As the e-commerce industry shifts from global to international, efficient shipping processes become vital for business success and continuity. If you’re looking to expand your shipping and delivery infrastructure, choosing the right e-commerce shipping model can help you lay a steady business foundation that promotes a positive customer experience.

In-house Shipping vs. Third-party Shipping

In-house shipping is a delivery model that places all shipping responsibilities on the business. Any task that relates to the delivery infrastructure is managed in-house by the personnel of the company. Often, companies that opt for the in-house shipping model operate their own storage facilities and vehicle fleets.

Third-party shipping is a delivery model that enables companies to delegate some or all delivery tasks to a third-party provider. From delivery fleets, fulfillment centers, packing and storage, to technological solutions—third-party delivery companies provide products and services designed to make shipping operations easier for business owners.

If you are equipped to handle in-house shipping, you may reap the sweet fruits of your labor. Otherwise, you might benefit from delegating the responsibility to those that can make it profitable for you.

Know Your Supply Chain

Supply chains are the foundation of the delivery ecosystem and can either make or break a business. Unfortunately, supply chains are also very complex to create. The supply chain contains every aspect of making a sale, from the raw material of the product, the design process, the storage facility, the wrapping, delivery and any stage in the process until the product reaches its ultimate destination—the consumer.

Delivery is present at many stages of the supply chain. Any delay in the delivery, even the smallest, may disrupt the entire process and the supply time. To keep customers happy, supply time should be as promised with an emphasis on fast and scheduled delivery.

In-house Shipping—Control Your Supply Chain

Pro: Ultimate Control

Keeping shipping in-house enables companies to create their own delivery infrastructure. When you create every aspect of your supply chain, you are better able to improve business operations. You can continually improve deliveries and ensure that logistics are managed in accordance with the needs of the company.

Con: Operational Complexity

There are many things that can go wrong with in-house shipping. Inadequate delivery personnel can cause delivery losses or bad customer experience—which often result in monetary loss for the company. Inefficient management can turn daily delivery operations into a nightmarish mess in which orders get lost, forever buried in a poorly managed email account or incompatible CRM software.

Third-party Shipping—Monitor Your Supply Chain

Pro: Increase Efficiency

Prioritizing tasks can help you ensure each aspect of the business is run at capacity. You can do that by evaluating the company resources. If you don’t currently have the experience and skills needed to run a delivery operation in-house, you can hire an expert or choose among the many third-party service providers.

Nowadays, there is a third-party solution for almost any delivery need—from drop shipping, fulfillment centers, delivery trucks and storage facilities.

Con: No Flexibility

Most third-party shipping services come at fixed models and fixed prices. You have no control over the design of the delivery infrastructure, and you’re paying to use the service as is. While this model provides a solution for companies looking to scale slowly without incurring setup overhead, it doesn’t allow for much modification, if any.

Know Your Tech

It is almost impossible to run a business efficiently without the use of advanced technology. The technology you choose should fit your company’s unique business processes. Your ERP software should support you and not the other way around. Technology, after all, is intended to make life easier for people.

In-house Shipping—Design Your Tech

Pro: Ultimate Flexibility

One of the pluses of an in-house shipping model is the ability to customize the delivery technology solution according to your current IT infrastructure, or to choose a suite of solutions that integrate well with your existing ERP systems.

When you have control over the technology, you have control over the data. Data can be analyzed and turned into insights that improve business continuity and drive more sales.

Con: IT Overhead

Technology doesn’t manage itself. It needs professionals who understand it and have the skills to monitor, maintain and manage it. While IT talent doesn’t come cheap, it’s often an investment that pays off in the long term. Outsourcing IT often results in long wait lines to get proper support and fixed solutions that may not be right for your company.

Third-party Shipping—Use Their Tech

Pro: Enhanced Functionality

The technology provided by third-party shipping services usually comes with all the bells and whistles. These companies have a lot of experience and have spent substantial resources on efficient technologies. From delivery route optimization for faster delivery to smart tracking and live alert for customer convenience, third-party shipping services provide the full delivery experience.

Con: Fixed Infrastructure

While many third-party shipping providers can integrate with existing systems, they are usually ready-made technology products. You can’t make any changes to the system or customize it to fit the needs of your company. For better or worse, you can only use the system as it is offered by the third-party provider.

Know Your Budget

The budget is the heart of the company. It’s in every company’s best interest to ensure the budget supplies money efficiently to all departments. The importance of a budget for delivery purposes can be determined according to the type of business and the volume of deliveries the business is estimated to draw or currently sustains.

