Although the key performance indicator (KPI) for Order-to-Cash (OTC) was green, the customer satisfaction measured thru surveys is not good.
What really happens?
How to improve the KPI?
What are the improvement areas?
Order-to-Cash performance is manage with OTIF (On Time In Full) KPI. OTIF means that products ordered are delivered on time and in the right quantity. This KPI is provided by BW in the SAP system. But even if this KPI indicated a good performance, customers were not satisfied.
To analyze the AS-IS situation, ARIS Process Performance Manager (ARIS PPM) was set up directly on SAP (and not on the Data Warehouse).
ARIS PPM collects data from SAP tables and rebuilds each process instance. Each instance of an OTC activity is captured, and the process is assembled automatically. The process flow is generated in real time for past and present.
Dimensions are available to aggregate process instances by product, production location, sales organization, … and to compare process execution and process performance.
Process instances allow the calculation of OTIF KPI and other KPI as cycle times, milestone deviations, discrepancy between lead time commitment and cycle time duration, offering the capabilities to carry out a more detailed analysis.
This company has everything they need to understand what happens: When and how often are orders modified? How often and in which scenarios are orders splits? How often delivery time is changed? What is the cause of delivery time deviation?
PI helps defining the most relevant indicator
With its integrated process approach, ARIS PPM provides information on committed lead-time changes. Because of this, it was highlighted that the OTIF indicator used was not the correct one. This KPI was calculated with the last lead time communicated to the customer. Even though this date was met, the customer was unsatisfied if the date was changed from the original commitment. The first committed lead-time should be used to measure the OTIF KPI.
PI highlights the good and bad practices
KPIs are very different from one site to another. Why? Process discovery provided by ARIS PPM showed that OTC processes are executed differently from one country to another and SAP is not used the same way. The country that has the best performance was a “cheater”. In this country, processes were supported by an Excel sheet. Customer orders, committed lead-times and other information was recorded in SAP at the end of each month. This bad practice was very easy to indentified with ARIS PPM which rebuild process instance including activity dates.
PI identifies weaknesses in processes
Getting to the root cause deviation on time. Aggregated processes analysis provides a percentage of deviation causes : late delivery creation , late material availability , late shipment , late picking, late goods issued or late final customer delivery?
28% of late deliveries were cause due to material availability. An action plan giving priority to this point was established, followed by lower priority actions.
PI supports the improvement plan
Measuring and monitoring of processes provides a clear visibility of added value on each improvement action. The company manage priorities for actions and calculates return on investment.
The focus on OTIF issue provided a very explicit PI use case. But PI is going to be carried out on many other key processes for this company. The PI Solution ROI is less than 1 year compared to the gains of higher orders caused by improved timeliness.
Next steps are deployment of ARIS PPM on other processes and the implementation of a global dashboard with ARIS Mashzone.