KMAC– BPM-McCormack Page 1
Business Process MaturityCreating Sustainable Business Results
Dr. Kevin McCormackJune 25, 2008
Advanced Analytics for Business Solutions
www.drkresearch.org
KMAC– BPM-McCormack Page 2
Agenda
• Introduction• What is Business Process Orientation/
Maturity?• BPM Results Overall• BPM in Supply Chain Results• BPM in Procure to Pay Results• BPM and Supplier /Partner Selection • BPM and Supplier Relationship
Management• How do you build BPM?
Dr. Kevin McCormackis President of DRK Research and an Adjunct Professor at NC State University, University of Alabama, and the University of Oklahoma . He also leads a team of business process and supply chain researchers from (6) Universities around the word (China, Brazil, Slovenia, Croatia, Belgium, US). Dr. McCormack has over 30 years of business leadership, teaching, research and consulting experience. His experience covers many national and international industry segments and a broad range of business processes. He has been a member of or has successfully conducted engagements with several government agencies and major companies in the food, forest products, pharmaceutical, chemical, consumer products, high tech and the plastics industry. Some of his clients have been Kraft, Philip Morris, CPC International, Cargill, DOD, USMC, USAF, Texas Instruments, USMC, Phillips Petroleum, Chevron-Phillips, Shell, Columbia Forest Products, Dow Chemical, Warner-Lambert, Standard Charter Bank, Microsoft, Intel, Tektronix, several state governments, Borden Chemical, California Public Employees Retirement System (CalPERS), Wal-Mart, Campbell’s, General Mills, Fairchild Industries and PepsiCo. He has written five books and numerous articles on Supply Chain Management and business strategy.
KMAC– BPM-McCormack Page 4
DRK
SCRD
Percipio
Profit Point
17th Floor
iCognitive
LeanInstitute
Process Management Research Center
Tom Davenport
ShanghaiConsulting
Supply Chain Resource
Consortium
NC StateUniversity
ESRI
SAS
Vlerick Leuven Gent Management School
Belgium
IndependentsAssociates
IACCM
ISM
QUTAustralia
BabsonCollege
MA
University of OK
Supply Chain Council
SCMClub
Neurametrics
Singapore
Shanghai
Europe
Portland, OR
Phil. PA
TX
NC
TBD
BPM Network
University of LjubljanaSlovenia
UMFGBrazil
Hilbert
OrionNJNIPE
Advanced Analytics for Business SolutionsAdvanced Analytics for Business Solutions
On DemandAnalysis
University ofZagreb,Croatia
CAM-I
KMAC– BPM-McCormack Page 5
이론이란 무엇인가 ?
“
”
KMAC– BPM-McCormack Page 6
좋은 이론(A Good Theory)이란?
② , (SME; Subject Matter Expert)(face validity)
③
KMAC– BPM-McCormack Page 7
프로세스 성숙도를 전략적으로 활용하고 있는세계적 기업 및 기관
• Shell• Suncor Energy• Prudential• Intel• Dow Chemical• Chevron Philips• Exxon Mobil• Galaxo Smith Kline• Corning• Air Products• John Deere• GM• Bank of America• Allied Signal• Avon
• US Marine Corp.• US Air force• US Navy• Boeing• Texas Instruments• HP• Siemens• Raytheon • Dow Corning• United Space Alliance (shuttle)• Weyerhaeuser• Honda • Toyota• Visteon• Whirlpool
KMAC– BPM-McCormack Page 8
Agenda
• Introduction• What is Business Process Orientation/
Maturity?• BPM Results Overall• BPM in Supply Chain Results• BPM in Procure to Pay Results• BPM and Supplier /Partner Selection • BPM and Supplier Relationship
Management• How do you build BPM?
The Business Process Orientation concept developed from 1990-1999.