In-house shipping is a hefty undertaking that adds lines over lines to the delivery budget. The total monthly expense of in-house shipping is made up of many variables—from vehicle costs such as insurance and maintenance, employees costs such as wages and training, and storage facility costs such as space and equipment.

In-house Shipping—Govern Your Budget

Pro: Cheap at Scale

By managing shipping operations in-house, you gain full control over your budget. Yes, there’s a level of control in choosing a third-party provider. The difference lies in the ability to make changes at every level of the delivery infrastructure.

If a certain vehicle is proving to be expensive in lease and maintenance, you can replace it with another model to reduce costs. For example, a vehicle running on a hybrid engine can reduce fuel costs. In-house shipping enables you to improve every aspect of the delivery budget and continually reduce costs.

Con: High Set Up Costs

Before you can get to a point in which you’re running a profitable and efficient delivery machine, you need to set it up. As with every endeavor, the initial costs of getting the operation up and running can be expensive. The exact sum varies from business to business, so be sure to create a comprehensive estimation of the initial capital needed to set up your delivery operation. While online research is always good, it doesn’t replace an individual evaluation of the numbers as they apply to your company.

Third-party Shipping—Maintain Your Budget

Pro: Scalable Costs

If you have no experience in delivery operations or no desire to take part in that aspect of the business, you can take advantage of the services offered by third-party shipping providers. Often, third-party delivery providers help e-commerce owners start small and scale slowly by eliminating the need for setup capital. Often, third-party delivery services help e-commerce owners run a one-person business, further reducing the costs usually allotted for staff.

Con: No Transparency

When you outsource delivery tasks, you aren’t able to control how the budget is handled. You pay a monthly fee for the use of the service. You can’t know how much of the money goes towards training the drivers, vehicle costs or administration. You forfeit that right in favor of using a pre-existing infrastructure. Be sure to choose a third-party provider that can be a trusted partner for the long term.

Bottom Line—Know Your Business

Choose a delivery model that fits your business. Consider your business resources—including talent, tech and money. If you’re running a one-person e-commerce show, third-party providers can help you clear time for more important priorities. If you’re looking to improve your existing delivery ecosystem, you can integrate to a third-party solution. You can also go with a hybrid model that incorporates the strengths of both.

Panorama’s ERP consultants can help your company determine a delivery strategy that continually improves your bottom line.

Written by Limor Wainstein. Limor is a technical writer and editor at Agile SEO, a boutique digital marketing agency focused on technology and SaaS markets. She has over 10 years’ experience writing technical articles and documentation for various audiences, including technical on-site content, software documentation, and dev guides. She specializes in big data analytics, computer/network security, middleware, software development and APIs.

Note: The inclusion of guest posts on the Panorama website does not imply endorsement of any specific product or service. Panorama is, and always will remain, completely independent and vendor-neutral. If you are interested in guest blogging opportunities, click to read more about our submission guidelines.

When organizations want to increase efficiency and run a lean company, many turn to value stream mapping.

Value stream mapping is a proven Lean Six Sigma technique that provides high-value information and a bird’s eye view of different factors within an operation. It optimizes processes by focusing on the actions, timeframe and people involved.

You might be familiar with a process map, but a value stream map can provide a much broader view of your processes. It is especially useful during an ERP implementation or digital transformation. Why? Well, according to our 2019 ERP Report, the top reason for ERP project budget overruns was scope expansion. In our experience, a major cause of scope expansion is a failure to define business processes before ERP selection.

Overview

Value stream mapping is a tool that helps organizations understand the flow of information or materials.

Value stream mapping should:

• Provide a broad range of information.
• Cover the value stream from end-to-end.
• Include a high-level view of a business process.
• Account for management and information systems support.
• Identify decision making flow.

While this may seem like a lot to expect from a simple pen-and-paper tool, the idea is to take a process that might seem complex and simplify it as much as possible.

Value stream mapping plays a significant role in reducing cycle times, eliminating decision-making blocks and reducing unnecessary information transfer or approvals. It’s a tool meant to remove steps that waste time and resources.

Ultimately, value stream mapping should align business process with the organizations’ overall goals or their goals for a specific product or service. 

Value Stream Mapping vs. Value Chain Mapping

While companies may use the terms value stream mapping and value chain mapping interchangeably, these two tools provide very different functions.

