Category Archives: Supply Chain and Logistics

Why they’re one and the same

When process management is culture — ThyssenKrupp Stainless

Posted on January 11, 2012 by | 1 Comment

The APQC Frameworks Study that concluded last Spring looked at a remarkable story of a new, $6B steel mill located near Mobile, AL. ThyssenKrupp invested so much because they believed in US manufacturing, even during tough times, and were determined to make their operation the most efficient and resilient of its kind. Successfully delivering a commodity process like rolled, galvanize steel means finding new ways to differentiate and earn business. They’re doing very well and attracting the best customers based on achieving five key ISO standards in a remarkably short period of eleven months. Companies like Lexus and BMW buy from ThyssenKrupp because they are guaranteed that their suppliers are delivering at their own high level of quality.

ISO

Commodity is a misleading term. Price only indicates the initial cost of steel. As a steel buyers, ThyssenKrupp’s customers need to be assured that the product will arrive as expected, at the quality level promised, without undue environmental or safety impact, and a host of other measures. This can only be done when the supplier has proven to independent auditors that they meet or beat the metrics that support these measures. Many companies out there create paper trails just for audit purposes, but the overhead of maintaining this is schizophrenic and a serious risk to the business. ThyssenKrupp has only one system to keep track of business process and compliance because they are one and the same for them.

Stainless steel sister

While ThyssenKrupp Steel USA went about their business, their sister company, ThyssenKrupp Stainless started out in more typical fashion using Visio and other tools to document and collaborate around processes, and with typical results. It was only after they were on this path for a while that they decided to make the switch to a true business process management system. The sponsors of this concept needed to help the organization understand why they should change gears and adopt a way of doing business that was completely new and would involve everyone from the executives to the folks in hardhats on the line. “How do you get an organization to change when they are on a different path?” is the most common question I get at conferences and from readers. ThyssenKrupp Stainless did exactly that and with great results.

PEX Orlando

ThyssenKrupp Stainless will be the Keynote Speaker at Process Excellence Week 2012 in Orlando, FL next week. I look forward to hearing from Brent Wilson, the ThyssenKrupp Director of Production Planning and Control as he relates their journey to making process cultural. I’ve had a preview, and it is a very good story.

If you’d like to know more about how ThyssenKrupp Steel USA achieved their goals through excellent business process management, check out the link to the BPTrends article, below:

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Posted in Manufacturing, Markets, Supply Chain and Logistics

Why did UPS centralize BPM? #BPM

Posted on September 9, 2011 by | Leave a comment

The past nine months has been and excellent opportunity to get to know UPS and their uniquely process-focused approach to their work. What was once a straightforward  business of picking up a package in one place and dropping it in another has changed significantly as the business environment has grown more complex, their customers more global, and their services more value-add. The details of their ongoing transformation can be found in this month’s BP Trends as a case study by Dawson Wood, the leader of the Process and Project Centers of Excellence at their headquarters in Atlanta, GA.

Enormity

To get a better sense of how critical processes are, try to imagine the amount of work involved in coordinating 406,000 employees working in 2,750 operating facilities and 62,000 retail access points. They move 15.1 million packages and documents daily, including 2.2 million just by air and 2.3 million internationally. On an annual basis, UPS delivers 4 billion packages and documents through a fleet of approximately 100,000 package cars, vans, tractors, motorcycles and 233 UPS-owned aircraft (the eighth largest airline in the world).

The coordination required to make this successful is staggering. The secret to their success to date is the following:

  • Centralization of their business process function
  • Simple, end-user-friendly tools that allow business people to manage their own process data
  • Frameworks that include their own and APQC’s PCF
  • Aggressive growth internationally
  • Pursue logistics as a move up the value chain in an increasingly global world

Logistics

The UPS global package delivery network becomes more much valuable to their customers when it can be used to manage international supply chains. As I wrote in March of 2011 in Hey, who interrupted my supply chain?, as more companies move toward using external organizations to create just-in-time supplies of parts and even whole products, there needs to be an increasingly complex-but-easily-used system to manage the movement of parts and finished goods. Many of the changes UPS is going through are part of their strategy to be the logistics backbone of choice.

Take the time to read the BP Trends case study and get the story in their own words.

