Originally published - June 25, 2007
Lean disciplines may have originated on the shop floor; but, they can also be applied in the front office and this is where the next frontier of productivity gains will take place. Growth in outsourcing and the shortening of product life cycles mean that more and more value is added to a product in the front office. Engineer-to-order and project-centric businesses, in particular, are vulnerable to efficiency drains in the front office, and companies that contract out a significant percentage of their manufacturing processes will also have increased demands placed on administrative functions, making front office lean absolutely critical.
In an earlier article, we dealt with some basic approaches to front-office lean. In this article, we'll focus on one often-overlooked tool for facilitating front-office lean—business modeler software that is tightly integrated with an enterprise application. Business modeler software can help to identify non-value-added steps in a front office process, but by using it to automate processes it can—in and of itself—eliminate non-value added steps.
There is a hidden waste that many executives do not discuss or may not even know about.
This is the waste that comes from a lack of clarity of what the company's current business processes are, or from poorly—defined or inadequately documented processes. In a front office environment, people in administrative and managerial roles may ask each other, their managers, or even the people who work for them, "how do we open a purchase order?" or "what is our process for an engineering change order?" Conversations like this may take 10 to 15 minutes, and might happen dozens or even hundreds of times a day, depending on the organization. Various people in the organization may have been trained to undertake these processes in a variety of ways, and employees may wind up discussing the relative merits of how a process is currently undertaken and how the same process may have been completed in years past.
Even if you are reasonably efficient in manufacturing, think of how much time you are wasting on interactions like these in the office. Moreover, if processes are not documented clearly, how much time and expense is wasted by training new hires in processes that may not be optimal? The need to train and retrain people because their initial training may not have reflected current processes is one indicator that a company ought to consider business modeler software.
Another indicator that business modeler software could be helpful is a periodic or frequent need to redo front office tasks because managers and employees were trained incorrectly or because there is no established, effective procedure for taking care of business tasks.
If, in the course of conducting business, the following questions are asked with any degree of regularity, business modeler software may be required in order to facilitate leaner operations:
Used correctly, business modeler software can reduce training costs and prevent errors and non-value-added work that result from undocumented or unclear processes. But, as we will soon see, there are other even more exciting benefits that can be derived from this technology, particularly when it is part and parcel of an enterprise software environment.
Business modeling software standardizes and record front office processes as they evolve.
Source: IFS North America, IFS Applications
How does business modeling help?
The genius of business modeler software is that it helps to reduce waste throughout your organization in a number of ways. First of all, it standardizes processes and then documents them. The business model then describes how you do things and puts that descriptive data in a common repository. Whether you are filling in for an associate who is away and have to learn a new functional area of the company or are training a new hire, your process information is standardized, accessible, and packaged for easy learning.
Business modeler software also facilitates process change management and improvement because it contains a history of how things have been done in the past and the reasons for adopting new processes over time. This history of the business models as they developed, what was done in the past and why processes were changed will help you avoid wasting time and resources by reverting to a process that you had earlier abandoned because you found them to be suboptimal.
If attempts at process change in your organization prompt comments along the lines of "we tried it that way years ago and it didn't work," business modeler software will certainly help. Only by recording and studying history can you avoid reliving it.
Another powerful aspect of business modeler software is that, if it is properly integrated with the enterprise IT environment, it is not just a training tool or a tool for senior managers; rather, it's a tool for daily use by hands-on system users. People using an enterprise software tool are using a system and therefore need a systematic approach for doing things on that computer system. The model would likely be most useful in the longer term for those who use a system only periodically, and, therefore, do not have the opportunity to rapidly master the system. Ideally, the model is not just for training, but for actual use until the processes contained in the model become second nature. Over time, the model is used less and less to guide workers as they follow processes on a daily basis. This means that when it is part and parcel of the overall enterprise software environment, business modeler software can guide front-office processes ranging from scheduling, materials planning, finance, quality, customer service, and other disciplines in a manner similar to visual cues and other methods used on the shop floor.
Business modeler software can streamline processes wherever there are a number of things to attend to; and by doing them in the proper way in the proper order, workers can reduce non-value-added steps. The fact that these processes are well-documented and centrally archived means that even after processes are learned thoroughly and the model is no longer being used as a daily guide, users can refer to it occasionally as a way to re-orient themselves on key processes.
Once processes are streamlined through the daily use of business modeler software to guide front-office activities, these well-documented processes can serve as a platform from which further lean initiatives can be launched. When an initiative comes down from senior management to reduce cost, for instance, the existing business model can be evaluated to determine where cost is coming from and how processes need to be revised to meet cost-cutting goals.
