The goal of using Intelligent Automation (IA) is to achieve better business outcomes through streamlining and scaling decision making across businesses. IA adds value to business by increasing process speed, reducing costs, improving compliance and quality, increasing process resilience and optimising decision results. Ultimately, it improves customer and employee satisfaction and improves cash flow and EBITDA and decreases working capital.
WHAT IS INTELLIGENT AUTOMATION?
IA is a concept leveraging a new generation of software based automation. It combines methods and technologies to execute business processes automatically on behalf of knowledge workers. This automation is achieved by mimicking the capabilities of knowledge that workers use in performing their work activities (e.g., language, vision, execution and thinking & learning).IA effectively creates a software-based digital workforce that enables synergies by working hand-in-hand with the human workforce.
On the simpler end of the spectrum, IA helps perform the repetitive, low-value add and tedious work activities such as reconciling data or digitising and processing paper invoices. On the other end, IA augments workers by providing them with superhuman capabilities. For example, it provides the ability to analyse millions of data points from various sources in a few minutes and generate insights from.
THREE KEY COMPONENTS OF INTELLIGENT AUTOMATION
IA consists of three key components:
Business Process Management with Process Mining to provide greater agility and consistency to business processes.
Robotic Process Automation (RPA). Robotic process automation uses software robots, or bots, to complete repetitive manual tasks. RPA is both the gateway to artificial intelligence and can leverage insights from Artificial Intelligence to handle more complex tasks and use cases.
Artificial Intelligence. By using machine learning and complex algorithms to analyse structured and unstructured data, businesses can develop a knowledge base and formulate predictions based on that data. This is the decision engine of IA.
WHERE AND HOW TO START WITH INTELLIGENT AUTOMATION?
Implementing Intelligent Automation might come across as a daunting endeavour, but it doesn’t need be. Like any business leader, you will have a keen eye on accelerating operations performance, which in essence is improving the behaviour and outcomes of your business processes. Process Mining is a perfect tool to help you with that.
Process Mining is a data-driven analysis technique, i.e., analysis software, to objectively analyse and monitor business processes. It does this based on transactional data that is recorded in a company’s business information systems. The analysis software is system agnostic and doesn’t need any adaptation of your systems. Process Mining provides fact-based insight into how processes run in daily reality: all process variants (you will be surprised how many variations of one process there actually are in your business) and where the key problems and opportunities lie to improve process efficiency and effectiveness.
Process Mining is also an excellent way to prepare the introduction of Robotic Process Automation, which could be the most relevant next step on your IA journey. Process Mining can be purely used as an analysis tool, but it can also be installed permanently to constantly monitor the performance of and the issues in the processes. It is a non-intimidating approach and a gradual implementation of Intelligent Automation.
THE IMPORTANCE OF A COMPANY-WIDE VISION AND SHARED ROADMAP
However, at some point, rather sooner than later, it is important to establish and communicate a comprehensive, company-wide vision for what you want Intelligent Automation to achieve: how will automation deliver value and boost competitive advantage. You need a shared roadmap for a successful implementation that covers processes, technology (including legacy systems), people & competencies and organisation.
Such a shared Intelligent Automation/Industry 4.0 Roadmap ensures a consistent, thoughtful approach to selecting, developing, applying, and evolving the IA/I4.0 structure to achieve the intended impact. The Axisto Industry 4.0 Maturity Assessment (AIMA) is an effective way to create such a shared implementation roadmap.
THE CRUX TO SUCCESS LIES IN A WIDE-RANGE OF PEOPLE-ORIENTED FACTORS
Importantly, the biggest challenge for a company is not in choosing the right technology, but in having a lack of digital culture and skills in the organisation. Investing in the right technologies is important – but the success or failure does not ultimately depend on specific sensors, algorithms or analysis programs. The implementation and scaling of Intelligent Automation/Industry 4.0 requires a fundamental shift in mindset and behaviours at all levels in the organisation. The crux to success lies in a wide range of people-oriented factors.
Industry 4.0 means the growing together of the digital and manufacturing industries. All physical assets are digitised and integrated into digital ecosystems with partners in the value chain.
Industry 4.0 represents a huge step in performance. You can improve your speed, flexibility and productivity by 40%. You can develop a new business strategy and take the opportunity to innovate your products and services portfolio.
Axisto works with you to map the digital maturity of your business with our AIMA (Axisto Industry 4.0 Maturity Assessment) and choose the elements that will deliver the most value in line with your vision. Well-chosen pilots will help you get on the learning curve and achieve some initial success. You will gain insights into the skills gap, and this can direct your HR strategy. We can help you to properly organise data analytics and develop your organisation more digitally. Axisto’s experience will ensure you avoid any pitfalls on your journey to becoming a digital enterprise.