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Posted in Strategy, Supply Chain and Logistics, Workplace reality

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Heroics versus Mastery

Posted on July 11, 2011 by | 12 Comments

The following is another guest blog by Tom Molyneux.

Heroics

Out and about in Newport Beach this weekend, my daughter yelled “Rocketman!” Easy to think it was her imagination, but sure enough, there was a man flying over the water on a jet pack  It was somehow both futuristic and like watching a news clip from decades past. Soon, everyone on the beach had their cellphones out and were snapping pictures. Working jetpacks are a brand new technology. There is no book to go by. This is the heroic, creative way to fly – making it up and learning as you go along.  Thrilling!

Mastery

There is another way to fly – one we are all much more familiar with.  It’s known as the commercial airlines. When you step on board you’ve chosen the opposite of heroics – to fly with a pilot who has mastered the competencies of flying. How do they do this? By putting each pilot through simulations of conditions they will experience on the job so the pilots master the knowledge and skills to do their jobs before they are allowed to step into a cockpit. They do refresher training to make sure that skills stay sharp…even the ones used infrequently.

So, which type of approach to learning do you want from your pilots? Or the people working in your refinery? Or the people who are interacting with your customers every day? Do you want heros or masters? My guess is that most of us would opt for masters.  Paradoxically, when people are truly masters at what they do, it’s far easier and more natural for them to rise to heroics when called upon – because they’ve been through it before in simulators.

Miracle on the Hudson

The emergency landing of US Airways Flight 1549 provides a vivid example of this.  Chesley Burnett Sullenberger, his aircraft engines disabled by a flock of geese, successfully landed his Airbus 320 in the Hudson. He became an instant national hero.  Some called it a miracle. Yet when you hear him speak of the event, a very different story emerges. “Sullenberger said in an interview on CBS television that his training prompted him to choose a ditching location near operating boats so as to maximize the chance of rescue” (Wikipedia).  Indeed, in his retirement speech he said, “My message going forward is that I want to remind everyone in the aviation industry —especially those who manage aviation companies and those who regulate aviation that we owe it to our passengers to keep learning how to do it better (MSNBC)”.

Business Process and Mastery

Too often BPM initiatives do a brilliant job of documenting business processes but fail or forget to consider if the people who will be performing, measuring or managing the processes will have the support necessary to become masters. This is a shame because bringing competency into process capture at the time of mapping is relatively painless. Indeed, some of the most forward looking companies are doing it already.

For example, Chevron is already doing this when capturing processes in their refineries. When they map their business processes through organized workshops, they make sure to have a representative from Training who determines the competencies required to perform the processes.   Because the business process platform they use is a centralized, role-based database of process, they simply create reports for each role involved that demonstrates required competencies. The next step for HR is simply to ensure that people who perform these roles have access to the information necessary and a plan to demonstrate mastery of those competencies.  They use Storyboards generated from their ‘live’ database that allow processes to be communicated end-to-end (process based) or by contributor (role-based).  These Storyboards are tracked when communicated and a built-in acknowledgement allows tracking of their completion.

We are currently involved in a company-wide mastery program with an enterprise software company that is implementing the same type of demonstrated competencies across their organization. In the process, one of the implementation specialists talked about the relief he felt from seeing the fruit from this effort. He told a story about his last employer, a well known enterprise vendor–new consultants regularly ended up having to ask clients about the features and functions of their own company’s software. Embarrassing. He related how extremely stressful it felt to be continually in a situation where he was expected to be a hero.

A culture of heroes is stimulating for rocket packs and mountain climbing. It’s just not something that works well for long in business.

SCOR

One other approach to matching demonstrated mastery to process bears mentioning.  For companies where supply chains are core to their operations, the Supply Chain Council’s SCOR model accelerates this process. For companies that have already mapped their processes, they can map those activities to pre-defined SCOR processes.  The SCOR model then provides the most common skills that must be mastered by those performing the activities. These skills requirements come from the distilled experience of hundreds of companies. In this way, it’s possible to translate a process map into a virtual picklist of skills that must be mastered for each role in the supply chain.

Do your business process depend on heroes…or masters?

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Posted in Strategy, Supply Chain and Logistics, Workplace reality

The ThyssenKrupp supply chain and compliance story

Posted on July 7, 2011 by | 5 Comments

Just this week, BP Trends published a case study that is well-worth taking in. ThyssenKrupp Steel USA spent US$6B to create a seamless system for producing rolled steel primarily for the automotive industry.  They made very early decisions to make sure their enormous capital investment broke from traditional industry by focusing on business process rather than functional organizational silos.