Example of a Value Steam Map

“Value Stream Map Parts” by Daniel Penfield is licensed under CC BY-SA 3.0

A value stream map is a high-level view, documenting a business process – usually, the manufacturing of a product, service or task. The map serves to reduce waste and help management choose the paths that provide the highest value to customers and other stakeholders. The map outlines processes, key people and the business architecture involved in delivering a product or service.

Example of a Value Chain Map

“SCHH Value Chain” by Pan491 is licensed under CC BY-SA 3.0

A value chain map shows a business function with its performance metrics. The map shows the current process and the aspects of each step that contribute to success. The map is very direct and focuses on the smaller, but still important, aspects of a process.

How Does Value Stream Mapping Add Value?

A value stream map adds value in the same way that many other Lean or Six Sigma tools do – it eliminates waste. Saving company resources, not just money, can have a positive impact on the culture, processes and eventually the bottom line.

A value stream map provides:

• Easy assessment of bottlenecks.
• A useful resource for management and executives.
• A way to initiate countermeasures in a visual manner.

Unlike other tools that aim to increase efficiency, a value stream map illuminates immediate options for process improvement. On top of everything else, a value steam map is simple to understand and easy to modify.

While obtaining buy-in for process improvement isn’t always easy, many organizations hire ERP consultants to help align stakeholders around common goals. For example, many of our clients’ project teams know that the project budget allotted by leadership isn’t enough, so we take the time to educate executives about the importance of success factors like business process reengineering and organizational change management.

Practical Uses

How can you put a value stream map to use in your organization? Historically, the value stream map has thrived in manufacturing settings since Toyota began to implement this type of system in the early 1950s. Today, value stream mapping is proving useful across a variety of industries.

When it comes to manufacturing the practical uses are clear. Each product that has a value stream map can increase the efficiency of manufacturing and eliminate the risk of overproduction.

In healthcare organizations, a value stream map can show doctors where a patient is in their recovery plan. These maps also can eliminate unnecessary testing, reduce wait times and lead to more cost-effective treatment without compromising the quality of care.

Administrative staff are learning to love value stream mapping as it eliminates duties that overlap or are blatantly unnecessary. A value system map can reduce quality control to one step rather than multiple quality checks that often bottleneck administrative work.

Value Steam Mapping During an ERP Implementation

Challenges

Every good thing comes at a price, right? Don’t worry – the challenges of value stream mapping lie in the initial time investment.

Creating a value stream map usually takes several weeks. It depends on how stasis your current processes are and the scope of the map. While the time investment may be intimidating, recruiting the right people for your project team can make the effort less taxing.

When creating maps, you of course want people who are intimately familiar with the processes being mapped. However, you also want to include people who have no day-to-day familiarity with the processes. You need people who will question small steps and why certain restrictions are in place. A third-party, like an ERP consultant, can be helpful since they will look at your processes with a fresh eye.

Best Practices

There are a few key components that play directly into the success of value stream mapping. First of all, you should ensure the map is realistic. The map of the current value stream cannot be optimistic when it comes to time aspects, such as how long it takes to receive goods from a vendor. Additionally, your future state map must strive to both restrict the ability of overproduction, while also removing constraints.

Does Your Organization Need a Value Steam Map?

Enabling organizational change and improving efficiency, this tool is well worth the time and effort spent creating it. Whether you’re having problems with a supplier, struggling to meet customer demand or trying to make the most of your ERP software, a value stream map can provide actionable insights.   

Panorama’s ERP consultants can help you create a value stream map that provides the insight necessary to make smart decisions during ERP selection and throughout your ERP project.

Improving sales isn’t about bringing in better salespeople. Instead, you need to understand how you generate leads and convert those leads into sales. In other words, improving sales is about improving your business processes.

Think About Your Sales Funnel

The first step to improving your sales processes is documenting them. Your sales funnel is good place to start. Document how you attract leads and eventually convert them into customers.

How many steps are in your sales process and what are they? More importantly, what purpose do they serve? Answering these questions will make it much easier for you to improve your processes.

Consider using value stream mapping, a technique that focuses on removing waste and identifying opportunities for improvement.

Establish KPIs

Key performance indicators (KPIs) are metrics that can provide you with tangible goals for improving your sales processes. You need to establish KPIs for each step in your sales funnel and measure your conversion rates over time.

When setting up targets, make sure you’re being realistic, and allow some flexibility to make changes along the way.

Automate Some of Your Processes

The next step in your journey to optimize your sales processes is to get the right tools. More specifically, you’re going to need a CRM system – or an ERP system with CRM functionality.