Importantly, the biggest challenge for a company is not in choosing the right technology, but in having a lack of digital culture and skills in the organisation. Investing in the right technologies is important – but the success or failure does not ultimately depend on specific sensors, algorithms or analysis programs. The crux lies in a wide range of people-oriented factors. Axisto supports you in the development of a robust digital culture and ensures change is developed from within and driven by clear leadership from the top.
CHALLENGE
A high-tech industrial equipment manufacturer has a complex supply chain with many SKUs and long lead times. It was struggling to match supply with demand, which was fluctuating strongly. Multiple engineering changes.
APPROACH
Through data analytics we mapped the characteristics of the business and identified key levers for improvement. This led to the design and implementation of a dedicated S&OP application – a decision-support tool.
“Tell me where you spend your money and I will tell you what your strategy is.” There is probably no better sentence to describe the potential difference between an intended strategy and a defacto strategy. Zero-based budgeting (ZBB) is a powerful approach to accelerate growth, create value and make your strategy happen.
WHAT IS ZERO-BASED BUDGETING?
ZBB starts from a blank sheet of paper, not from last year’s budget. On a very granular level, you start by determining what resources various business units require to deliver the strategic goals. You then address individual cost categories across all business units and justify all expenditure. In ZBB the base line is not last year’s budget, but “zero”.
ZBB was introduced in the 1960s and was slow in getting traction. It had a brief spell of popularity and then sank away into obscurity. Now, supported by progressed digitisation, it is on the rise again. But it’s no longer just being used in the consumer packaged goods industry, nor focused only on sales and general administrative expenditure. It has begun to spread across industries and functions. And rightfully so because ZBB is appropriate for any industry and all functions: procurement, supply chain, sales and marketing, service and support, and others.
ZERO-BASED BUDGETTING IS NOT JUST A COST-CONTROL TOOL
Many companies use it as a cost-control tool. However, this is vastly underestimating its real power. When used in a strategic context, ZBB can reconfigure cost structures, free up investment funds and accelerate growth. Successful companies start with a solid “What by How” objective that gives the company direction. The related goals then lead to questions about which investments are necessary and what the total cost structure needs to be to enable these investments. This way, ZBB is tightly integrated with the company’s strategy. It addresses both the cost discipline and the investments and opportunities that drive growth. However, using ZBB as a one-time exercise won’t cut it.
ZERO-BASED BUDGETING TRANSFORMS YOUR BUSINESS
ZBB is not a one-time exercise; it is a way of doing business and part of the DNA of an organisation. Its implementation not only redesigns your processes, policies and systems, but also instils new mindsets and behaviours. ZBB establishes clear cost accountability and disciplines to reduce and permanently eliminate costs that add little or no value. At the same time, it establishes a clear accountability to maximise the added value of the right expenditure. ZBB challenges companies to operate more efficiently and effectively across functions, geographies, divisions and business units to grow the top line and margin. It drives people to make conscious, strategic decisions and to get the right things done.
ZERO-BASED BUDGETING IN GOOD TIMES AND IN BAD TIMES – MAINTAIN STRATEGIC MOMENTUM
During a recession – and more so just afterwards – successful companies grow their EBIT whereas others stall. So why do some companies win while others lose? The common denominator with the winners is that they maintain a strict cost discipline and fund their growth levers in both the high and low phases of the economic cycle. They maintain strategic momentum regardless of market conditions.
We know that the total shareholder return a company achieves is mainly determined by its margin. The companies that generate a significantly higher long-term value grow their EBIT most and implement the required change during economic highs – i.e., pre-emptively. So the earlier a company transforms, the better its future performance.
AND WHAT ABOUT LEAN SIX SIGMA (LSS)?
Lean is often talked about as being an extensive toolbox. This misses the point. Lean is all about mindset and behaviours – it’s about strict cost discipline and fast cash conversion cycle. Lean originated at Toyota when it was rebuilding its business just after World War II. The company was cash strapped – as were its customers.
The whole concept of flow within Toyota’s way of working was, and still is, to ensure a fast cash conversion cycle and eliminate low value-added costs. What’s more, they approached everything from the customer’s point of view – what is the customer willing to pay for? Everything else is waste. Having a fast cash conversion cycle creates the opportunity to grow faster. And that is what they did.
Similarly, Six Sigma is often talked about as being an extensive toolbox. But Six Sigma is also all about mindset and behaviours – one of relentlessly eliminating variation. Six Sigma was developed at Motorola in the late 1980s. The company was crippled by the cost of poor quality, which drained their margins and eroded their revenue. For the company to have a viable future, it had to drive down variation.
SO HOW ARE ZERO-BASED BUDGETING AND LEAN SIX SIGMA RELATED?