Download the case study

I’ve been to the plant in Calvert, Alabama, and what they’ve accomplished is remarkable to see first-hand.  An hour or so north of Mobile, there is an exit labeled “ThyssenKrupp Drive” and as you crest the hill, the horizon is filled with a very modern-looking version of a very traditional industry…rolling and galvanizing 8-ton ingots of steel that are produced in Brazil and operationally managed from Rotterdam, The Netherlands.  To make such a geographically dispersed system work with any sort of efficiency meant creating a system that allowed common business processes at a macro (marketing, orders, confirmations, delivery) level as end-to-end as the micro (OSHA, work instructions, training).  They do this by having a single, centralized repository of process and its supporting information available to every employee, even those who don’t work with PC’s (they have kiosks).   They are the embodiment of centralize, govern and distribute something that everyone can understand and follow.

Compliance

Because they have a centralized way to see how all business is done, they have by extension a centralized way to show their compliance to several ISO standards.  The Case Study covers their aggressive schedule for certification, which would be unachievable in such a complex and start-up environment without the business process effort they’ve undertaken.  Why is compliance significant?

Supply chain competitiveness

Compliance is the single greatest way to assure their end customers that they have the ability to provide a reliable supply of rolled steel, at a quality level expected, and delivered in the amounts and on the dates contracted.  As a start-up system, they would otherwise take years to establish a track record that would provide these assurances.

Getting attention

The Wall Street Journal took notice of their unique model in a recent article that lays out an external perspective on what they’ve done.   The article does a great job of describing how the multiple locations come together in a single business model.  Beyond that, they’ve garned a great deal of attention from the marketplace they were seeking to impress…auto manufacturing.  The initial orders came more quickly than expected and put the mill on notice that there would be no slow ramp-up.

In December 2010, their model was demonstrated as part of the APQC Frameworks Study as they accelerated development by basing their process model on the APQC PCF.  Having a broadly-used standard allowed them to avoid a great deal of debate as they decided how to align their business and avoid the classic pitfalls.  You can download a free copy of the APQC Frameworks Study findings to see the story from a frameworks angle.

Take a moment to download the case study.  It is very detailed and gives an excellent step-by-step breakdown of how ThyssenKrupp arrived at their current state.

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Posted in Compliance, Frameworks, Manufacturing, Supply Chain and Logistics

When Supply chain, compliance and BPM are one #BPM #supplychain #compliance

Posted on June 30, 2011 by | 3 Comments

In the next issue of BP Trends coming out on July 5th, 2011, you’ll see a story about the success of ThyssenKrupp Steel and their ability to ensure an uninterrupted supply chain through a focus on business process and ISO compliance.  One of their very first decisions was to make end-to-end process management the cornerstone for operations in the US’ newest steel mill near Mobile, Alabama.  Their approach and the success they’ve had are a subtle but powerful trend that will to continue to gain traction in the coming years.

People often manage careers by developing niche expertise around topics like supply chain and compliance, and ideas that disrupt the ‘niche-ness’ of knowledge can spark significant debate.  Today’s Big Data revolution, however, is putting many business concepts on a collision course that puts traditionally disparate ideas under a larger umbrella of operational excellence and business process management.  The ThyssenKrupp story is about centralizing the ERP, supply chain, compliance and operations (including training and performance metrics) in such as way that enterprise data is moving in and out of these disciplines without duplication and with a high level of accuracy.  The efficiency gains from doing this are very, very convincing.

Supply chain and compliance

Supply chain excellence is about knowing your supplier’s supplier and your customer’s customer.  If you look at the fast-moving technology space, Cisco, Intel, Micron and others lead a trend where rapid fluctuations in markets and technologies have led to supply chains that rely external organizations to create just-in-time supplies of parts and even whole products.  The risk this creates can be enormous, and requires new systems to manage new risks.