A CRM system can make your sales team more efficient. For example, it can track who is responding to your marketing material, and help you identify which leads are more likely to turn into customers. You also can learn about people’s demographics and interest profiles and use this information to help you sift through your leads and move those less likely to turn into sales towards the bottom of the list.

CRM systems put all your data in one place and make it easy for your team to share information. This ensures organizational alignment, which is critical to digital transformation.

Determine How You’re Going to Improve

There are generally two ways to improve your sales:

• Increase the volume of each sale
• Increase the number of customers

Typically, you should be able to make improvements in both areas. Consider offering some promotions that bundle different products together or use your CRM software to send follow up emails to previous customers.

To improve your conversion rate, you can do some A/B testing in your CRM system to find out what content is most effective.

Start Optimizing Today

Improving your sales processes to boost revenues is a long process, but it’s one that is well worth undertaking. It will help you improve margins in a sustainable way, so your business can continue growing and maintain its competitive advantage.

About the Author: Kevin Conner is the founder of several successful startups. His current focus is Broadband Search, a service dedicated to helping people find the best value internet service provider in their area. These businesses have given him the opportunity to work closely with many different sales teams, giving him an insider’s perspective on what works and what doesn’t.

Note: The inclusion of guest posts on the Panorama website does not imply endorsement of any specific product or service. Panorama is, and always will remain, completely independent and vendor-neutral. If you are interested in guest blogging opportunities, click to read more about our submission guidelines.

Many organizations begin ERP selection without a solid foundation of business process management. When they look at the mass of ERP systems to choose from, they have no idea where to start because they don’t know what technology will enable their business processes or competitive advantage.

Clearly, business process management is important. At the most basic level, business process management helps you define business requirements that you can submit to your long-list or short-list ERP vendors.

However, the value of business process management goes beyond business requirements:

5 Areas Where Business Process Management is Useful

1. Competitive Advantage

Misalignment between processes and strategy makes it difficult to deliver customer value. Business process management gives you the opportunity to design your processes to support your digital strategy and competitive advantage. Business design sessions bring together stakeholders from across the organization to promote strategic alignment and find opportunities to improve your competitive advantage.

You can protect your competitive advantage and minimize software customization by viewing processes through three lenses. Backoffice processes, like invoicing or procurement, can usually leverage out-of-the-box software functionality. Other processes are industry differentiators. These will guide your choice of ERP software since some ERP systems may not support niche functionality. Finally, there are processes that provide competitive advantage, such as product development or ecommerce. These may require software customization. While expensive, customization for the sake of competitive advantage is always worthwhile.

2. Employee Buy-in

Defining your business processes allows you to identify organizational changes and communicate them to employees. Imagine telling employees, “there will be change,” without being able to outline specific process changes. This would not elicit buy-in.

Business process management also helps you understand roles and responsibilities as well as changes to organizational structure. This understanding facilitates change management activities as it enables you to develop a targeted communication plan.

Another way to elicit buy-in from employees is to involve them in business design sessions. When employees are allowed input on the changes made to their own processes, they will naturally support these changes and encourage others to support them, as well.

3. Organizational Alignment

When we say that business process management can lead to organizational alignment, we are talking about a certain approach to business process management. One approach relies on functional thinking, which is a way of thinking about processes in terms of specialization. The other approach relies on end-to-end process thinking, which looks at the entire value chain, including the intended purpose of each process and hand-offs between functions. The latter approach leads to organizational alignment.

Another name for this approach is value chain mapping. What does it look like? It’s all about breaking down functional silos and gaining end-to-end process understanding, visibility and control. You bring together various stakeholders to look for ways to increase efficiency across functional areas and not just within functional areas. By integrating processes across silos, you ensure everyone is working toward the same goals.

While many ERP consultants take a functional approach to business process mapping, Panorama uses value chain mapping. Make sure your ERP consultant takes this integrated approach.

4. Removing Workarounds

Ideally, business process management will remove 90% or more of the workarounds your employees use to complete tasks. Employees use workarounds when processes are poorly defined. Sometimes, the current technology cannot support efficient processes anyway.

When mapping your business processes, be sure to differentiate between workarounds and actual processes. You don’t want to include workarounds in the business requirements you submit to ERP vendors as each requirement may add additional implementation costs. You can remove workarounds by designing new processes that negate the need for extra steps.

