Business Process Management, YMB Consulting, Lean Management, Information Flow, Boston, New York, Sackville, Moncton, Halifax, Montreal, Canada, USA

What is BPM?

by / Wednesday, 13 January 2016 / Published in ERP, Latest posts, Lean Management
Business Process Management, YMB Consulting, Lean Management, Information Flow, Boston, New York, Sackville, Moncton, Halifax, Montreal, Canada, USA

What is BPM?

One of the industry leaders on the subject, BPM.com defines BPM as : “Business Process Management (BPM) is a discipline involving any combination of modeling, automation, execution, control, measurement and optimization of business activity flows, in support of enterprise goals, spanning systems, employees, customers and partners within and beyond the enterprise boundaries.” However, when reviewing BPM’s approach one can see that its focus on reducing waste and improving performance by optimizing and automating a company’s business processes is a very simple application of the fundamental principles of lean manufacturing.  The biggest different with Business Process Management is that its focused on the information flow portion of the business and does not limit itself to the manufacturing process. In many ways, optimizing business process is critical to improving the lean management practices in your company, limiting your company’s lean manufacturing effort to the production floor will only get you so farAlthough it is true that in many cases BPM requires the development or customization of software, it isn’t just an IT function. Like Lean Manufacturing / Continuous Improvement, it is critical that the documentation and improvement of processes be driven by the top and that the initiative is executed by the process owners. The key to successful Business Process Management is understanding the entire information flow and not making changes that will negatively impact your internal customer (s) or supplier (s), in many cases reduction in waste will improve the flow to your internal supplier (s) and or customer (s).   There are several other blogs on the topic that have very specific definitions of Business Process Management, however, in my opinion it is critical that the methodology used for executing BPM be adapted to the current state of your business. The proper business process management approach depends on the current state of your company and the goals you are trying to reach, not what somebody wrote in a blog.

Why is optimizing business processes so neglected?

What processes are the most neglected by companies who practice lean manufacturing / continuous improvement? That’s easy, business processes. I’ve been working in the manufacturing industry for over 16 years and I have seen very few companies focus on optimizing business processes. Many companies start their lean journey by working with consultants who train them on 5S, pull systems, value stream mapping, etc… When the journey starts we see lots of shadow boards, value stream maps and Kanban cards, but in many companies fail to understand the fundamental concept behind lean manufacturing, eliminating waste and making value flow. The application of a cookie cutter approach when applying lean manufacturing principles will often result in neglecting many business processes like sales, purchasing and engineering. When I visit companies, I like to spend time in the support groups like engineering and purchasing. In the purchasing department, I often see 5s checklists and lots of labels, but see the purchasers using very time consuming, convoluted and manual processes to order material.

Why ignore indirect resources?

Another reason that optimizing business processes is so neglected is that accounting has separated resources in 2 categories: direct and indirect resources. Many companies divide their resources in these 2 buckets and either cut or limit the indirect resources without understanding the impact that this will cause downstream. When I try to explain this concept to my customers I use the simple diagram below.

Peformance to Target Diagram Business Process Management

This diagram has 4 work stations, the first work centre has 2 resources that are meeting 90% of their targets, the second work centre has 3 resources who are meeting 85% of their targets, the 3rd has 40 resources who are meeting 75% of their targets and the final work centre has 10 resources and are meeting 65% of their targets. One of the biggest problem in this production line is that each work centre (except the first one) is constantly doing workarounds because of lack of work from the preceding work centre, which is affecting their performance. After I explain this to my customers,  I ask them what they would do to improve the performance of this line. Some customers tell me that they would add 1 resource to work centre 1 and 1 resource to work centre 2 and see how much the performance of work centre 3 and 4 would improve. Some customers even tell me that they would get these resources from work centre 3 and move them back when they are needed. However, when I tell my customers: “What if this wasn’t a production line and the first work centre was engineering, the second was purchasing, the 3rd was production and the 4th was shipping.” Most of my customers go quiet at this point, some of them simply say: “Well I can’t add resources to engineering or purchasing, they are indirect cost and I need to keep my indirect cost low!”. The point of this simple diagram is not that you should simply add resources to your support groups, but to show that companies need to focus on the entire flow not just the production floor. Simply cutting resources because they are “Indirect” without understanding the entire flow will create several problems downstream.

What business processes are usually neglected?

Every company is different and there are several processes that are neglected, however, the one process that I have seen neglected the most is the material and resource planning process. Several companies purchase very expensive ERP systems to use 10% of its functionality, there are several opportunities in improving the material planning processes without requiring any custom reporting or programming. In most cases companies create purchase orders inside the system and issue material to work orders, but do not focus on improving / automating the purchasing or resource planning processes. There are also very few companies that focus on improving their engineering and their sales process, I often visit companies with 5S checklist on the production floor, but that haven’t defined their sales or engineering process. What types of benefits would your organization have by defining, measuring and continuously improving your sales or your engineering process? In order for your company to achieve its full potential, it must not limit its lean manufacturing initiative to the production floor. I know what some of you are thinking: “How can he be talking about MRP, that’s a push process! MRP is evil, everybody should use pull systems!” I believe that properly linking your production pull system to your MRP system is the proper approach, for more about this, read my blog on How can push and pull work together?

How do I know which process to focus on?

A very simple way to determine where your focus should be is by asking the following questions:

  1. Do the employees on the floor always have all the parts and the tools they need to do their job?
  2. Do the employees on the production floor know “What” they need to do?
  3. Do the employees on the production floor know “How” they should do it?

The answer to their 3 questions will help you better focus your improvement effort, in some cases you will find that your production staff spend too much time working around part shortages, in other cases you will find that your staff has no idea “How” they are suppose to build your product. Finding these problems isn’t always as simple as asking your workers, you may need to watch them work to see that everybody is assembling your product differently. When you’ve tried this on your production floor and found opportunities for improvement, repeat the activity in all your other departments (yes, I know that they are overhead, just trust me on this one). When you get to the point that the answer to all 3 of these questions is yes for every department, then you can still focus on reducing the waste within each process. Tools like value stream mapping, process mapping or simple waste observations can be very valuable, but if not used properly, they can make you focus on the wrong issues. In some cases it may be important to focus on processes that are creating a lot of work for your management staff so that they can focus on standardizing and improving other processes.

Manufacturing Execution Systems and OEE

There are several very good software solutions on the market that can help your company automate key processes. I have found that Manufacturing Execution Systems and OEE Software solutions are a great way for your company to reduce the waste in its business processes. These systems have the benefit of automating several processes and eliminate a lot of the paperwork waste currently present in most manufacturing companies. For more information about Manufacturing Execution Systems, you can read our blog What is MES?  or check out our VisualFactory page Also, for more information about OEE, you can read out blog What is OEE? or check out our ShopFloorConnect page. 

 

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