Edc Knowledge


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Edc Knowledge

  1. 1. Because Knowledge is Power, You Need To Know Everything Going On In Your Company. An Operational Business Intelligence System Using Statistical Business Process Control. Bob MacLeod, Enterprise Data Consulting, LLC, Phoenix, AZ Of the current Business Intelligence tools, the best Executive Summary will provide measurements and reporting on business performance at the Key Business Indicator This paper discusses a deficiency in current (KBI) level. This is where the strategic Balance business reporting and Business Intelligence Scorecard meets the actual results of the business. systems. Current reporting gives information on what But, this by itself is not good enough. The problem was produced but gives little information on the with only KBI reporting is it tells about results, things mechanisms that produced it. This leaves that have happened and the results are weeks or companies in the dark on their systemic operational months old. It will tell you how many sales occurred problems. A new and innovative product, C-Level in the mid-west, by state, and by product for the last Clarity, provides extensive information, both quarter. It will tell you how may customers called in summary and detailed, on the operational and their average wait time for the last week. It may characteristics of the business processes that even tell your inventory levels and whether the perform the work inside a company. Reporting in levels are rising or falling, month over month. This real-time on how well the business processes are information is valuable and has its place but by itself functioning, their efficiency and stability, allows the information is incomplete in being used to business owners and managers to identify and manage a business. It’s respond to process weaknesses and changes in the like steering a ship by business environment. No other reporting system looking at the ship’s provides this information. The benefits of C-Level wake. The information is Clarity are extensive and extremely strategic. The reassuring and relaxing if benefits are discussed in full detail in the body of the everything is running paper. right, but it does nothing for navigating what’s coming at you or dealing with Introduction what’s happening in various parts of the ship right now. For those things you need a different kind of Successful business management has always information. You need inward and forward-looking required the proper blend of the right behavioral information. attributes as well as good solid business information. It’s as important to have the 7 habits of highly You need to know if you’re going to meet your effective people, as it is to know your sales figures service level agreements with a major customer. and your current profit/expense ratio. Operating a You need to know if your sales people are going to business well requires information on a multitude of meet their targets. You need to know if every part of aspects: sales, customers, orders, products, etc. your business is operating correctly or if you have a The better the information the more likely the correct problem somewhere that is hidden from you and decision will be made. Information is therefore the waiting to bite you. And you need to know if lifeblood of the business. Business information something is changing in your business and if it will systems have evolved over time from the basic impact your ability to deliver. You need to know all accounting ledger through to today’s massive and these things and you need to know that the complex Business Intelligence systems. However, information is accurate and timely. The information until now, all business reporting has missed one key must tell you what is happening in the business right aspect of the business, it doesn’t tell you how now. Today. Not last week, not last month, and not smoothly your business is running. It doesn’t tell you last quarter. This is inward and forward looking if the business operates in fits of starts and stops or information. This information will give you the if it hums along like a well-oiled machine. knowledge and the power to manage your business Allegorically, it doesn’t tell you how much internal to win. friction, and hence internal waste, that you have. 1
  2. 2. measuring the output of the business, C-Level C-Level Clarity Clarity measures the characteristic of the processes that produce the result; a fundamental difference. Enterprise Data Consulting has developed a new, This is the concept of Business Process Metrics. innovative product, C-Level Clarity, based on the The outputs of a process are a function of the health collaboration of the fields of Business Process of a process. You cannot get good results from a Metrics and Statistical Business Process Control. process that isn’t working properly. Measure the This software provides business owners and outputs of a process and you know what the managers the inward and forward-looking process produced; measure the characteristics information that they need. C-Level Clarity shows of the process and you know what the process is the owners and managers everything that is taking capable of producing. By measuring the place in their business, right now, and shows the performance characteristics of the process you can expected performance of the business into the near tell how stable the process is, how well it is future. C-Level Clarity works by measuring, operating, and you can predict the future analyzing, and reporting the health and performance performance of the process. This is the concept of of the company’s business processes. It is those Statistical Business Process Control. Together business processes that do all of the work of the Business Process Metrics and Statistical Business company and therefore knowing how well the Process Control are the inward and forward-looking processes are actually functioning