Another cause of workarounds is a lack of effective employee training. Fortunately, an ERP implementation is a great opportunity to train employees. You can use process documentation to design customized training materials. Training should be recurrent enough to support long-term retention and customized enough to address each employee’s unique processes.

5. Continuous Improvement

Business process management provides a foundation for building a center of excellence, which allows you to continuously improve. During business design sessions, you can develop key performance indicators (KPIs) to regularly measure performance improvements and project cost savings, such as decreased turnover.

While most organizations only measure improvements immediately after go-live, many benefits are achieved overtime, so you should continue to measure improvements years after go-live. This is especially true if you have a center of excellence since you will always be improving processes.

While continuous improvement is essential, it can be mismanaged. It’s important to involve the IT department in process changes as your ERP system should continually be configured to support new processes. If your technology cannot support these processes, employees will use workarounds and create new inefficiencies.

What is Your Business Process Management Approach?

An end-to-end process mindset can help your organization realize the benefits of business process management. However, according to a recent study by the American Productivity & Quality Center, the biggest challenge organizations experience with end-to-end process thinking is convincing executives of its value.

How can you overcome this challenge? Panorama’s ERP consultants can help you articulate the benefits of value chain mapping so you can obtain buy-in from executives.

While most organizations are racing to ERP go live, some are taking the time to reengineer their business processes. They are not concerned with implementing an ERP system as quickly as possible. Instead, they’re focused on beating the competition by designing differentiated, efficient business processes. They may lose the race to the go-live finish line, but they’ll win the race that actually matters – the race to grow their customer base and increase revenue.

Here are seven tips for improving your competitive advantage through business process reengineering:

1. Budget adequate time and resources

Business process reengineering takes time. In fact, it takes more time than the technical configuration, testing and implementation of ERP software. It probably took your organization years to adopt your current processes, so it will likely take some time to change those well-established processes. You should ensure sufficient time for defining, improving and implementing new business processes. Benchmarking against organizations of similar size and industry will help you set realistic expectations for your project.

2. Define business requirements before selecting ERP software

Organizations often find that modern ERP systems are too flexible to simply start using out of the box. Even the simplest business processes have multiple workflow options. This complexity will slow down your project if your business processes aren’t well defined before the design and build phases of your implementation. If you start your project with a clear vision of your business requirements, you will minimize the amount of time you spend with expensive technical consultants. You’ll also ensure your competitive advantage isn’t lost to standard software functionality.

3. Improve business processes before selecting ERP software

Just as you should define business requirements before software selection, you should also improve your processes as early as possible. This is also the time to consider whether your processes align with your long-term organizational strategy. Waiting until the last minute to improve processes may leave you with no choice but to keep all your existing processes, whether or not they are optimized. Operational efficiency can differentiate you from your competitors, so now’s your chance to surpass them through process improvement.

4. Don’t treat all business processes equally

Many organizations are overwhelmed by the number of business processes they need to document, analyze and improve. They don’t realize they can start by focusing on just the processes that are competitive differentiators. These processes should drive your selection of ERP software and shouldn’t be constrained by software best practices, which may not be best practices for your unique operations. For example, your customer service may be a source of competitive advantage. If so, customer-facing processes should be a priority during business process reengineering and requirements gathering.

5. Integrate business process re-engineering with change management

Resistance to change is one of the main reasons business transformation takes longer than expected. Ensuring employees understand and accept new processes is challenging because people naturally dislike change. Before training employees, you should identify the gaps between your current and future state, so employees understand new processes in the context of their day-to-day jobs. A comprehensive change management plan includes more than training. You also need to strategically communicate with employees to ensure they accept new business processes before go live and adopt those processes for the long term.

6. Integrate analytics into business processes

Several ERP vendors offer innovative solutions that leverage business intelligence and predictive analytics. These systems use artificial intelligence (AI) to turn massive amounts of seemingly unusable data into actionable data. But what good is this data if you don’t have a plan for acting on it? When defining your future state business processes, you should include processes for analyzing and acting on data. Chances are, most of your competitors don’t have a strategy for leveraging AI nor have they implemented this innovative technology.

7. Measure results and make incremental improvements

Measuring post-implementation results helps you stay on track to realizing expected business benefits. If you’re not achieving a particular benefit, you should determine root causes and pain points. Continually measuring incremental benefits realization allows you to make corrections as needed. Misalignment between business requirements and software functionality can deter benefits realization. Lack of employee buy-in can also create a roadblock.

Why Improve Your Processes?

