Seven Sigma When great can be better · Six Sigma traditionally targets. ... Companies that use...

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  • Intelligent automation’s role in redefining continuous improvement

    Seven Sigma– When great can be better

    kpmg.com

  • Intelligent automation can be a new beginning for traditional continuous improvement efforts. These digital-age technologies enable companies to automate many manual activities Lean Six Sigma process improvement targets.

    Intelligent automation does not make Lean Six Sigma irrelevant. Instead, it creates significant new opportunities for businesses to benefit where continuous improvement methodologies and these technologies intersect.

    Six Sigma is a well-proven set of methods intended to reduce variation and improve quality in business processes. When combined with Lean principles, Lean Six Sigma is the foundation of many continuous improvement programs. The advent of intelligent automation technologies allows companies to use software bots to automate manual processes Lean Six Sigma traditionally targets.

    © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

  • Intelligent automation – a new beginning to continuous improvementMany of us have been involved in continuous improvement waves including Lean Six Sigma and business process engineering during our careers. We used tools and methods available at the time that were great at measuring and diagnosing quality and operational inefficiencies.

    Companies that use Lean Six Sigma, one of the most pervasive methodologies, have achieved extensive efficiency, quality and customer service improvements. However, nonstandardized processes and systems inherently limit these methods. They also keep work from being executed consistently as intended. For example, no- or low-value manual efforts, like data retrieval, manipulation, and entry are often unavoidable because of business systems shortcomings.

    An optimal solution often required changes to hard-coded systems that could take months or years and significant cost. It was also difficult to predict how redesigned processes might perform. Without a clear return on investment, many opportunities went unaddressed. Organizations outsourced as a workaround by simply moving ineffective processes to low-cost locations, which further masked the root issues.

    Intelligent automation challenges traditional continuous process improvement approaches. Intelligent automation, a spectrum of technologies including robotic process automation (RPA), machine learning, artificial intelligence, and cognitive systems, are intended to either automate or augment human activities and decisions. For example, what does “nonvalue-added activity” mean in an age of virtual workers? In our view, intelligent automation opens new possibilities to breathe life into established methodologies and take continuous improvement to a new level.

    This article presents continuous improvement from a new point of view. It is intended for anyone involved in planning or implementing continuous improvement and/or intelligent automation activities. In it, we propose opportunities to use intelligent automation technologies that can aid in improvement efforts. We also hope this new perspective will bring together those who focus on intelligent automation and Six Sigma activities and inspire them to act on these proposed approaches.

    So dust off your stack of old process improvement books and learn to apply familiar methods augmented with the power of intelligent automation. The potential results are even more extensive improvements to efficiency, quality, and customer service.

    Source: HFS Research, 2018

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    1Intelligent automation’s role in redefining continuous improvement

    © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

  • One of the world’s largest paper products companies used RPA technology to enhance process performance in its global procurement function. Legacy applications and process variations across multiple businesses and commodities resulted in significant manual interventions and work-arounds. The company planned a number of system replacements, but these were months or years in the future. RPA provided the means to reduce manual labor and improve process performance and quality.

    The company used RPA to automate critical business processes, eliminating manual activity, and increasing process velocity and quality. The company did not simply automate the existing as-is business processes. It integrated process improvement into automation design by incorporating common-sense process changes into automation requirements. An example is eliminating nonvalue steps like checking and approvals. The company implemented many of these automations before planned technology enhancements.

    As in this case, RPA technology can often delay the need to invest in costly new systems. RPA stitches together desktop screens, software apps, and manual tasks to process repetitive tasks unattended by humans at relatively affordable costs. Every broken process chain or poorly converged dataset slows down an organization’s ability to do business in realtime and stay ahead of its market. Traditional barriers between front, middle, and back offices hinder companies’ true abilities to operate in this real-time, responsive, and anticipatory digital fashion. Companies should evaluate the cost and benefits of each process improvement activity. When making these decisions, the legacy system label does not mean these systems should be immediately replaced.

    Quality and service levels remain top of mind. According to an HfS Research and KPMG State of Intelligent Automation 2018 survey of 590 business leaders, 30 percent of respondents selected “improve customer service quality and quality of interactions” as the key operational objective for their intelligent automation strategy.

    Another benefit for this paper manufacturer relates to requests for information the company’s procurement analysts and buyers submitted to vendors. The traditional process involved frequent email requests to vendors to verify or request additional information. This large group of buyers and procurement analysts sent these emails in nonstandard formats. Many of the vendor replies were incomplete, and the response rate was low. When bots took over this function, email formats were standardized and sent consistently. Within weeks, response rates jumped from about 30 percent to more than 80 percent. Response completeness also rose dramatically.

