Improving Process Cycle Time improves Supply Chain Performance

By May 14, 2014No Comments

Improve Process Cycle Time by utilizing Internet Connectivity Technology

If you analyze the performance of your organization’s various business processes you will spot several roadblocks that can hamper productivity. These often involve time-sensitive communications between individuals and trading Partners, the routing and distribution of critical documents, and the enforcement of your organization’s approval policy which is applied to each process. They may relate to responding to critical needs of products or services, or just getting the appropriate approvals of requests and other documents.
How can you use the “new” connectivity to improve your organization’s business processes, and more specifically improve overall supply chain performance? What are the industry “best practices” being used, and what are the tools needed to make it happen?
In this blog we will highlight some of those ‘connectivity tools’, including:

  • Anytime/Anywhere Cloud Access
  • Supplier Punchouts (the new EDI)
  • eMail Alerts
  • Electronic Forms and Approval Workflow
  • Mobile Functionality

Anytime/Anywhere Cloud Access
What would we do without the Internet? We probably don’t remember the days that we did not have the Internet to facilitate communications, shopping, socializing, and all of the other activities we do on the web, so the answer to that question is, who knows!?
And although you would think that the subject of providing anytime/anywhere access to your business applications and data is ‘old hat’, many organizations still perform most of their business processes without the connectivity benefits provided by the Internet.
By utilizing the connectivity power of the Internet and making your business processes Cloud-enabled (ie; the people who are part of the process can participate in the process via the web), your organization can significantly improve Process Cycle Time. In a recent poll of ISS Group Clients who have Cloud-enabled their Purchasing and Sales Quoting processes, a number of companies have reported reductions as much as 500% (2 weeks to 2 days) for the ‘Requisition to Purchase Order’ and ‘Quote to Sales Order’ cycle times! This in turn has resulted in a more efficient flow of materials and an overall improvement in daily operations, as well as an improvement in cash flow.
Supplier Punchouts (the new EDI)
Requisitioning material for your organization can be performed in a number of ways. One approach is to allow your organization to requisition products and services using the “Amazon” model, or typical store website to find what they need. There are a number of issues which arise from this approach, including price inconsistency, multiple suppliers selling the same material, and process inconsistency, to name just a few. These issues result in lost productivity and lost profits. If you want your organization to be able to purchase directly from suppliers, but only for those items at prices that are part of your contractual relationship with your key suppliers, you should utilize what ISS Group calls the ‘new EDI’ capability, or ‘Punch Out’, that all major suppliers now provide. This ensures that the users only buy from approved suppliers, and at contracted prices for contracted items, and do so in an extremely efficient way that doesn’t require a user learning curve. Your organization will leverage the technical infrastructure provided by the suppliers without having to duplicate and manage the product catalog environment, and material requisitions will be created quicker with fewer data exceptions which require revision as part of the PO creation process.
eMail Alerts
We’ve all been using eMail to communicate for years, but few companies utilize the connectivity power of eMail in an automated fashion to alert internal or external resources that ‘something’ needs to be done (ie; review of a document, revision of a request, approval of a request, etc.). Of course all companies utilize eMail to communicate, but most of the communication is created by a person and not an automated alert based on a set of criteria (or rules). By automating the communication within your business processes to create eMail alerts as part of your business processes, valuable time will be eliminated from processes waiting on human resources getting around to creating an eMail to keep the process flowing.
Electronic Requests and Approval Workflow
You can reduce process cycle time by using technology to ‘digitize’ requests and enforce the approval policy of various business processes within your organization. Technology such as rules-based electronic approval workflows working together with eMail alerts make many request process actions automatic and fast, without requiring unnecessary approvals when requests are within budget and the approval authority of the person making the request.
From ISS Group’s experience, many organizations continue to use paper forms (or Excel forms) for approval requests and routing those forms via sneaker-net or manually created eMails.
Here are some key findings in a large study on paperless processes from AIIM – 2013 ( the data below comes from the AIIM Market Intelligence Report “Winning the Paper Wars.”
What are the biggest problems caused by paper-based processes in your organization?

1. Time spent re-keying data, searching for paper copies and filing 48%
2. Storage volume and outsource paper storage costs 44%
3. Inability to monitor workflow progress 41%
4. Lost paperwork or request forms 39%
5. Compliance and audit issues 29%
6. Poor access to process documents for front office or staff 25%
7. Inability of staff to work from road or home 19%
8. Delays introduced by post, courier, or mailroom 18%
9. Difficulty of allocating or re-locating workloads 13%
10. None of these 4%

Other issues highlighted were difficulty of version control, cost of paper supplies, and the endless chase for “wet-ink” signatures.
Clearly, eliminating paper (or Excel) forms will have a significant positive impact on process cycle time, as much as a 4:1 reduction, as well as other benefits documented by the AIIM study, such as:

1. Better records for audit trail or compliance 53%
2. Faster customer/supplier response 50%
3. Better monitoring of status and workloads 40%
4. Reduced staff resources 36%
5. Fewer errors 30%
6. Visibility/access for non-process staff and requisitioners 25%
7. Better management of exceptions 18%
8. Improved ability to outsource or load-share 9%

Mobile Functionality
Out of the office? Well, that should not be a reason a process is held up!
Everyone carries a mobile device, and most business professionals carry a smart mobile device. By Cloud-enabling your business processes you can alert the people who need to participate within a given process by an automated eMail or text message, allow the user to review and revise if necessary any data which requires the users input, and approve or reject a request directly from their mobile device. For people who live on the road this connectivity functionality will keep the process moving forward and eliminate ‘process cycle lag’ due to resources being out of the office.
The Internet and technology (software and hardware) which leverages the connectivity power of the Internet will assist your organization reduce Process Cycle Time which in turns improves productivity of activities which are performed as part of Supply Chain Management processes. By reducing cycle time and improving productivity, supply chain performance is improved leading to cost savings and increased profits.
In summary:

  1. With regard to trading partners such as suppliers, take advantage of the tools made available by your suppliers to improve connections and response time (such as Punchouts).
  2. Implement process tools (such as eMail Alerts and Electronic Approval Workflows) to streamline communication and enforce policies so that technology assists (and not hampers) your employees efficient participation in critical business processes.
  3. Eliminate paper (and Excel) forms within your processes.
  4. And last but certainly not least, utilize smart mobile devices in critical processes where people who need to participate in the processes may be out of the office.

Click here and register for our Webinar on May 22nd and learn more about ‘How to’ use connectivity to improve supply chain performance…