 Every organization deserves ERP software that supports their business processes. The only way to ensure you select such software is to improve your processes before selection.

Business process reengineering also ensures your chosen ERP software aligns with your long-term organizational goals. ERP systems are a big investment, so they should support your processes for the next five to ten years.

Most importantly, business process reengineering helps you beat the competition by ensuring your ERP system enables differentiated, efficient business processes.

Panorama’s ERP consultants can help your organization improve its processes before selection. We have seen organizations save time and money during implementation by investing in pre-selection activities like business process reengineering.

When the Titanic sank, researchers furiously worked to determine the causes, so all future ocean liners could safely transport passengers. When an organization experiences a material operational disruption – such as the inability to ship products or close the books – it should work just as furiously to determine root causes, so it can learn from its mistakes. Often, these mistakes are related to business process management.

Excavating the Wreckage

Here’s what you might find in the wreckage of an operational disruption:

• Low morale among employees
• Heavy customization and/or software functionality inadequate for your business requirements
• Low benefits realization
• Broken glass

Learning From Failure

Don’t let your operational disruption discourage you from attempting business process management again. While it can be a daunting process fraught with risk, it’s the only way your organization can grow and innovate. Here’s how you can learn from your mistakes.

Forgive

Whenever you experience failure in any area of life, your first order of business is to take a deep breath and forgive yourself and others. Only then, can you have a clear head to focus on the facts without allowing emotion to determine your path forward.

Analyze

You can conduct a lessons learned meeting to review project deliverables. While you want to focus on causes, it also is important to look at effects. Quantifying the direct and indirect costs in terms of time and money will give you an idea of the benefits you’ll need to realize to achieve a positive ROI on failure.

Disseminate

 Sharing lessons learned with the entire organization creates a culture of transparency and trust. Every department has something to learn from the post-mortem so be sure to spread the knowledge and empower employees to help you succeed in future initiatives.

Components of Successful Business Process Management

While it’s normal to experience a decrease in productivity after implementing new business processes, operational disruptions can be avoided by developing an effective business process management plan.

Business Process Mapping

This involves mapping your current state business processes at a high level, while looking for pain points and opportunities for improvement. There are several degrees of improvement you can choose. Maybe you just want to remove waste. Maybe you’re striving for ultimate efficiency. In rare cases, you may want a radical change where you start from scratch. Once you’ve improved, optimized or reengineered each of your processes, it’s time to map your future state. If you’re implementing new technology, you’ll want to map these future state processes in granular detail to serve as the basis of your software selection.

Organizational Change Management

As mentioned earlier, implementing new business processes often causes a decrease in productivity. Organizational change management can reduce the degree of this productivity drop and shorten its duration. Business process management cannot succeed without customized training and targeted employee communication, both of which should begin before software selection.

Continuous Improvement

 A mentality of continuous improvement will ensure that your processes remain optimized overtime and evolve with the needs of your organization. Setting KPIs will allow you to regularly measure performance and determine when processes need further improvement.

Business Process Management Tips for an ERP Implementation

If you’re improving your business processes in preparation for an ERP implementation, you’re probably wondering how software functionality might affect your business process management strategy. The short answer is, it depends.

Basic software functionality is probably adequate for your core business processes, like accounting and inventory management. However, processes that are industry differentiators or sources of competitive advantage – such as CRM or eCommerce – should not be constrained by basic software functionality. Instead, you should dedicate significant time to mapping these processes before you evaluate software. Naturally, you’ll want to plan for the time, money and resources of these efforts. While it’s a larger upfront investment, these processes will deliver a higher ROI if they continue to support your competitive advantage.

Understanding the Wreckage

Now that we know what successful business process management looks like, let’s go back to the wreckage, and see if it makes more sense.

• Low morale among employees
  • If employees are resisting organizational changes, you may have neglected to map your current and future state business processes and identify gaps for training purposes.
• Heavy customization and/or software functionality inadequate for your business requirements
  • If your software doesn’t fit your needs and requires extensive customization, you may have allowed software vendors to wow you with shiny new features instead of scripting the demo based on your business requirements.
• Low benefits realization
  • If your business transformation delivers fewer benefits than anticipated, you may have failed to improve key processes with the most potential to improve efficiency and reduce costs. Or, you may have standardized processes that should be competitive differentiators.

What’s Your ROI on Failure?