Creating guarantees

The most direct way to mitigate risk is to demonstrate compliance to recognized standards. That means centralizing and managing large amounts of process and compliance data –exactly what ThyssenKrupp has done.  This centralization allows them to aggressively pursue ISO certification without significant time and resource investment, and using the very same systems that manage end-to-end process across the enterprise.  The benefits include:

  • The ability to ensure their suppliers share their Green commitment and are reducing impact to the environment – ISO 14001 as an environmental management system framework
  • Ensuring ThyssenKrupp and their suppliers aren’t running sweatshops or dangerous workplaces that are risky for employees…or can end up in the NY Times with their name attached – ISO 18001 for occupational health and safety
  • Mitigating information security risks, threats, vulnerabilities and their impacts – ISO 27001 for information security management
  • Proven quality standards – ISO 9001

The new game is to have supply chains that meet these measures of quality and process as the best guarantee against disruption, bad products, bad press and more.  As a business relies more on people and behaviors NOT directly under its control, the more standards become the new currency of the contract.

Compliance = Competitiveness

ThyssenKrupp spent $5B to build a steel mill in Alabama to serve primarily the needs of the US automotive industry, and they’ve had remarkable early success in sales.  Their best pitch for their commodity product is their ability to prove their excellence through ISO compliance, which in turn promises an uninterrupted supply chain backed by quality, environmental, health, safety, IT and business process standards.  ISO certifications are as critical as the plumbing and wiring of the mill.  See the Wall Street Journal write up here.

Traditional niche disciplines and their segmented data are on a collision course…centralization of data allows us to manage supply chain efficiency, operations excellence and compliance a single system. 

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Posted in Compliance, Manufacturing, Supply Chain and Logistics

How does an underway business adopt a framework? #bpm #frameworks #apqc

Posted on May 31, 2011 by | Leave a comment

I hosted a seminar this morning along with Northrop Grumman’s Dennis Pikop on the topic of how to implement and mature business process and other frameworks.  We used examples that highlighted three circumstances; withing ‘legacy’ businesses that merge or acquire (Northrop Grumman), from the top downward (UPS) and from the bottom up (ThyssenKrupp Steel USA).  If you missed the webinar, you can listen to a recording here.  Most of our observations came from the work done for the APQC Frameworks Study, led by APQC’s John Tesmer, who was also on hand for the seminar.  You can download a free copy of the APQC Frameworks Study here.

Frameworks in legacy environments

Customers often ask how to get started with frameworks such as APQC’s PCF.  Not everyone has the benefit of UPS’ significant focus on process (it is simply put, the only thing they do), or the green fields approach that TKS used when they built a $5B steel plant that just opened in December 2010.  Ask around…you’ll hear from most business process people that it isn’t easy to convince an underway, profitable business that a framework would provide a common vocabulary for business from the day 1, and would gradually increase in value as it matures to the point that an enterprise can have process excellence at the heart of its strategy and goals.  Some would say, “Impossible.”

A success story

Today, Dennis showed us that Northrop Grumman has come quite a ways on the journey while going through significant mergers and acquisitions (TRW, most recently), and that their secret sauce was to make it “leader-supported but do-er empowered.”  Neither executive support nor end user input alone is enough.  It takes strong leadership and mass adoption for a framework to be implemented effectively and then matured.  Most of all, he advised participants to appreciate the journey as it will likely take time.

From my own experience in working with them for the past couple of years, Northrop Grumman has a remarkable level of maturity when it comes to frameworks and process through their adaptation of an APQC-like hierarchy that they call, simply, the Process Architecture.  It allows this very large enterprise (over 130,000 employees) to find the common ground for their global supply chain, for example, while enabling fast-moving, innovative work such as the LCROSS space system that successfully impacted the moon, as designed, in October 2009.  The fact that a large defense contractor very quickly brought together the resources and methods for a fast, experimental-but-inexpensive project is a testimony to their ability to flex their business while maintaining long-term programs like the F/A-18, ship building and more classic space vehicles.  The fact they won awards for doing it was just icing on the cake.

Northrop Grumman is able to use a framework of process to draw together common areas of their business, like design or purchasing, and to allow those areas to flex within boundaries to meet the needs of highly diverse projects.  When you see what they’ve done, you begin to realize the power of frameworks and the way it has liberated what could easily be a very stodgy business model.  As defense budgets draw down and projects become smaller and more frequent than in the past, Northrop Grumman is well-positioned to be highly competitive with companies that don’t have the benefit of strongly supported, highly adopted process frameworks.