Business modeler software also enhances your lean improvement efforts by allowing you to benchmark your lean process improvements. In the software, you will have static "as is" models as well as dynamic "to be" models. Once daily system users migrate away from using the model as a guide, and as the processes become ingrained and subconscious, pragmatism and innovation take over and system users tend to change these processes, making them even leaner than they were before. These improved processes can be woven into a new "to be" model and compared to an "as-is" model as well as other dynamic "to be" models.
This means that periodically it is possible to compare current processes to the business model. Frequently, this comparison will reveal that the processes documented in the model do not describe what employees are doing, but rather that employees have improved on the original processes. Business modeler software documents where you have improved (by removing non value-added work). So, in this case, the software can help you document improvements that take place over time.
Anyone involved in lean initiatives like value stream mapping or "as-is, to-be" knows the importance of being able to record processes as they exist and describe processes as they should be. Regardless of the specific lean discipline followed, the lean goal is to document how things are done now to make sure they are done the most efficient way (with the least amount of non-value-added steps), then develop a "to-be" model depicting how things work best. You want to be able to see where your processes are now, where they are headed and then see multiple versions of evolution of those processes.
Within, without the enterprise application
The ability to guide users directly though processes in an enterprise application is one powerful way that business modeler software can facilitate lean in the front office. But that does not mean that processes need to be completed entirely within the enterprise application in order to be streamlined through the use of business modeler software. The business model should be able to encompass processes completed in other applications and on the Web.
For example, let's say that you are responsible for handling requisitions for new materials. As part of the process model, you need to do research on the part or material you are looking for. It should be possible to build into the model a link to a Web browser along with links to sites where you might source the products you need. Another procedure might be to prepare a request for quotations, and a link in the business model could open a window to complete that step, perhaps in a word processor if that is the tool you have decided to use for that step, or could even direct you to the vendor site to complete an online purchase.
Regardless of what front office process you are involved in or what technology tool your model mandates for the completion of that process, the business modeler software ought to steer users to that specific technology tool and facilitate process completion. The business modeler may be integrated into the functionality of your enterprise software environment, but it could launch processes in an ERP application, in a word processing program or direct users to a vendor site where information could simply be keyed in. Regardless of whether tasks are completed inside the enterprise software or within other pieces of software or on the Web, links to the appropriate tool are embedded in the process model.
Whether you are completing business processes within the enterprise software or outside of it, the process diagram describes what you want to do and allows you to complete all of those tasks right from that model. That is in contrast to a stand-alone business model that is just a diagram where you need to go back to your own computer to figure out how you go about completing the steps outlined in the model. So, business modeler software is one of the few tools that in and of itself removes non-value added effort.
Correct technology essential
Business modeler software is nothing new, but those who want to derive maximum lean benefits from their business model ought to choose their technology carefully. There is no shortage of standard flow charts and other tools that are touted as business modeler software. Business modeler software tools that are tightly integrated with an underlying enterprise software tool, like enterprise resource planning (ERP), will result in quantifiable business streamlining results because the model can be automated at a very granular level.
Some flowcharting tools have become dynamic enough to encompass a variety of business processes, but are still essentially generate standalone documents. Enterprise simulation tools are designed to model an enterprise for the purpose of comparing existing processes to new processes, but still might fall short of the process automation functions that represent the height of value that can be realized using business modeler software. Workflow tools, meanwhile, are designed to automate processes by passing work from one person to the next. However, a quality enterprise application ought to facilitate this degree of interaction already.
Stand-alone business modeler software will just act as another silo of information, hindering the flow of information and hence the flow of value throughout the enterprise. Business modeler software embedded within the enterprise application, however, can help define how information flows through the enterprise and help plan the most efficient way to complete business functions with the lease effort lost to non-value- added work. The resulting business benefit is that you will have a model that tracks how processes have changed and improved over time, creating an organizational memory – a history of your lean journey. Business modeler software can make that journey a better one.
Greg Romanello is a business solutions consultant for IFS North America, with almost thirty years of materials management and manufacturing industry experience. His background includes supporting, designing, and implementing shop floor information systems, project management systems, and comprehensive business (ERP) systems. Romanello has filled these roles both domestically and internationally, as he has been involved in discrete, job, and repetitive manufacturing implementations in engineer-, configure-, assemble-, and make-to-order and mixed mode manufacturing environments. Romanello holds a degree in economics from Ripon College, Ripon, Wisconsin (US) and various certifications, including production and inventory management (CPIM) and integrated resource management (CIRM) from APICS.