Today, we’re better at saving people from shipwrecks, and this is partially due to what we’ve learned from the sinking Titanic. While these lessons learned could never outweigh the loss of life, operational disruptions are different. An operational disruption could eventually bring enough benefit to your organization to outweigh the damage. If you follow our tips for learning from failure and our steps to successful business process management, you can begin to transform your organization and achieve your vision. Your ROI on failure is up to you.

This may prove challenging, but I’m going to attempt to explain business process management in less than 500 words. So take your seat, pull out a pencil and hold onto your hat because this is going to be quite a ride.

Business Process Management Defined

Business process management is a holistic approach used to evaluate and improve an organization’s business processes. This is often performed before the organization implements new ERP software. With or without new technology, business process management can enable an organization to improve efficiency and reduce production costs. An organization pursuing digital transformation may use business process management to change their company’s entire business model.

The Importance of Business Process Management

When you automate an inefficient process, you only make an inefficient process faster. Many organizations implementing ERP software choose to improve their business processes before stuffing them into an ERP system.

Today’s ERP software is very flexible and can accommodate a process in a variety of ways. This is why so many organizations take the time to envision their future state processes before selecting enterprise software. These organizations save time and money by determining their software configuration requirements early in project. They also can more accurately estimate customization costs.

Areas of Business Process Management

Business Process Improvement

An organization examines only its key processes – the ones that serve as competitive differentiators. The organization documents its current state process and defines key performance indicators. Then, the organization improves these processes to optimize efficiency while ensuring that controls are put in place to monitor efficiency on an ongoing basis.

Business Process Reengineering

If an organization finds that no amount of improvement can make a process more efficient, they may completely remove the current process and redesign it from scratch.

Business Process Optimization

An organization evaluates and improves all of its business processes, including those that are not a source of competitive advantage. This approach looks at the organization from a financial perspective to determine how to reduce production costs.

Business Process Management Essentials

Business Process Mapping

This involves the outlining of current state processes, the identification of pain points and the gathering of business requirements. The result is a clear map between an organization’s current state and its desired state. Business process mapping facilitates requirements gathering and provides a baseline for developing a business case and outlining expected benefits. The business case is often used to gain executive buy-in.

Business Blueprinting

This is the final step of business process management. Once an organization has improved its processes, they provide their chosen ERP vendor with a business blueprint. This details how the ERP vendor should configure each business process within the ERP system. The blueprint provides specifics on workflows, business logic, checklists, triggers and notifications.

There you have it. The basics of business process management in less than 500 words. Class dismissed!

Ray Kroc once said, “the two most important requirements for major success are: First, being in the right place at the right time. And second, doing something about it.”

We see this all the time with organizations. During software development or ERP selection, at one point or another, we have all heard the term “requirements.” What are requirements? Why are they so important? Once you have them, what are you supposed to do with them?

The most condensed answer to this question is: requirements are what an ERP system/implementation or a company must be able to do to perform their jobs.

To simplify things, let’s take software out of the picture. If you were to ask a bricklayer what they need to do their job they might rattle off a list like: bricks, a way to transport bricks to the site, mortar to lay the bricks, a way to transport mortar to the site, a blueprint or reference of what we are building with the bricks. Furthermore, they need a process to determine when the job is done and if the job is finished to specifications.

Notice that in the analogy I never once specified the “how,” only the “what.” During the process of requirements gathering, there is no need to spend precious time on how you want to be able to complete a task. Instead, spend your time on simply completing the task.

Another comparison is the job of a Hollywood screenwriter. A common trap that novice screenwriters fall into is that invariably describing camera angles, music crescendos, lighting motifs and sound effects. This is not their job, their job is to tell a story, the foundation of the entire movie. Without them, you get 90 minutes of bangs, explosions and special effects without any story or characterization that anyone would care about.

The same holds true for requirements. During the requirements process, it is important to focus on what the software should be able to do, not how. Do not get caught in the trap of “the function key F5 must pull up a screen of orders to be processed”. What we need is a screen of orders to be processed, the F5 key is irrelevant. You may settle on a ERP vendor software package that uses a click to open the screen. Choosing software based on specific points like an F-key that must be pressed is a hard justification. Are you really going to choose the software package on that criteria alone?

Now that we have covered the “what” aspect of requirements gathering, what is the best approach to it? There are horror stories related to how requirement sessions go off the rails, rabbit holes are explored to no end and all active participants are talking about details that have nothing to do with the scheduled functional area. The best counter to this hazard is to follow a proven methodology of requirements gathering that consists of careful consideration to workshop session structure and making sure the subject matter experts and process owners are in the room. In many cases, the subject matter expert knows every detail of the process, but the higher-level intentions of the process are the domain of the process owner.