Companies that don’t start the on the journey now will be playing catch up before they know it, and with competitors that will be moving ever higher in maturity level.

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Posted in Compliance, Frameworks, Supply Chain and Logistics

Supply Chain…where do I start? #supplychain #SCOR #bpm

Posted on May 16, 2011 by | 3 Comments

A guest blog by Tom Molyneux:

Last week, Chris Taylor posted a great quick start guide to getting started with BPM.  This made me realize that many of the same challenges confront those tackling initial Supply Chain initiatives.  Good news…there is an even more-well worn road map that companies can follow to improve their chances of success and avoid the most common pitfalls of supply chain improvement initiatives.  I’ve tried to group these steps along the lines used in the original BPM post.

Get Started Now

Quick, low-cost wins can be found here:

  • Segregate suppliers and reduce their overall number
  • Inventory the enterprise for supply chain initiatives and aggregate these dispersed initiatives into a centralized supply chain group or center of excellence
  • Look at outbound freight for consolidation and rationalization – a logistics
    partner     can often help reduce costs per mile of transportation and warehouse space

Adopt a Framework

After these quick wins companies typically start to go deeper into supply chain improvement.  They start thinking about process and get to the idea of a framework for supply chain improvement.  The most widely adopted by far is the SCOR (Supply Chain Operational Reference) model – with good reason.  This is a massive, peer-reviewed, cross-referenced database of standard supply chain processes, best practices, metrics, skills and human attributes.  Its power comes from its quality and its widespread use.  The model represents over fifteen years of focused and tested thinking about supply chain by the best and brightest minds in supply chain operations.  As such, it provides a common language for supply chain professionals both within the company and across the larger extended supply chain (“from cow to cone” and from “rock to ring”).

Train

Once companies get serious about SCOR they should send teams to SCOR training – thus ensuring that companies that have seriously adopted SCOR soon have a cadre of professionals who speak the same supply chain language and use the same approach to supply chain improvement.  Make it sticky.

Methodology

SCOR is a great framework and common language for supply chain improvement.  But it goes even further – in a way particularly fitting to this post.  It provides a methodology to run a first supply chain improvement project, unsurprisingly called a SCOR Project.  Take a standardized, proven approach on the organizational structure as well as the activities.  Better yet, use the sample tools and activities to select the appropriate, high value supply chain improvement process to tackle first.

Tools

Figure 1: Easy to follow process for running a SCOR project includes templates for all project artifacts right where they are needed

Implementation issues will show up when companies try to execute project management with PowerPoint and process management with Excel.  SCOR projects require process capture, improvement, management and deployment.  Having a BPM solution with built-in support for the SCOR Framework and SCOR Project can really get things off to a quick start and keep things on track.  You wouldn’t try to create a loan payment calculator with a BPM tool, so why would you capture, maintain and deploy processes with a spreadsheet?  Because a good BPM solution will tie directly into the powerful online SCOR database, it can save hundreds of hours of that administrative drudgery that bog down a project.  Initial process can be reused when supply chain processes are captured in a governed platform.

Make it easy

Figure 2: Having the SCOR model built directly into a BPM solution is a powerful and time saving combination. Direct links into the SCOR online database make it live.

Implementation of a SCOR Project is where we see companies start to struggle.  At the Supply Chain Council’s Global User Group Meeting in New York this past February, many voiced a desire for more support for SCOR Projects.  There is room to grow in improving the overall odds of project success.  While the SCC provides excellent classroom training as well as PowerPoint and Excel templates, they’ve chosen to be perhaps too software-agnostic.  The SCC membership includes so many software vendors like SAP, Adobe, Nimbus, IBM, Intuit and others for good reason. Make life easy.

Lastly, and perhaps most importantly, having the right BPM platform will allow you to deploy process changes to end users so that they are actually adopted.  And that’s where things really start to happen.

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Posted in Supply Chain and Logistics

Tagged , , ,

Supply chain + process means standardize AND differentiate

Posted on April 28, 2011 by | Leave a comment

The following is a guest blog by Tom Molyneux.

Many posts on this blog discuss the value that frameworks, such as APQC, bring to BPM.  But what about the value that having solid, understandable BPM brings to frameworks?  I’ll argue that to get value out of virtually any framework, it is foundational to have a working BPM solution.  Let’s take a widely accepted and rapidly evolving  framework – SCOR.

