Feb 22 / Stéphanie Gamelin

Leveraging information systems to increase bottom line results : How ?

3 main development axis with an objective to leveraging ERP systems
Nowadays business environment is characterized by lower sales levels in some industries, and a constant focus on liquidity. In general, profit is beginning to edge up due to cost cutting; however, there remains a significant gap to goals.

Therefore, it is a must to continue to search for ways to free up cash and improve profitability with minimal investment.

It is recognized that multiple industries and globally, companies typically are utilizing 20% of their ERP (Enterprise Resource Planning) systems capabilities.

More than 90 percent of the companies that have implemented ERP have not had a truly successful implementation the first time around.

3 main development axis

With a low implementation success rate in many cases and positive ROI often non-existent, many management teams think that ERP systems are expensive, and even wasteful exercises. 

Still, ERP can serve many valid and necessary purposes such as storing product definition data, processing sales orders, planning material needs, paying and issuing invoices, etc. Therefore a clear option which doesn’t require capital investment or major disruption is to leverage ERP systems.

Here are 3 main development axis with an objective to leveraging ERP systems:

 Get a clear view on inefficiencies in no time with process mining,
 Enforce data integrity,
 Develop metrics for effective decision-making
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Get a clear
view on inefficiencies

You can get a clear view on inefficiencies in no time with process mining. The core idea of process mining is to utilize ERP or any other information systems implicit data by using algorithms to create new process model, analyze a process model or enhance an existing process model.

Process mining enables companies to leverage existing data from e.g., ERP, SCM or CRM, allowing organizations to monitor the step-by-step execution of core processes and to understand how to optimize them. For example, process mining can be used to facilitate ERP post implementation review.

For a given process (Order-to-cash, Procure to Pay, Record to Report ...), the analysis will allow to discover the normal and unusual data paths. The process mining results may show that some of the activities are very uncontrolled i.e. sometimes it can be done in a short time but in other cases it took a long time.

The activity may be done quickly because the procedure is bypassed. The bottlenecks may occur due to technical issues (error in the systems), data migration issues (the introduction of new material numbering and categories) and cultural issues (high dependency of hard copy approval).
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Enforce data integrity

Many times, a number of business issues find their root cause in the lack of data integrity and process discipline. Improving these will have direct and immediate impact on results.

For example, inventory management is very often an area with accuracy issuesAlthough leveraging the ERP system (by implementing cycle counting and bar coding) , in many companies, the main cause of inventory inaccuracy is a lack of process discipline.

A "classical" issue arise when physical inventory movements (such as warehouse transfers) happen without someone completing the system transactions in a timely manner.

Thus, no matter the system, it would have no idea where the inventory was located.
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Develop metrics for effective
decision-making 

A great outcome of process mining is the availability of Key Performance Indicators ; these can be built in different ways and can be used to measure internal efficiency, customer satisfaction, and automation.
For example, the analysis of the order-to-cash process shows the effectiveness of a company to convert a product or service into revenue.

This process can be subdivided into subprocesses such as order-to-shipment, billing-to-accounts receivable. Some exemplary indicators include : Order-to-confirmation time, order-to-fulfillment time, order-to-bill time, shipment / service-to-billing time, percentage of on-time delivery, number of order changes, percentage of late payments ...

Process Mining is offering great opportunities

Process Mining is offering great opportunities to perform process discovery, monitoring, and bring improvements fast. There are many options that make the price and time commitment to start the Process Mining journey very manageable.
With several different vendors and price ranges, there is an option for every company with a use case.  
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Stéphanie Gamelin

Stéphanie est une experte avérée de la gestion des risques et des revenus des fournisseurs. Spécialiste de la gouvernance, transformant les performances commerciales de bout en bout grâce à la gestion des finances, des données et des risques pour les organisations axées sur les clients.
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