Next up is mapping the process. This illustrates the process in front of everyone so that nothing is lost. After that, you take the process maps and make them into requirements. For example, looking at a process map we may see: Receive order from website EDI > transfer order to picking > deliver product. We have several requirements for the software such as: the ability to integrate with 3^rd party website EDI, the ability to display list of products that need to be picked from the warehouse, the ability to mark products as picked, The ability to transfer picked products to delivery module, the ability to recognize delivery route based on customer delivery address….and so on. Then you will categorize the requirements by process, and in turn by functional area. The requirements can then be delivered to the software developer or vendor to determine if the work can be done or not.

Requirements communicate need. What do you need to do? What does your business need to function? Your business has unique operations and characteristics that set you apart. Don’t let those unique attributes hit the ground because your time was spent talking about what your business doesn’t need. Your business needs to be able to manufacture and deliver products and services to customers. I guarantee that your business doesn’t need the F-key.

Coffee lovers, you know this too well. It’s early. You’re trying to get your “morning burst of energy” (aka caffeine), so you drive to your local coffee shop. There are two types of people:

1. The people who go through a drive thru line
AND
2. The people who park their car and grab their coffee inside

However, the coffee shops who have a drive thru option can have a tough job.

They have to keep both lines moving at a very fast pace. You can’t have a terribly long drive thru line (people will see how long the line is and decide to go elsewhere), but you also have to cater to those who came inside to grab their coffee. Both lines are full of people who need fast service.

If there is anything we all know about coffee shops it is that people can get very angry without their caffeine. That’s why baristas need to be as efficient as possible. They’re in the trenches. They can realize what needs to be done in order to make everyone’s morning move smoother.

Let’s take this as an example: In order to move both lines along quicker, a barista may ask for the cappuccino machine to be moved to a more centralized location so that there is not as much running back and forth between the two lines (drive thru and in-store customers). The barista making the claim for the move is most likely a subject matter expert because they experience this issue on a daily basis. This is when a Six Sigma Quick Hit called a “DMAIC” can be used. DMAIC stands for: Define, Measure, Analyze, Improve and Control. Out of all of these steps, the “control” proves to be the most challenging.

For the most part, this process is straightforward. To “define” a problem, talk about the problem, why it is a problem and why it should be addressed. This keeps your problem in scope.

As for “measuring,” it basically means the consumption over time. You probably have that number, so establishing your baseline for comparison is usually not the issue.

The “Analysis” can employ a number of techniques depending on the situation including fishbone, root causes, and analysis of variance. Pick the best analysis tool for your situation and remain consistent.

Now it’s time to “improve.” A lot of people get bogged down on whether they are taking the best approach on this. Remember, business process reeneingeering is iterative. Apply an improvement, measure, analyze, improve, measure, analyze, improve. Record your data over time and stick with what is working. Record the process change as a marker on the graph so you know what worked at a particular time. Now comes the tough part… “control.”

You get measurable results and then you have a “Eureka!” Moment. When this happens, a lot of people will run off to tell everyone that they were were “right” the whole time. Slow down. Without the “control,” your process will slowly revert back to what it was before. It may sound crazy, but there is a reason why it was that way to begin with.

Let’s go back to our barista. Imagine that one of the measurables was that a cup was consumed from the cup counter hopper. If the user moved the cappuccino maker over next to the cup dispenser, then you should see an activation from the cappuccino maker within seconds.

Compare that to the data from our baseline (which would have been at least 10 seconds because they had to run across the store). If the investigator sees inconsistent or erratic times from the cup hopper to the cappuccino maker, then that is a red flag and a follow-up conversation with the barista should be conducted. (This is when some organizational change management comes in handy!)

You must control your new process and verify it with quantitative data collection and identification techniques. At the very least, give it a solid month or two of implementation so that you have the data to back up the process improvement initiative. After that, even if the users revert to old ways, you have the report to tell the boss that it worked, but that it needs oversight, executive buy-in or a corporate mandate.

Process improvement is not “hard,” but it requires a methodical approach. Most of the time we eyeball process improvements and hope for the best. Depending on your pay scale, this can be expensive or at the very least, divert unnecessary resources away from primary operations. If done methodically and with an iterative approach, the tasks of the DMAIC process can be relatively passive. Give it a try, you might just like it. Either way it shows you’re a go-getter and know how to make things happen.