    RPA can delay new system purchases and boost quality

    2 Intelligent automation’s role in redefining continuous improvement

    © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

  • 1 “Ready, set, fail? Avoiding setbacks in the intelligent automation race.” KPMG LLP, 2018.

    Software bots can augment continuous improvementSoftware bots execute a business process exactly the way a human operator would. A bot interacts with the same enterprise and desktop applications and uses most of the same interfaces as human workers. However, bots have many advantages over their human counterparts. They typically operate faster with shorter cycle times and execute processes with 100 percent consistency and compliance based on how they are configured. They also don’t make data entry, interpretation and omission errors that humans can rarely avoid.

    Bots can, in appropriate cases, be a substitute for reengineering, which used to require significant process or information technology changes. This is a major reason why companies are accelerating automation technology adoption. In a recent KPMG study, 75 percent of experts surveyed said they would use RPA and 49 percent would use cognitive and artificial intelligence at scale in the next 3 years.1 Process automation offers the potential to enable process performance beyond what has been possible through continuous improvement methods like Lean and/or Six Sigma alone.

    Some may assume RPA makes methods like Lean or Six Sigma obsolete. After all, how much should we care about nonvalue-added activities or process variations when a bot eliminates all or most of the human effort?

    Not so fast. Process improvement is essential to effective process automation implementation. As more companies deploy a large number of automation instances to production, they learn that simply automating bad processes results in suboptimal process performance—even when automated.

    A global engineering and electronics manufacturer recently automated 91 percent of its monthly payroll reporting process. Twice monthly, its payroll coordinators manually produced an employee self-service work time list

    report in SAP. They also generated email reminders for associates and supervisors. A bot automated 10 of 11 manual steps.

    However, the manufacturer designed this automation for one business segment, which covered only about 60 percent of the company’s total transactions. In other business areas, notification and report timing policies were different, which meant automating the remaining 40 percent of work would have required creating an additional bot. In practice, there was no compelling business reason for the difference. Applying Lean Six Sigma process standardization principles before automating could have allowed one bot to handle 100 percent of the transactions—a 67 percent business impact improvement.

    Bots do care if a process is optimized

    of experts say they expect to use RPA at scale in the next 3 years.

    of experts say they plan to use cognitive and artificial intelligence at scale in the next 3 years.

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    3Intelligent automation’s role in redefining continuous improvement

    © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

  • A. Optimizing processes for automation

    B. Characteristic improvement opportunities Optimize

    withautomation

    Eliminate nonvalue stepsEliminate/reduce manual approvalsStandardize simpler processesStandardize reporting formats and policyStandardize data formatsStandardize complex processesChanges to customer/supplier processesMaster data cleanupHarmonize disparate systems Optimize

    beforeautomation

    Software bots can augment continuous improvement (Continued)

    Similarly, in the procurement process example earlier in the article, many points in the traditional process required analysts and buyers to email requests for approval to managers. This introduced waiting time for human and bot workers, a classic Lean source of waste. During development, design team members challenged these routine approvals. In most cases, the company removed unnecessary routine supervisor approvals and wait times from the process before automating, which improved automation performance.

    Example A to the right highlights the importance of being able to apply continuous improvement principles during the automation development process. Organizations can incorporate process changes to simplify automation development as well as improve bot performance and process effectiveness.

    To clarify, we do not recommend trying to fully optimize a process before automating. Instead, the objective should be to eliminate obvious process variation and wasteful steps, such as in the procurement email example. These are often the results of business policies that organizations can easily change or eliminate. However, if a current process has serious performance issues or system deficiencies, it may not be a good automation candidate until these are addressed. The characteristic improvement opportunities in example B at the right shows how to decide.

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    Optimizing processes for automation not only reduces development effort, but also increases automation performance effectiveness.

    4 Intelligent automation’s role in redefining continuous improvement

    © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

  • Cross-educate automation and continuous improvement teams to encourage collaborationFor continuous improvement and process automation to complement, it’s essential to cross-educate continuous improvement and intelligent automation teams. Automation analysts and developers should learn the significant Lean and Six Sigma principles and how to use them to improve processes while they define automation solutions. Companies with established continuous improvement capabilities and trained practitioners can also include continuous improvement team members in the automation analysis and requirements definition phases to bring the needed improvement perspective.