“상하관계(hierarchies)보다는 프로세스 또는 프로세스 지향적 사고와성과, 고객만족을 강화하는 조직”
Business Process Orientation: Gaining the E-Business Competitive Advantage.McCormack, K.P. & Johnson. W., CRC Press, Jan, 2001.
Byrne
Rummler-Brache
OD
Narver / Slater
Kohli / Jaworski
Day
Marketing
DruckerDeming
Imai
Hammer
Davenport
Taylor
ShortMelan
Porter
TQM Strategy IT
Background Behind the BPO Maturity Theory
KMAC– BPM-McCormack Page 10
FO – 프로세스 보다는 상하관계를 강조하며특히 직무와 상명하복의 보고 관계에 중점을 둠
BPO – 상하관계 보다는 프로세스를 강조하며, 특히 성과에 고객만족에 중점을 둠
KMAC– BPM-McCormack Page 11
BPO Components1차 요소프로세스적 관점(Process View)•
review
maintenance change control
프로세스 업무(Process Job)•
프로세스 평가(Process Measure)• , , ,
2차 요소프로세스 조직구조(Process Structures)•
프로세스 가치 및 사상(Process Values and Beliefs)•
KMAC– BPM-McCormack Page 12
Background of BPOBPO의 수백 여 기업에 대한 평가 결과는 다음과 같음.
• BPO
“ (connectedness)”
• BPO .
• BPO (esprit de corps)
KMAC– BPM-McCormack Page 13
BPO의 주요 성과BPO Outcomes
조직 단결력 (esprit de corps)
•
•
•
KMAC– BPM-McCormack Page 14
BPO Maturity
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Definition
프로세스 성숙도는 다음을 전제로함:
•
• (Ad-hoc)
(Defined (Managed) (Leveraged)
(Optimized) (Evolutionary Phases)
Key Impacts of Process MaturityMaturity Relationships
BPO Maturity Levels –Generalized Results and Distribution
Ad Hoc
Defined
Linked /Managed
Integrated
10%
40%
30%
20%(Integrated)
(Defined)
5-10% over Ad Hoc
10-20% over Ad Hoc
Data Set: 1500 companies, world wide,from 1997 to 2008 (all industries)
KMAC– BPM-McCormack Page 18
Maturity Levels and Descriptions
확장단계
통합단계
연결단계(관리단계)
규정단계
Pro
cess
Mat
uri
ty
임시단계
BPM Model
정책
방법론
전략적 연계성
정보기술(IT)
인적자원
조직문화
프로세스성숙도Score
업무 기능간 갈등
업무 부서간 연결성
조직단결력
비즈니스성과
Self Assessed MeasureSelf Assessed v. CompetitorsAnnual Revenue Growth (%)Cost of Goods Sold (COGS) (%)Process Performance
-
+
-
+
++
+
독립변수 종속변수
InterimDependent Variables
KMAC– BPM-McCormack Page 20
프로세스 경영을 위한 6가지 주요 성공요인
전략적 연계(Strategic
Alignment)
문화 및 리더십(Culture &
Leadership)
인적자원(People)
정 책(Governance)
방법론(Method)
정보기술(IT)
Xxx – denotes BPO measures Xxx – denotes new measures
Survey Assessment MeasuresBusiness Process
Management Maturity
Methods People
(Business Process Management: BPM)
Culture
(input), (output),(process owner)
“social networks”(Business Process
Management)
Strategic Alignment
(operating strategy)
Xxx – denotes BPO measures Xxx – denotes new measures
Proposed Survey Assessment Measures
Business Process Management Maturity
Governance Information Technology
Demographics –DataExecutiveSr. ManagerMangerIndividual Contributor
(cross-functional)Co. Business Unit
Industry Type
Global Location (North America, Europe, etc.)