will tell the reporting that business owners and managers need. owners and managers how well the business is operating. Remember, no work can be done in the By measuring the processes, C-Level Clarity business that is not done by a process so knowing performs two primary functions. First, it flags and how well the processes are operating is akin to alarms when a process is performing so badly that having gauges on your business. It’s like a central reliable predictions of the future behavior of the command and control room for your company. process are not possible. The process is deemed unstable and out-of-control. Processes of this type are the source of the hidden problems in your business. Totally unexpected things (surprises) happen here. Typically these processes are responsible for the bulk of the waste and inefficiencies in a business. Identifying and correcting these processes can very quickly achieve large profits. The second main function is that C-Level Clarity allows the business owner and managers to analyze how things are operating in all sections of the The measuring, analysis, and reporting that C-Level business and to make informed, knowledgeable Clarity performs is based on the same operational decisions on the operations of the whole company improvement methodologies that were used in the based on the performance capabilities of each manufacturing environment starting over 50 years section. In a highly predictable manner. ago. It is these process improvement methodologies that have given us TV’s that never break and cars C-Level Clarity is non-intrusive. It installs over top that run over 250,000 miles. C-Level Clarity takes of, not replacing, your current enterprise information these same concepts and through modern system. C-Level Clarity easily installs and adapts to technology applies them to business processes. By changes in your business. Once installed, C-Level definition, a process is the mechanism for the Clarity starts automatically reading the business conversion of inputs into outputs. A business process metrics from your business. The analysis process is different from a manufacturing process takes place in real-time and the results are made only in that a business process is not limited to available to users through an easy to use and physical objects and may also convert either intuitive dashboard. Armed with this new knowledge, intellectual or cognitive objects such as knowledge about how the business is performing, many new or perceptions. A business process can be a things are possible. manufacturing process; it can also be the processing of a purchase order, hiring a new employee, or answering a customer’s phone call. Identify Unknown Problems Your business, whether you have explicitly Through C-Level Clarity all the unstable and out-of- recognized it or not, is an amalgamation of individual control processes in your company are flagged. You processes all working for a common goal. Instead of 2
  3. 3. now know instantly and automatically where all the managers decide when and how to tackle the job of major problems are in your business. You now know correcting broken processes. those processes that are either broken or near breaking. No more surprises. Once the broken processes have been handled, either repaired or quarantined, then the owners and Under the old way of business reporting you were managers can move on to the more encompassing never given information on how well the processes task of business process improvement. Keep in mind were operating, only the volume of the output. Never that the processes must be repaired before they are any of the details on what it took to produce the improved; you cannot improve something that you do not control. C-Level Clarity supports a proactive, results. Therefore if you wanted to increase the volume of the work through the process you had no well-managed approach to business process idea if the process could handle it or not. improvement by providing the managers with detailed analysis of the performance levels of the Now you know if the process must be watched processes. This information allows for a structured carefully and handled gingerly. You cannot increase approach to process design and reengineering the workload of these processes. You cannot where the strategic goals of the company drive the remove any of the resources. You must be extra process capabilities requirements. The analysis from C-Level Clarity shows the level of improvement careful on the quality of the work going into the process and the quality of the work coming out. It’s required to meet the company’s goals. The process like having a car with the check engine light on. is changed by incremental improvement or by radical You’re probably all right to drive to the corner store reengineering, as required. There is no point in a but you wouldn’t want to go on an extended trip out massive redesign if a 20% improvement will suffice. C-Level Clarity gives owners and managers better into the desert in the summer. Imagine if you never had the light to warn you. That’s the warning that C- control of the process improvement effort. Level Clarity provides you. If the red light comes on then you need to fix that part of your business, or Improve Internal Communications bad things will happen. The following figure shows one of the ways that bad processes are flagged by With C-Level Clarity in place you can talk C-Level Clarity. knowledgably to managers and subject matter experts about the actual performance of a process. C-Level Clarity provides a singular focal point for all discussions regarding process operation and process performance. It provides that one true picture. Many times there is a disconnect between how a manger or supervisor thinks a process is being done and how the workers actually do the job. C-Level Clarity documents how the work is actually done. Additionally, C-Level Clarity allows the business to assign a process