    From a continuous improvement standpoint, continuous improvement teams should consider the potential for

    automating part or all of a process. To do this effectively, continuous improvement teams need to be trained in automation technology capabilities and use cases so they can identify situations where automation could be a preferred improvement choice.

    When intelligent automation technologies are part of the continuous improvement lifecycle, they allow and inspire people to think about continuous improvement in different ways. Conversely, continuous improvement should equally be part of the automation lifecycle.

    5Intelligent automation’s role in redefining continuous improvement

    © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.© 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

  • Continuous improvement from a new point of viewLean and Six Sigma methods have been around for decades. Since the Lean Six Sigma wave first transformed business in the 1990s, many other transformation waves have taken business process performance to new levels. The advent of intelligent automation technologies brings new life and fresh potential to traditional process improvement methods.

    It’s time for companies to revisit traditional continuous improvement approaches to take advantage of process automation technologies. According to our research, 86 percent of 400 CEOs surveyed consider their companies to be active disruptors, and 81 percent of these CEOs believe technology to be the only significant disruption their business faces.2 Other research shows that companies are

    already investing heavily. Thirty percent of 590 respondents say their enterprise has already invested over $50 million in intelligent automation technologies.3 The result can be dramatically greater business performance than automation technology or continuous improvement can achieve alone.

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    Companies can boost efficiency, speed, and scale using intelligent automation in conjunction with continuous improvement.

    Source: HFS Research, 2018

    2 “KPMG U.S. CEO Outlook 2018,” KPMG LLP, June, 2018.

    3 “State of Intelligent Automation 2018,” HFS Research and KPMG LLP, 2018.

    6 Intelligent automation’s role in redefining continuous improvement

    © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

  • Continuous improvement from a new point of view

    Confirm your current continuous improvement approach includes process automation as a potential improvement solution.

    Educate your continuous improvement practitioners in evaluating automation opportunities.

    Educate your automation analysts and developers in applying Lean and Six Sigma principles to process improvement.

    Be certain your continuous improvement professionals collaborate closely with your automation centers of excellence.

    Evaluate to be sure you’re automating the right processes.

    When evaluating processes, reference the list on page 4 to consider whether to reengineer and then automate or vise-versa.

    Include requirements to evaluate processes for expedient changes as part of the automation configuration in your process automation development methodology.

    Carefully consider these steps to manage traditional continuous improvement efforts with process automation technology implementations.

    Intelligent automation’s role in redefining continuous improvement 7

    © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

  • KPMG is a pioneer implementer of intelligent automation solutionsWe do more than configure bots. Our service offering is broad and addresses strategy, process improvement, security, complexity, as well as people and change. We have developed wide ranging and tested viewpoints focusing on using intelligent automation in the highest impact business areas. We use a scoring and evaluation methodology that compares typical legacy-state, labor-intensive, error-prone manual processes with future-state automated processes enabled by intelligent automation solutions. KPMG is a leader in applying natural language processing in business context. We merge in into digital labor solutions that bring paper and unstructured data into mainstream business operations, demonstrated through successful industry solutions.

    Our global team, made up of hundreds of advisory professionals, supports thousands of transformations for clients in 153 countries. We provide services to 76 percent of Fortune 500 companies.

    8 Intelligent automation’s role in redefining continuous improvement

    © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

  • ContributorsTodd Lohr Principal, U.S. Intelligent Automation Leader, KPMG LLP

    Todd leads KPMG’s U.S. Intelligent Automation consulting business. He specializes in enterprise transformation, process excellence and process automation and has led numerous lean continuous improvement initiatives at Fortune 100 companies and government agencies.

    [email protected]

    215-300-4600

    Phil Fersht CEO and Chief Analyst, HfS Research

    Phil founded HfS in 2010 and introduced the topic of RPA to the industry in his 2012 analyst report. Phil is a world-renowned analyst, writer, and visionary in emerging technologies, intelligent automation and RPA software, digital business services, and the transformation of enterprise operations to drive customer impact and competitive advantage.

    [email protected]

    617-645-1515

    David Neely Advisory Managing Director, Digital Enablement, KPMG LLP

    David helps Fortune 100 companies develop and implement strategies and business processes to improve growth and financial performance by adopting intelligent automation. He is a thought leader on business transformation and process optimization, including Lean Six Sigma, business process reengineering, and business process management.

    [email protected]

    914-552-3137

    © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

  • © 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

    The KPMG name and logo are registered trademarks or trademarks of KPMG International.

    The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.

    kpmg.com/us/intelligentautomation

    Some or all of the services described herein may not be permissible for KPMG audit clients and their affiliates or related entities.

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