KMAC– BPM-McCormack Page 23
BPM Maturity Path and Actions Components Level 1 Level 2 Level 3 Level 4
Methods
Governance
Extended / OptimizedIntegrated
Level 5
Ad Hoc
IT
Process Change Management
Culture
People
Strategic Alignment
Process Roles
Process Defined
Process language /view
begins
Continuous Improvement
Customer Involvement in
process
Process Stable
Process Orientation
Realized
Broad / empowered
/learning oriented jobs established Process
Awareness
CF Collaboration Established
BPM knowledge established
Process language
established
Basic process
measures defined
Process goals in place
Process outcomes measured Resources
allocated based on process
Process Owners
establishedLeadership support
process improvement
Team based structure
Leadership view process
improvement keyOrg structure realigned by
process
IT supports CF Teams
IT supports / aligns with process
IT flexibility
IT integrated
Defined Linked Managed
KMAC– BPM-McCormack Page 24
BPM and Analytics
People
Broad / empowered
/learning oriented jobs established
Process Awareness
CF Collaboration Established
BPM knowledge established
Process language
established
Methods
Process Change Management
Process Roles
Process Defined
Process Stable
Process language / view
begins
Continuous Improvement
Customer Involvement in
process
Process Orientation
Realized
Culture
IT supports CF Teams
IT supports / aligns with process
IT flexibility
IT integrated
IT
Basic process
measures defined
Process goals in place (Score Cards)
Process outcomes measured
Resources allocated based
on process
Strategic Alignment
Process Owners
established
Leadership support process
improvement
Team based structure
Leadership view process
improvement key
Org structure realigned by
process
Governance
Optimized (Networked)
Integrated
Ad Hoc
Defined
Linked -Managed
Basic Process Analytics
Basic Process Analytics
Advanced Process
Analytics
Advanced Process
Analytics
Integrated Process
Analytics
Reporting
Score Cards
Broad Process Models
Predictive ModelsAnalytics OrientedAnalytics Oriented
Aligned models
Process Analytics
knowledge
Analytics DrivenProcess
Analytics Experts
KMAC– BPM-McCormack Page 25
BPM, Lean & Six Sigma Convergence
•Organize structures and Jobs around process
• DMAIC – Focused problem solving
• Sigma Level• Reduce Variation• Hypothesis Testing• Statistical Sampling
L E A N
BPM
S I X S I G M A
• Reduce Cycle Time• Pull• Inventory Reduction• Load Leveling• JIT Manufacturing
•Quality focus•Visual Control•Problem Solving•Eliminate Waste
•Process Hierarchy and Decomposition
•Manage by fact
•Build a process language and culture•Manage Process as an Asset
•Strategic Alignment through linked measures and goals
•Enterprise view , cross functional•Continuous
Improvement•Reduce Non Value Added work
KMAC– BPM-McCormack Page 26
BPM Analytics and Six Sigma
People
Broad / empowered
/learning oriented jobs established
Process Awareness
CF Collaboration Established
BPM knowledge established
Process language
established
Methods
Process Change Management
Process Roles
Process Defined
Process Stable
Process language / view
begins
Continuous Improvement
Customer Involvement in
process
Process Orientation
Realized
Culture
IT supports CF Teams
IT supports / aligns with process
IT flexibility
IT integrated
IT
Basic process
measures defined
Process goals in place (Score Cards)
Process outcomes measured
Resources allocated based
on process
Strategic Alignment
Process Owners
established
Leadership support process
improvement
Team based structure
Leadership view process
improvement key
Org structure realigned by
process
Governance
Optimized (Networked)
Integrated
Ad Hoc
Defined
Linked -Managed
Basic Process Analytics
Basic Process Analytics
Advanced Process
Analytics
Advanced Process
Analytics
Integrated Process
Analytics
Reporting
Score Cards
Broad Process Models
Predictive ModelsAnalytics OrientedAnalytics Oriented
Aligned models
Process Analytics
knowledge
Analytics DrivenProcess
Analytics Experts
Six Sigma – an important part of the Managed Level
KMAC– BPM-McCormack Page 27
Agenda
• Introduction• What is Business Process Orientation/
Maturity?• BPM Results Overall• BPM in Supply Chain Results• BPM in Procure to Pay Results• BPM and Supplier /Partner Selection • BPM and Supplier Relationship
Management• How do you build BPM?