Zero-based budgeting is the overarching approach to drive the short- and long-term success of a company. From a business strategy point of view, first the “What by How” objective is set and then the top goals and targets are set. ZBB views the company as a whole from the highest level, informed by its purpose, vision and ambition. It affects every aspect of a company: the operating model including the organisation structure and policies. ZBB thrives on the right mindset and behaviours that are incorporated in the DNA of the organisation.
The mindset and behaviours behind Lean Six Sigma (LSS) fit fully with the mindset and behaviours behind zero-based budgeting. ZBB will steer the selection of tools from the LSS toolbox that best contribute to the business needs in the company’s drive to deliver on its vision and ambition – in the same way that Toyota and Motorola developed and acquired skills and tools that were in line with their business needs and informed by their mindset.
An autonomous operating model is not just a digital upgrade of your current operating model. It is a radically different way of conducting your business.
INTEGRATED PERFORMANCE MANAGEMENT
Primary and support business processes are integrated. This allows the financial department to act in a much more agile manner. The cash flow is visible on an ad-hoc basis, which improves planning and analysis abilities. A forecast supported by the IT system replaces manual forecasts. Once determined, KPIs make controlling easier through automated warning messages, thus allowing immediate intervention to take place.
The budget process is changed and no longer runs along the individual business functions (such as Sales, Marketing, Production, IT), but along value drivers (sales quantities linked to market data, prices in combination with customer clusters, etc.). At any time, the balance and P&L for the company as a whole and for each of the departments can be determined. This makes it possible to sail sharply close to the wind.
The entire supply chain uses a single point of truth for real-time information The transparency makes it possible to simulate different scenarios quickly and easily, but ultimately people make the decisions. The effect of decisions is calculated and communicated in real-time throughout the end-to-end supply chain. Margin, order cycle time and cash can be predictively optimised based on a holistic view of supply chain performance, stock levels and trend analyses.
MOBILE
Mobile devices are an essential interaction channel for both customers and employees. As a result, the management and control of the integration of different mobile devices and of the mobile applications are strategic factors. New and existing mobile technologies are easy to integrate.
AGILE COLLABORATION
Collaboration is largely multidisciplinary and without hierarchy. Knowledge and skills are not things that sets you apart from others in the company – they are things you make available to the team.
Collaboration must be able to be set up ad hoc at any time, from anywhere – even across geographic boundaries. Active exchange of ideas, knowledge and expertise requires an appropriate incentive system. This system focuses on the group outcome and allows them to participate in the overall success.
Social media and collaboration technologies are a central element of communication, knowledge transfer and teamwork. This applies to interaction with customers, employees and business partners. The technologies are used for the interactive exchange of information and content, thus making collaboration more effective, and they are increasingly focused on establishing interaction patterns in a digital culture.
The aim of redesigning the office environment is to increase cooperation and creativity in the company. This includes, for example, creating zones of creativity in offices, building open structures where there are no fixed desks and integrating the employee’s own home office.
STRATEGIC WORKFORCE MANAGEMENT
Digitisation requires new skills and abilities on the part of employees. The development of these competencies in the workforce requires strategic planning to address the requirements in the long term. The use of analysis methods not only enables the optimised deployment of employees, but also clarifies the question about which skills are needed now and in the future and how to get them as quickly as possible.
STRATEGIC WORKFORCE DEVELOPMENT
Knowledge and experience are becoming obsolete at an ever-increasing rate, and roles and tasks are constantly changing. The employees are constantly challenged to learn new things, to participate in training for new tasks and to adapt to role changes.
CHALLENGE
Global chemical compounds company with multiple factories with multiple production lines.
Medium term decisions on allocation of products to product lines.
Strong influence of batch size and product sequence on output of production lines.
Need to plan allocation of products to production lines at least one year up front.
Uncertain demand and strong influence of market fluctuations.
Complex global supply chain cost and turnover picture including tax regimes.
APPROACH
Build a mathematical optimisation model of the global supply chain.
Embed the model in a user-friendly software system to support decision making.
Involve future users and management to guarantee quality and acceptance of decision support system.
Transfer system to the organisation and remain available for support.
Disciplined cash and working capital management drives good operational and financial performance. However, performance in order to cash, inventory management and procure to pay slumped over the 5 years prior to the COVID outbreak. A closer analysis reveals that inventory optimisation poses companies the biggest challenge – both in volatile and non-volatile markets. More Cash – Lower Inventory – Better Service, good inventory management is the key.
DELIVER DOUBLE DIGIT INVENTORY REDUCTIONS AND MAINTAIN OR IMPROVE SERVICE LEVELS
Decades of experience have taught us that going straight for the inventories themselves is both the quickest and the surest way of delivering a high-performing supply chain. Inventory sits right at the heart of your supply chain and is both a symptom and cause of your supply chain performance. Getting inventory right keeps your customers happy, increases flow and reduces cost and waste and frees up cash.
