ERP & Process Mining: How to make sure your company is executing at full capacity

4 Mins Read 22-10-2021

Submitted by Sharon on Or, 10/22/2021 - 06:09

ERP customers want to take advantage of the latest innovations — AI, machine learning, RPA — dealing in parallel with changing business models, divestments and M&A:

VR/AR
Data Analytics
Open business to innovation
World of context
Internet of Thing

These opportunities, combined with ERP, are huge... But only if you are able to optimise/standardise your processes and understand how to implement the newest technology trends with the current or future ERP backbone.

That’s where process mining will assist.

Organisations spend millions on digitalisation in order to drive better business execution

Some key digital transformation statistics:

508 enterprise applications on average per company
$431B total spend on enterprise software globally
2/3 of CEOs say digital strategy is a top priority

Yet these transformation projects often take longer - and cost more - than they should. There are execution gaps because the performances of many business processes are not good enough. In short, this means most companies are not running at their maximum potential.

So where are the gaps?

How to identify execution gaps in your organisation

Processes are forced to run across a rigid and fragmented technology landscape, resulting in execution gaps.

But how do you know if you are dealing with execution gaps?

Measure how your processes really run
Analyse which gaps have the biggest impact on your KPIs
Analyse if you are able to resolve gaps quickly in underlying systems

ERP graph

Source: Celonis

Are you unable to analyse the above? Chances are you are dealing with execution gaps.

What does process mining entail?

Here’s an example of how a company maximised its capacity by identifying and acting upon execution gaps…

A distributor of electronic components, based in the US and founded in the twenties of last century, needed to transform according to the changing needs of its customers and suppliers.

However, they struggled to measure the throughput time or identify what was holding up their overall processefﬁciency. The ﬁrst step in their journey was to develop measurable, objective results to keep leadership invested in these initiatives.

Step 1: Measure the gaps

They decided to use speciﬁc process mining software that quickly provided user-friendly analysis of one of their key processes: Purchase-to-Pay (P2P).

Based on the event logs of their systems, the process mining software depicted a process model with all variants of the P2P process. Drilling down to all possible levels enabled them to zoom in and identify where the all important gaps were.

Basic Process Mining Technique

Step 2: Know what these gaps mean

The standard happy P2P ﬂow was only effective in so many cases. The next step was to identify which gaps had the biggest impact on the company’s execution.

Process mining happy path
Source: Celonis

Here’s how they did it:

Manual steps, changes in payment terms, delivery date changes a.o. were visualised.
By using the process mining software, they identﬁed that 20-30% of their processes could be automated.
10% of all purchase orders were not delivered in time and still they paid 10% of purchase orders too early.

Step 3: Taking action

Improvement activities and projects were deﬁned based on the identiﬁcation of the high-impact gaps and recommendations from process mining software.

Immediate actions were taken in order to close those gaps and increase capacity.

This resulted in immediate ROI in 1 year, up to several millions USD in working capital optimisation and over 50% reduction in throughput times.

But it doesn’t end there...

The process mining cycle should be continuous

As with all transformation projects, there are continual improvements that can be made. After the initial optimisations have been implemented, the process can restart to identify further areas of enhancement.

Execution Management System

Could your organisation beneﬁt from a gap analysis?

Reach out and we can advise you on the best steps to take that will ensure your business is functioning at full capacity!

The content of this article was originally put together by Jörgen Ricksen, an expert on implementing new ways of working in the digital world, changing operating models and running programs on a global scale.