KMAC– BPM-McCormack Page 28
Statistical Evidence
KMAC– BPM-McCormack Page 29
• Return on Investment (ROA)• Value added per employee• Relationships with suppliers• Net fluctuation of employees -
turnover (inverse)• Work productivity of employees• Trust in leadership• Employees mutual trust• Work organization of employees• Commitment of employees• Employees prepared to go the extra
mile
• Cost of work• Absenteeism (inverse)• Satisfaction with work conditions• Learning ability and adaptability• Risk taking• Customer complaints (inverse)• Customer complaints speed of
solving the issue• Retaining clients• Reputation of company in
customers eyes
29
Data: University of Zagreb and University of Ljubljana.European Study 2006, multi-industries
Organizational Results Statistically Related to Process Maturity
KMAC– BPM-McCormack Page 30
OPTOTAL
2624222018161412108
BPM
TOTA
L180
160
140
120
100
80
60
40 Rsq = 0.3367
ec
403020100
bpo
70
60
50
40
30
20 Rsq = 0.2516
Esprit de CorpsBusiness Performance
16.6% increase in BPM relates to 19.4% performance improvementFor example: a $200 million Profit will increase by $40 million.
30
KMAC– BPM-McCormack Page 31
Air Products’ Road to Business Process Maturity
KPIDashboard.
ProcessManager.
Air Products U.By Process
BPMS?ProcessLibrary
IT Rep.
BusinessReengineering
GlobalProcess Board
SOX
Lean
Strategic Alignment
Governance
Leadership and Culture
People
Methods
Information Technology
CEO LaunchesProcess
ProcessOwners
Process modelfrom SCOR
MaturityAssessment
ProcessTraining
SAPImplementation
TQM Six Sigma
1980 1990 2000 2001 2002 2003 2004 2005 2006 2007
Source: George Diehl
KMAC– BPM-McCormack Page 32
Strategic Alignment Best Practices Example: Air Products
Inventory Cycle CountAccuracy
% Faultless Invoices
Cash-to-Cash Cycle Time
Forecast Accuracy
% Complaints Closedby Target Date
Average Days to Pay minus Average Terms
Inventory Days of Supply
% Orders ReceivedOn Time to Demand
P&L Impact
% Data AccuracyProduction Master
AverageTerms
KMAC– BPM-McCormack Page 33
SiemensBuilding Process, Technology and Metrics
KMAC– BPM-McCormack Page 34
Governance Best Practices Example: Global Oil Company
Process Executive
CEO
Process Executive
Process Executive
프로세스 간부회의(Process Executive Council)
Process Owner
Process Owner
Global Process Program Manager
Process Owner
프로세스 담당자 회의(Process Owners Council)
Process Owner
ProcessExecutive
FunctionalManager
Process CIO
FunctionalManagerFunctional
Manager
프로세스 영역 회의(Process Area Council)
KMAC– BPM-McCormack Page 35
Nokia
• (Core Process)•
(session)
Management& Support
Product/ServiceCreation Delivery
Customer Engagement
관찰(Observations)• (senior
managers)
•
•
Source: Sami Lotvonen
KMAC– BPM-McCormack Page 36
Field Experience 1:Results and Observations at Nokia
결과(Results)
• (tool)
• Delivery Process
• Demand Fulfillment
• Care
Observation
•(senior managers)
•
•
Source: Sami Lotvonen
KMAC– BPM-McCormack Page 37
Agenda
• Introduction• What is Business Process Orientation/
Maturity?• BPM Results Overall• BPM in Supply Chain Examples• BPM in Procure to Pay Examples• BPM and Supplier /Partner Selection • BPM and Supplier Relationship
Management• How do you build BPM?
