SAP Signavio – Procure-to-pay: An intelligent BPM case study.
A little history on BPM and about my motivation.
Business process management — in short: BPM — is around since more than 20 years. During my time as functional IT consultant I witnessed a few “groundbreaking” tools that should have helped businesses gain tremendous value through documentation of the same.
Why was it, that during more than 12 SAP implementations in different industries the first activity on-site was always as-is process understanding and documentation?
I found that BPM was a once-a-lifetime activity driven by a CxO through the organization with a focus on documentation. Once complete, no processes were set in place to keep it up to date or — more likely: Everyone tried to quickly forget about it for no value was seen in return for investing resources to keep it alive. And so the documentation became an archive. And remained very sceptical about BPM as a discipline.
Today, I want to share what some consider intelligent BPM and where I see an immediate return on investment. This story reflects my personal learning journey and is not a best practice document. Let’s learn the story of Takeshi.
Takeshi: a process owner’s challenges.
Welcome to the world of Takeshi working at Mitsuhashi K.K. – A leading Japanese cat food producer! He was recently appointed by his boss to “Global Process Owner Procure-to-pay”. Something he can’t write on his namecard and likely an outcome of one of the long lasting management meetings. He feels there weren’t too many competing for these honors!
It’s true however that the past rapid growth has led to inefficiencies in procurement. Having worked as a manager in procurement for years he knows that finding sources for direct but also so for indirect procurement was priority and process cost and control was no focus at all.
With the recent global supply chain challenges, increased raw material cost and interruptions of on-time fulfillment he knows that very soon this topic will make it onto the boards agenda. And when the lights focus on him he would need insights and proposals to improve Mitsuhashi’s supply chain!
Carrying the heavy thoughts back home he dreams a weird dream that night…
“What was that? My cat’s giving me advise?” – He rises up from bed. Sig-nya-vio? Wait! Signavio! I saw that when I walked over the supply chain exhibition in Tokyo’s Big Sight last month! Let me see. Takeshi fetches a tea and opens his notebook. Radically Optimize Your Procure-to-Pay – “That’s what they advertised! Well, I’d give it a shot!”
A week later, Takeshi spends intensive 2 days with the Signavio Consultant SAP sent after he called for support. Here’s how it goes:
SAP Signavio Process Management.
He understands they would go through a 3 step approach:
- Document the business process to the best of their knowledge in SAP Signavio Process Manager
- Prepare the process data from their system(s) so that it can be used as so-called “cases” in SAP Signavio Process Intelligence. A case is an end-to-end process kept together by a process ID.
- Prepare and run the investigation: Define process metrics, maybe custom attributes and let Signavio find automated insights where to investigate. Also build an investigation dashboard to get hold of all optimization potential.
Takeshi’s first enlightenment is how fast he can get the procure-to-pay process documented in SAP Signavio. He still finds some Excel sheets from his predecessor. The consultant told him it’s ok to first start with what’s available.
At the end of the exercise the process is documented and he has a video tutorial he can use to teach others at Mitsuhashi K.K. Maybe his O2C colleague?
Documenting the procure-to-pay in SAP Signavio Process Manager.
Preparing the Investigation – Data load and mapping.
Together with the gurus of corporate IT, Takeshi does the magic (some call it “SQL”) to produce a case list with attributes for import. It is this list with which Signavio is supposed to provide the insights he’s so eagerly wanting to obtain!
How lucky he got all the steps documented in a video after it was successfully accomplished with a bit of consulting help!
Loading the data and mapping it to the business process – and a first glance at the investigation.
Next time, Takeshi wants to load the data directly from Mitsuhashi’s on-premise system. He found a blog he’ll certainly try out: SAP Signavio Process Intelligence: On-Premise SAP S/4HANA data
Setting the metrics and gaining first insights.
With 4 months of Mitsuhashi’s procure-to-pay data loaded and mapped in SAP Signavio Process Intelligence, Takeshi is learning how to set up metrics and custom attributes.
Metrics are predefined in a library and provide e.g. data aggregations to get specific data insights. They can also be freely defined using SIGNAL. For example finding out how often purchase orders are rejected or how often a process step is skipped or which steps are manual work and many more.
Custom attributes are handy for Takeshi to look at for example a part of the process like understanding the duration from order entry to order confirmation by the vendor. It’s just by clicks and he already is very glad having listened to his cat dream. 😸
After these 2 steps SAP Signavio’s automated insights can be requested for Mitsuhashi’s procure-to-pay process data. Yes!
Defining metrics and custom attributes and browsing the insights automatically found by Signavio.
From insights to completing the process investigation.
It’s the last of the two days – the process investigation is gradually shaping up! Takeshi is blown away by the amount of insights he’s able to get through widgets, filters, grouping and more. There is much more to be optimized than what he had originally thought of! Certainly he will be able to come up with a long and prioritized list of actions that will create tangible value for Mitsuhashi!
That night,after completing his last video document and being on his way home, he decides that his cat truly deserved a special treat for appearing in his dream! Salmon maybe? 🐟😻
Setting up the investigation for procure-to-pay and obtaining automated insights.
From insights and investigation to business value
Two weeks later and after multiple presentations and discussions with fellow experts on the insights of his investigation he has the action plan in place:
Supplier invoice entry: Takeshi found with a 105 day data extraction the the work on the non-automated process in indirect goods procurement is up to 10 times higher than the machine processing lead time.
Putaway lead times
It’s not surprising to Takeshi that dispatch advised goods run faster through the intake process. However he wasn’t able to quantify it before.
“If we move 3-4 of the biggest direct goods supplier already running on PO EDI to dispatch advise and electronic invoicing we will have the stock on hand 30 minutes earlier and with less risk of exception handling due to wrong or missing paperwork.
Manual correction in the flow
Takeshi is surprised to see peaks of manual rework needed for certain vendors. He defines a first round of analysis and optimization that impacts 5 major suppliers.
“Less rework, less exception handling, more time to work on sourcing topics of which we have quite a few!”, Takeshi thinks out loud. Having seen the average order value he knows that’s another thing he needs to tackle to save overhead cost.
“Why are 11% of all manual orders being rejected?” – This fact bewilders Takeshi.
He learns that the average time to take a decision is 11 minutes for all POs to be undergoing an approval process. 21 days per year two of his purchasing managers spend on that task. That point makes it on the improvement list for sure.
Together with a few more additional insights, the deck is compiled and ready. “Pheew… That saved me days and days of tedious analysis work and I gained insights that surprised me more than once! Time to call it a day!”
Now all he has left to do is run it by the senior management meeting to get support and funding for the improvement programme!
Happy with how the senior management meeting went, Takeshi is also relieved of all the pressure that he found was on him the past days. “How could I have gained those insights and drafted the action plan without SAP Signavio?” – He plans the next steps towards automation, consolidation. Certainly he would follow-up on the progress and improvements using SAP Signavio Process Insights!
Interesting story? It could be yours! Happy to hear your comments. 😸
Thanks Sumin Lee – for letting Nyangban be the guest star of this blog! She’s a busy cat with her own channel! 🐈