Welcome to part 3 of our series on building a successful supply chain center of excellence (COE). In today’s article, we focus on how a supply chain COE can drive process innovation. We’ll explore the importance of process visibility, tools and methods for mapping current processes, and how the COE can facilitate these efforts. We’ll also identify common inefficiencies, discuss best practices for process innovation, and highlight the role of the COE in supporting overall process improvement and innovation.

1. Initial Step: Process Visibility

Before diving into process innovation, process visibility is non-negotiable. Understanding the current state of your supply chain processes allows you to identify inefficiencies, redundancies, and bottlenecks. This fundamental step ensures that any improvements are data-driven and aligned with the real needs of your business. Without clear visibility, innovation efforts may be misdirected or fail to address the root causes of inefficiencies.

2. Tools and Methods for Process Mapping the Current As-Is

To start understanding the process, there are several tools and methods that can be used to map the current as-is processes:

• Celonis Process Mining: Using advanced algorithms, Celonis extracts and reconstructs process flows from event logs, providing insights into inefficiencies, bottlenecks, and deviations
• Value Stream Mapping (VSM): A lean-management method that illustrates the flow of materials and information required to bring a product to the customer, identifying waste and areas for improvement (value-added and non-value-added activities)
• Business Process Model and Notation (BPMN): A standardized graphical notation used to model and document business processes. It provides a visual representation of the steps, workflows, and interactions within a process, making it easier to understand, analyze, and improve.
• SIPOC Diagrams: A high-level visual tool used in process improvement to summarize the inputs and outputs of one or more processes in a table format. SIPOC stands for Suppliers, Inputs, Process, Outputs, and Customers. It helps teams understand the key elements of a process, identify sources of variation, and clarify the relationships between different components, ultimately aiding in process analysis and improvement.
• Flowcharts: Simple yet effective, flowcharts can visually map out each step in a process, highlighting decision points and sequential activities.

Supply Chain COE plays a key role in supporting process mapping efforts. The COE can increase knowledge by providing training and resources on process mapping tools and techniques. Organizing mapping sessions ensures that all relevant stakeholders are involved and that the sessions are productive. In addition, the COE can connect different parts of the process and teams, ensuring a holistic view and fostering collaboration across departments.

3. Visibility on Inefficiencies Found Through Process Mapping

Once the process mapping brings the first view of the As-Is Process there will be a range of inefficiencies discovered with the most common ones including:

• Bottlenecks: Points in the process where work accumulates, leading to delays and increased lead times. For example, a manual approval process that slows down order fulfillment.
• Redundant Activities: Duplicate tasks that do not add value, such as multiple data entry points for the same information, leading to wasted time and resources.
• Lack of Standardization: Variability in how tasks are performed, resulting in inconsistent outputs, higher error rates, and quality issues.
• Excess Inventory: Holding more inventory than necessary, which ties up capital, increases storage costs, and risks obsolescence.
• Underutilized Resources: Equipment or personnel that are not fully utilized, leading to higher operational costs without corresponding value.

The impact of these inefficiencies can be significant, resulting in increased operational costs, reduced customer satisfaction, longer lead times, and lower overall process efficiency.

4. Process Innovation to Fix and Remove Inefficiencies

In order to address and fix the identified inefficiencies you would want to implement one of the best practices for process innovation, such as:

• Lean Six Sigma: This methodology combines lean manufacturing principles with Six Sigma’s focus on quality. By systematically eliminating waste and reducing process variation, Lean Six Sigma enhances efficiency and quality. For example, streamlining inventory management to reduce excess stock and improve turnover rates.
• Automation and Digitalization: Implementing automation technologies, such as robotic process automation (RPA) or automated inventory tracking, can streamline repetitive tasks, reduce errors, and accelerate processes. For instance, automating order processing to reduce manual data entry and improve accuracy.
• Agile Supply Chain Management: Adopting agile principles can increase flexibility and responsiveness. This involves breaking down processes into smaller, manageable tasks and continuously iterating based on feedback. For example, using agile project management for new product introductions to quickly adapt to market changes.
• Continuous Improvement Programs: Establishing a culture of continuous improvement ensures that process enhancements are ongoing. This involves regular assessments, employee training, and the use of feedback loops to drive iterative improvements. For example, conducting regular kaizen events to identify and implement small, incremental changes.

These innovations can lead to significant improvements, such as faster cycle times, reduced costs, improved quality, and greater customer satisfaction. By making processes more agile, organizations can better adapt to changing market conditions and customer demands.

5. How COE Can Support and Help with Overall Process Innovation

A Supply Chain COE plays a critical role in driving process innovation by promoting best practices, sharing knowledge, and connecting teams. The COE can facilitate cross-functional collaboration, ensuring that innovations are aligned with business goals and effectively implemented. By maintaining a repository of best practices and lessons learned, the COE ensures that improvements are sustainable and scalable. Ultimately, the COE serves as a catalyst for continuous improvement, fostering a culture of innovation and excellence within the supply chain.

Conclusion

In summary, a supply chain COE is essential for supporting process innovation. By improving process visibility, facilitating process mapping, identifying inefficiencies, and driving continuous improvement, the COE ensures that supply chain processes are efficient, agile, and able to meet the demands of a dynamic marketplace.