SCM Maturity Model -Financial Factors470
S OC
R
UE M A K E
DA
EL
I VE
R
LPN
SS
SS C
CC
CAd Hoc
Defi ned
Linked
Integrated
Extended
SOURCESOURCE
SOURCESOURCE
MAKEMAKE
MAKEMAKE
DELIVERDELIVER
DELIVERDELIVER
PLAN PLANPLAN
SUPPLIERSCUSTOMERS
SOURCE MAKE
PLAN
DELIVER
PLAN PLANSUPPLIERS CUSTOMERS
SOURCE MAKE DELIVERPLAN
CUSTOMERSSUPPLIERS
PLAN
SUPPLIERS
CUSTOMERS
SOURCE MAKE DELIVER
112
0
227
338
416
Average Performance of the Top Three Maturity LevelsSCM Costs % of Revenue = 9.6%COGS % of Revenue = 58.6%Profit % of Revenue = 8.7%Sales Growth (99-00) = 24%
Average Performance of the Bottom Two Maturity LevelsSCM Costs % of Revenue = 12.3%COGS % of Revenue = 70.1%Profit % of Revenue = 6.8%Sales Growth (99-00) = 6%`
Measuring Maturity of SCM ProcessesGerman Automotive Company
SCS
SCDSS
PM
SRM
Business Strategy
DM
Core SC Processes
SC ManagementProcesses (Operational)
CM
PSRMRP
OrdersRP
MDM
Signal
SCPln
CI RM
PTCA
SC Supporting Processes
ENQM
AP
SC ManagementProcesses (Strategic)
LP
> 60% - key strength
50- 60% - Opportunity
SCM Maturity and Associated Performance
0
0
0
0 Ad Hoc
Defined
Managed(Linked)
Leveraged(Integrated)
Optimized
7700No. of SuppliersPer $B Spend 1.0
2.0
3.0
4.01700
No. of SuppliersPer $B Spend
1% of SpendProcurement
Costs
0.7% of SpendProcurement
Costs
104No. of FTEs
Per $B Spend
54No. of FTEs
Per $B Spend
RM ProcessesLT=1SS=1PO=1
RM ProcessesLT
SCM Maturity and Associated PerformanceConsumer Goods Companies
Source: Grosspietcsch, J. and Kupper, J. “Supply Chain Champs” (2004). The McKinsey Quarterly. 2004. No. 1
0
0
0
0 Ad Hoc
Defined
Managed(Linked)
Leveraged(Integrated)
Optimized
18%Weekly Measurement
Frequency 1.0
2.0
3.0
4.042%
Weekly MeasurementFrequency
5.3% of SalesLogistics
Costs
4.1% of SalesLogistics
Costs
4.0 DaysDelivery Times
KMAC– BPM-McCormack Page 42
BPM Maturity Path and Actions Example 1: Borden’s
Components Level 1 Level 2 Level 3 Level 4
Methods
Governance
Extended / OptimizedIntegrated
Level 5
Ad Hoc
IT
Process Change Management
Culture
People
Strategic Alignment
Process Roles
Process Defined
Process language /view begins
Continuous Improvement
Customer Involvement in
process
Process Stable
Process Orientation
Realized
Broad / empowered
/learning oriented jobs established
Process Awareness
CF Collaboration Established
BPM knowledge established
Process language
established
Basic process
measures defined
Process goals in place
Process outcomes measured Resources
allocated based on process
Process Owners
establishedLeadership support
process improvement
Team based structure
Leadership view process
improvement key
Org structure realigned by process
IT supports CF Teams
IT supports / aligns with process
IT flexibilityIT integrated
Defined Linked Managed
Start 2001 2004
KMAC– BPM-McCormack Page 43
Borden’s
단계1• SCM •• IT • (Process Owner)
단계2• metrics
• (global logistics integration)
KMAC– BPM-McCormack Page 44
Borden Chemical (Hexion)Total SCM Scores v. Performance
227
338
112
2001273
1999203
201816141210864
SCM
Mat
urity
400
300
200
100 Ad Hoc
Defined
Managed
Leveraged
Optimized
Performance
KMAC– BPM-McCormack Page 45
Borden (now Hexion) ChemicalSavings from increasing maturity
• 2004 EBIT impacton $1.4 billion in sales
Improved Service& Quality
90% reduction inperfect order failure
rate by 2002
Cycle TimeReduction
20% by 2004
OrganizationDevelopment