Over the last quarter century as computerization and automation became the the norm, there’s been a tremendous movement towards standardization methods, vocabulary and ways of doing business.  Back when I went to business school, the term “best practice“ was rarely heard.  Large ERP and CRM initiatives have since led companies to be ever more identical in the activities they perform.  Reference frameworks like APQC and SCOR have encouraged businesses to adopt the more and more of a common way of experessing process.  Even in the BPM world, the ever growing use of process templates and accelerators has reinforced this standardization.  In this world of uniformity, where all industry players are relentlessly moving toward doing the same best things in the same best ways, where is value stored?

People and culture

Let’s take SCOR (the Supply Chain Council’s Supply Chain Operations Reference model) as an example.  For those not familiar with SCOR, it is a comprehensive and configurable model of all supply chain activities that includes a common:

  • language to describe supply chains so everyone’s on the same page
  • processes
  • best practices
  • skills, aptitudes and training

The model is extremely powerful.  Since supply chain costs typically make up 60-90% of overall costs, small improvements can often yield huge results.

So, what doesn’t it do?  It can’t be home to your processes – the unique way you do things.  It can’t store, keep, foster and nurture those special ways your company behaves that sets you apart…your secret sauce.  The true value in your company is NOT found in doing things in the standard way for your industry – your competitors do all of the predictable things, like adopting a new ERP system, process template or reference model.  The real trick is to match or exceed performance benchmarks while maintaining what sets you apart.

The answer is to find a home for your processes.  A home big enough not just for SCOR processes but for all your process-based initiatives.  Also, a way to assign ownership to the processes so they can change and not simply become artifacts of last year’s hot project.  Oh, and a way to make sure that your end users can actually find, understand, and perform the activities.  A robust Business Process Management platform can be this home.  We’ve long recognized the value of all enterprise accounting data being housed in a single database-based system that provides clear ownership, access, controls and up-to-date and “correct” value of accounts.  Our processes – the way we do things – are every bit as important to the success of the enterprise.  Isn’t it time to treat them in the same way?

Keep what truly differentiates your business while capturing the benefits that a widely accepted and standardized approach provides.

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Posted in Supply Chain and Logistics

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Hey, who interrupted my supply chain?

Posted on March 14, 2011 by | 4 Comments

Who stocks warehouse nowadays?  The real question is, “Who owns warehouses…or sub-assembly plants…or even manufactures products?”  Cisco, Intel, Micron and others lead a trend where rapid fluctuations in markets and technologies have led to supply chains that rely on external organizations to create just-in-time supplies of parts and even whole products.  What does this mean for BPM?  It means new systems to manage new risks.

A thing of the past?

“I need guarantees“

Just as companies push work out to the World, there are standards to ensure the World delivers.  Take the International Organization for Standardization (ISO) as a great example:

- Need to ensure suppliers share your Green commitment and reduce your impact to the environment?  ISO 14001 as an environmental management system framework.

- Need to know suppliers aren’t running a sweatshop that is risky for its employees…or can end up in the NY Times with your name attached?  ISO 18001 for occupational health and safety.

- Need guarantees your supplier is managing information security risks, threats, vulnerabilities and their impacts…including YOUR designs and data?  ISO 27001 for information security management.

There are as many standards as there are risks, or in Apple parlance, “there’s a standard for that.”

The new game is to have supply chains that meet these measures of quality and process — as the best guarantee against disruption, bad products, bad press and more.  As a business relies more on people and behaviors NOT directly under its control, the more standards become the new currency of the contract.

Compliance = Competitiveness

One of my customers, ThyssenKrupp, recently fired up a $5B steel mill in Alabama and another in Brazil to serve primarily the needs of the US automotive industry.  What is their best pitch for the commodity product of rolled steel?  An uninterrupted supply chain backed by quality, environmental, health, safety, IT and business process standards?  This customer made ISO certifications as critical as plumbing and wiring.  See the Wall Street Journal write up here.

Just a few months into production, the biggest and best names in the market are beating a path to their door.  It is working.

Quality and compliance is no longer just an internal question…we have moved to where business is brokered on compliance to quality standards before the first slab of steel hits the rollers.  Are you ready?

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Posted in Compliance, Frameworks, Supply Chain and Logistics