive in complexity.
The first use cases of process mining within supply
chain management are emerging and supply chain
leaders are now facing the challenge of
understanding and applying the technology to
unlock value in the form of service, cash and cost.
© 2021 Copyright Genpact. All Rights Reserved -6-Authors
Luis A. Dominguez
Manager
E luis.dominguez@barkawi.genpact.com
--
Mathias Vaupel
Senior Consultant
E mathias.vaupel@barkawi.genpact.com
T +49 89 7498 2600
W www.genpact.com
About Genpact
Genpact (NYSE: G) is a global professional services firm that makes business transformation real. We drive
digital-led innovation and digitally enabled intelligent operations for our clients, guided by our experience running
thousands of processes primarily for Global Fortune 500 companies. We think with design, dream in digital, and
solve problems with data and analytics. Combining our expertise in end-to-end operations and our AI-based
platform, Genpact Cora, we focus on the details – all 87,000+ of us. From New York to New Delhi and more than
25 countries in between, we connect every dot, reimagine every process, and reinvent companies’ ways of
working. We know that reimagining each step from start to finish creates better business outcomes. Whatever it is,
we’ll be there with you – accelerating digital transformation to create bold, lasting results – because transformation
happens here.
About Barkawi Management Consultants, a Genpact company and the authors
The authors work for Barkawi Management Consultants, a Genpact company. The firm is a leading supply chain
management consultancy with experience in many industries and, now as part of the larger Genpact organization,
has the capability to deliver management consulting, managed services and digital transformation at a global
scale.You can also read