Global Structure,Capable Resources
by 2001
Improved SupplyChain Design & Operations
$15 MM Savings*
Leveraged GlobalPurchasing
$25 MM Savings*
KMAC– BPM-McCormack Page 46
BPM Maturity Path and ActionsExample 2: Degussa
Components Level 1 Level 2 Level 3 Level 4
Methods
Governance
Extended / OptimizedIntegrated
Level 5
Ad Hoc
IT
Process Change Management
Culture
People
Strategic Alignment
Process Roles
Process Defined
Process language /view begins
Continuous Improvement
Customer Involvement in
process
Process Stable
Process Orientation
Realized
Broad / empowered
/learning oriented jobs established
Process Awareness
CF Collaboration Established
BPM knowledge established
Process language
established
Basic process
measures defined
Process goals in place
Process outcomes measured Resources
allocated based on process
Process Owners
establishedLeadership support
process improvement
Team based structure
Leadership view process
improvement key
Org structure realigned by process
IT supports CF Teams
IT supports / aligns with process
IT flexibilityIT integrated
Defined Linked Managed
Start 04 06 08
KMAC– BPM-McCormack Page 47
Degussa
단계1• S&OP(sales and operations planning)
••
•
단계 2• metrics• BPM
KMAC– BPM-McCormack Page 48
S&OP Maturity – Degussa
BASICPP
201816141210864
SOPT
OTA
L
300
200
100
0 Rsq = 0.6946
Overall Supply Chain Process Performance
S&
OP
Pra c
t ice
Inst
i tutio
n al iz
atio
n
Foundation
AdvancedNon-institutionalized
AdvancedInstitutionalized
150
105
60
DEC – 922004
BM Mean - 91
DEC - 2003
•• SCM
DEC 1072006
Note: Data represents 55 Supply Chain Council firms, from various industries, that were examined using the SCM best practices survey.
KMAC– BPM-McCormack Page 49
Degussa (Evonick) S&OP Maturity –2008 Integrated Forecast, Planning and Scheduling
BASICPP
201816141210864
SOPT
OTA
L
300
200
100
0 Rsq = 0.6946
Delivery performance v. commit date>89%
89%60%
>75%
S&
OP
P ra c
t ice
Inst
i tutio
n al iz
atio
n
Overall Supply Chain Process Performance
•
Forecast Accuracy Benchmarks(SKU/ Location/ 30 days / Weekly)
60%
BPM Maturity Path and Actions Example 3: USMC
Components Level 1 Level 2 Level 3 Level 4
Methods
Governance
Extended / OptimizedIntegrated
Level 5
Ad Hoc
IT
Process Change Management
Culture
People
Strategic Alignment
Process Roles
Process Defined
Process language /view
begins
Continuous Improvement
Customer Involvement in
process
Process Stable
Process Orientation
Realized
Broad / empowered
/learning oriented jobs established Process
Awareness
CF Collaboration Established
BPM knowledge established
Process language
established
Basic process
measures defined
Process goals in place
Process outcomes measured Resources
allocated based on process
Process Owners
establishedLeadership support
process improvement
Team based structure
Leadership view process
improvement keyOrg structure realigned by
process
IT supports CF Teams
IT supports / aligns with process
IT flexibility
IT integrated
Defined Linked Managed
Start 01 03 06
KMAC– BPM-McCormack Page 51
USMC Logistics Transformation
KMAC– BPM-McCormack Page 52
Agenda
• Introduction• What is Business Process Orientation/
Maturity?• BPM Results Overall• BPM in Supply Chain Results• BPM in Procure to Pay Results• BPM and Supplier /Partner Selection • BPM and Supplier Relationship
Management• How do you build BPM?