owner. Depending of the scope of the process, the process owner can be a manager, a supervisor, or a team leader. In any Plan & Prioritize Process Improvements case the process owner is the most knowledgeable person in the company on how the process is supposed to work and is the go-to person when With C-Level Clarity you can fix the worst something goes wrong. performing and most important parts first. Given that the typical business has 30% - 40% waste and inefficiency you can safely assume that more than Manage Your Business one part of your business is currently broken. C- Level Clarity not only shows the processes that are C-Level Clarity allows better management of the broken but also it assigns a ranking level to each business, both reactively and proactively. If one part process and shows how the processes are grouped, of the business is having a problem or is overloaded interconnected, and interdependent. This then move resources (people, machine, materials) information allows the business owner and from another part of the business that is slack and managers to prioritize the process repair and has extra. Compensate immediately and with process improvement plan. You can’t fix everything confidence. Know the impact and scope of at once. You can fix the most important processes disruption of any abnormal event in the business. first and then move on to the lesser important. The Know if a problem in one area will cascade through information that C-Level Clarity provides lets the the business like an avalanche, picking up more 3
  4. 4. destruction as it moves through subsequent deliver. The second change is the improvement in processes or if it will peter out when it reaches a service. Well-designed processes are customer- process more stable and with higher capacity. This centric. Your processes will deliver what the will allow the owners and managers to react customer wanted and when and where they accordingly, not too much but also not too little. expected it. Being able to manage a business, to keep it stable and functioning correctly, provides owners and Identify and Standardize Best Practices managers with both the skills and confidence to expand and grow their business. With C-Level Your company may perform similar activities at Clarity business growth is much more secure. various parts of the business; customer callbacks for example. C-Level Clarity will help identify those Identify & Eliminate Waste and Inefficiency similar activities so that a single best practice can be applied across the company. If you do the same C-Level Clarity helps add profit to the bottom line. thing 10 different ways then 1 way is the best and 9 are not quite as good. C-Level Clarity identifies the Most waste occurs in the unstable and out-of-control processes. There, the high amount of rework, 1 best way and helps to easily transfer that best overtime, employee turnover, theft, and ineffective practice over to the other areas. waste of resources eats 30% - 40% of a business’s operating budget. For every dollar you spend, 33 Easy Access to Operational Information cents is thrown away. The figure below shows what 33 cents wasted out of ever dollar looks like. C-Level Clarity allows owners and managers to immediately find the information they need. No longer waste time searching for it. Additionally the information is always current, never weeks or months old. If you need to know how well Purchasing is operating then the information is at your fingertips. The same applies to Sales, Accounting, Production, Shipping, and Engineering; C-Level Clarity identifies those areas of waste and any part of your business. inefficiency. By eliminating them through process repair and process improvement then all the money previously spent does not now have to be spent. Conclusion You can take the 30% – 40% savings and send it straight to the bottom line. Or, if you like, you can This paper showed the existing deficiency in current invest the money back into the business to make business reporting and the problems it causes. more money. In any case it’s no longer leaving the C-Level Clarity integrates Business Process Metrics company as waste. and Statistical Business Process Control to deliver a new innovative dimension in business reporting. C- Level Clarity reports on the health and performance Improved Customer’s Experience of the internal business processes and thereby provides owners and managers inward, forward- With your business now operating using well looking, and real-time information on business designed and managed business processes, your operations. A multitude of benefits ensue including: customers will experience two key changes. First, identify all previously unknown problems, structured the errors that your customers used to see will business process improvement, improved internal disappear. Now things are done right, and done right communication, improved business management, the first time. Well-designed processes will eliminate reduced waste and inefficiency, improved customer nearly all possible ways that errors could occur. You experience, standardized best practices, and will be able to tell your customers the probability of improved access to business information. an error and know with confidence that you can ------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Bob MacLeod is the founder and CEO of Enterprise Data Consulting, LLC. He has been a thought leader in business process improvement for the last 20 years. Enterprise Data Consulting specializes in strategy and tools for business process improvement. The company has a new innovative tool, C-Level Clarity, specifically designed for business improvement that marries business process metrics and statistical business process control for the next great competitive advantage. Enterprise Data Consulting, LLC Bob MacLeod, CEO 2337 West Solano Dr, Phoenix, AZ 85015 602-451-8480 bobmac@edataconsulting.com www.edataconsulting.com 4