BPM Maturity Path and Actions Example 3: Forest Products Co.
Components Level 1 Level 2 Level 3 Level 4
Methods
Governance
Extended / OptimizedIntegrated
Level 5
Ad Hoc
IT
Process Change Management
Culture
People
Strategic Alignment
Process Roles
Process Defined
Process language /view
begins
Continuous Improvement
Customer Involvement in
process
Process Stable
Process Orientation
Realized
Broad / empowered
/learning oriented jobs established Process
Awareness
CF Collaboration Established
BPM knowledge established
Process language
established
Basic process
measures defined
Process goals in place
Process outcomes measured Resources
allocated based on process
Process Owners
establishedLeadership support
process improvement
Team based structure
Leadership view process
improvement keyOrg structure realigned by
process
IT supports CF Teams
IT supports / aligns with process
IT flexibility
IT integrated
Defined Linked Managed
Start 06 2008
KMAC– BPM-McCormack Page 54
Forest Products Co.
•
•
•
•
•
KMAC– BPM-McCormack Page 55
Procure to PayGeneric High Level Process Map
ForecastPlan &
Coordinate
Need Clarification/Specification
SourcingDecision
Contract / POGeneration
Supplier Need
Fulfillment
Receive Material
& Documents
Settle and Pay
StartStart EndEnd
Projects Maint Operations
Enablers: Finance, Legal, HR, IT
Global Forest Products Co.400,000 PO /yearP2P Cost at Defined Level = $45 mil.P2P Cost at Managed Level = $23 mil.
KMAC– BPM-McCormack Page 56
BPM Maturity Path and Actions Example 4: Suncor Energy
Components Level 1 Level 2 Level 3 Level 4
Methods
Governance
Extended / OptimizedIntegrated
Level 5
Ad Hoc
IT
Process Change Management
Culture
People
Strategic Alignment
Process Roles
Process Defined
Process language /view
begins
Continuous Improvement
Customer Involvement in
process
Process Stable
Process Orientation
Realized
Broad / empowered
/learning oriented jobs established Process
Awareness
CF Collaboration Established
BPM knowledge established
Process language
established
Basic process
measures defined
Process goals in place
Process outcomes measured Resources
allocated based on process
Process Owners
establishedLeadership support
process improvement
Team based structure
Leadership view process
improvement keyOrg structure realigned by
process
IT supports CF Teams
IT supports / aligns with process
IT flexibility
IT integrated
Defined Linked Managed
Start 04 06 07
KMAC– BPM-McCormack Page 57
Global Canadian Energy Co.
•
•
•
•
•
Global Canadian Energy Co.Implementation Waves v. Savings on $7 bil. In spend per year
Stabilize6-12 Months
Basic Process/Practices
12 -24 Months Primary Returns 5-7%
Advance Practices24-48 Months
Secondary Returns 7-10%
OptimizationOn Going
System Wide Returns 7-10%
Go live
Mat
uri
ty L
evel
1
2
3
4
5
06 07 08
Cu
mu
lati
ve S
avin
gs (
% s
pen
d)
0
0
5
12
20
So far, $350 mil in spend savings to this point
KMAC– BPM-McCormack Page 59
Agenda
• Introduction• What is Business Process Orientation/
Maturity?• BPM Results Overall• BPM in Supply Chain Results• BPM in Procure to Pay Results• BPM and Supplier /Partner Selection • BPM and Supplier Relationship
Management• How do you build BPM?
KMAC– BPM-McCormack Page 60
Supply Networks
Custom
ersC
CC
C
C
C
C
C C
Orchestrator
Strategic Trading Partner
Strategic Trading Partner
Strategic Trading Partner
Trading Partner
Trading Partner
Trading Partner
C
C
C
Custom
ersC
CC
C
C
C
C
C C
Orchestrator
Strategic Trading Partner
Strategic Trading Partner
Strategic Trading Partner
Trading Partner
Trading Partner
Trading Partner
Orchestrator
Strategic Trading Partner
Strategic Trading Partner
Strategic Trading Partner
Strategic Trading Partner
Strategic Trading Partner
Strategic Trading Partner
Trading Partner
Trading Partner
Trading Partner
C
C
C
KMAC– BPM-McCormack Page 61
SCM Supplier Maturity and Associated Performance300+ Suppliers for Daimler Truck Div., Boston Scientific, Shell, Chrysler
LT = LeadtimeSS = Safety StockPO = Perfect Order1. Source: “Procurement: Current Benchmark Findings.” The Hacket Group, 2004
2. “The Quit Revolution in Supplier Management.” Aberdeen Group, 2004
0
0
0
0 Ad Hoc
Defined
Managed(Linked)
Leveraged(Integrated)
Optimized
7700No. of SuppliersPer $B Spend 1.0
2.0
3.0
4.01700
No. of SuppliersPer $B Spend
RM ProcessesLT=1SS=1PO=1
RM ProcessesLT
KMAC– BPM-McCormack Page 62
Agenda
• Introduction• What is Business Process Orientation/
Maturity?• BPM Results Overall• BPM in Supply Chain Results• BPM in Procure to Pay Results• BPM and Supplier /Partner Selection • BPM and Supplier Relationship
Management• How do you build BPM?
KMAC– BPM-McCormack Page 63
Supplier Relationships and Performance
독일의 세계적 자동차 회사/트럭 부문:
Targetoperation test: OT
63
KMAC– BPM-McCormack Page 64
Medical Devices Company-Materials Inventory
Inventory Turns
0.1 – 3.0 3.0 – 6.0 6.0 – 30.0
Mgmt. Decisions
SpecialCauses
$100
$50
0.00
$48
$18.9
Stable
$24
1.353.75
To-Be
$24
$10$16
216.8
2.7
$91.1 As-Is$51.3 To-Be
•(materials inventory)
Cos
t $
mill
ion
Cos
t $ m
illio
n
KMAC– BPM-McCormack Page 65
Medical Devices Co. Benefits
•
•
•
•
•
•
KMAC– BPM-McCormack Page 66
Agenda
• Introduction• What is Business Process Orientation/
Maturity?• BPM Results Overall• BPM in Supply Chain Results• BPM in Procure to Pay Results• BPM and Supplier /Partner Selection • BPM and Supplier Relationship
Management• How do you build BPM?
KMAC– BPM-McCormack Page 67
BPM Maturity Path and Actions
Components Level 1 Level 2 Level 3 Level 4
Methods
Governance
Extended / OptimizedIntegrated
Level 5
Ad Hoc
IT
Process Change Management
Culture
People
Strategic Alignment
Process Roles
Process Defined
Process language /view
begins
Continuous Improvement
Customer Involvement in
process
Process Stable
Process Orientation
Realized
Broad / empowered
/learning oriented jobs established Process
Awareness
CF Collaboration Established
BPM knowledge established
Process language
established
Basic process
measures defined
Process goals in place
Process outcomes measured Resources
allocated based on process
Process Owners
establishedLeadership support
process improvement
Team based structure
Leadership view process
improvement keyOrg structure realigned by
process
IT supports CF Teams
IT supports / aligns with process
IT flexibility
IT integrated
Defined Linked Managed
KMAC– BPM-McCormack Page 68
Natura
l Force
s Lead
ership
Drive
n
•
X You are here
Optimized Level
Ad Hoc
Defined
Managed (Linked)
Leveraged
(Integrated)
Questions?
Thank You,
Dr. Kevin McCormack
It’s About Balancing the Maturity Factors as you move forward.
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