At Axisto, we combine the practical business focus of management consulting with the high-speed analytical capability of advanced information technology. We rapidly distil practical insights from data in Enterprise Resource Planning (ERP) systems. Our people concentrate on the human challenges of implementing and sustaining resilient and lean supply chains.
Our unique approach to supply chain puts inventory optimisation front and centre. This allows us to help deliver double digit reductions in inventory while maintaining or improving service levels – at speed in a low risk manner compared to traditional approaches.
OUR INVENTORY MANAGEMENT PROPOSITIONS
Axisto provides three inventory management propositions: inventory optimisation programmes, inventory analytics and inventory maturity assessments.
Our starting point with most clients is a quick scan. On the basis of just 3 standard reports from your ERP system, we quantify improvement potential item by item as well as overall. The output is both an immediate high-level quantification of improvement potential and the basis of a road map to deliver sustainable improvements quickly.
INVENTORY OPTIMISATION PROGRAMMES
We provide expert analytics and effective change management backed up by a clearly measurable business case. Improvements to inventory positions of 20% or more, sometimes much more, are usually achievable within the first year, at a high return on investment.
INVENTORY ANALYTICS
Do you find it difficult to really understand what your inventory data is telling you, or what you should do about it? Do you have optimisation tools that are difficult to use or which give results you know to be wrong, but you’re not sure why? With the proprietary technology that we use, we provide clients with rapid actionable insights into their inventory data.
In addition, we help clients with a range of targeted analytical exercises, ranging from strategic inventory positioning (where in your supply chain should you hold inventory?) through to setting inventory policies for items that are hard to optimise, such as spare parts, or make to order products.
INVENTORY MATURITY ASSESSMENTS
Inventory is influenced by almost every aspect of your business. Therefore, it can be hard to know at an enterprise level where the biggest opportunities for further improvement are, or how you compare to your competitors.
Axisto can take the temperature of your inventory management. We combine a granular, bottom-up quantitative assessment of your potential for improvement with a qualitative overview of your people, processes and systems, including relevant benchmarks, to give you actionable insights into where to find the next step change in your performance journey.
A CASE
CHALLENGE
A medium-sized industrial manufacturing firm with a strong market position and profitability had little historical focus on inventory. The consequence was that inventory was increasing gradually. It was time to act.
RESULTS
Inventory was reduced by more than 50% from the initial baseline over a period of 3 years, while service levels were maintained or improved. Improvements in the underlying data led to a better understanding of how and why to act – inventory management capability was significantly developed within the client’s teams.
SOME QUOTES
“We finally have full transparency of what we have, so we can make fact-based decisions on a weekly basis.” – Automotive manufacturer
“Since starting a programme, we have reduced our inventories by over 50%.” – Industrial manufacturer
“The results are exceptional and have made a major difference to our cash flow.” – Global manufacturing company
“The inventory programme brought a wide range of process issues into sharp focus, with an impact much broader than just inventory.” – Market-leading manufacturer
CHALLENGE
Design of optimal and feasible integral supply chain for various companies in High-tech, Consumer Goods, Food and Building Materials
APPROACH
Determine goal, scope, decision criteria and decision-making process.
Involve all stakeholders and experts during the process to get commitment and create trust.
Make sure all relevant data on actual situation and future trends are available.
Tailor and validate a mathematical optimisation model of the global supply chain.
Organise decision preparation workshops in which scenarios are developed and discussed.
Organise session to discuss recommended options as basis for a decision on the design of choice.
Our More Optimal Platform provides companies with solutions to model, plan and optimise their business operations from end to end. Our platform can handle scenarios that are considered too complex for other software solutions: planning and optimising complex production value networks, optimising intricate logistics operations, and planning and scheduling highly diverse workforces.
Key capabilities include predictive and prescriptive data analytics, forecasting, what-if scenario planning, collaborative decision-making, disruption handling and production scheduling.
The platform is hosted in the cloud and no separate tooling is required. You can model supply chain applications in your browser where end-users use it as well – what you see is what you get!
Supply chain modelling requires no code or specific calculations, and visualisation can be created using a small amount of easily understood code.
Powerful algorithmic building blocks for optimisation come out of the box and are fully integrated in the platform.
Serverless scaling enables multiple algorithms to be run in parallel so that large supply chain conundrums can be tackled.
Maps, 3D visuals, Gantt charts and other charts come out of the box and can easily be configured by the modeler. Custom visuals can be created using low-code and may be shared with other modelers in the More Optimal community.
The calculation engine makes sure you can focus on what needs to be calculated; dependencies between calculated fields are automatically handled by the platform.
These days, customers expect shorter fulfilment timeframes and have a lower tolerance for late or incomplete deliveries. At the same time, supply chain leaders face growing costs and volatility. how process mining creates value in the supply chain is by creating transparency and visibility across the supply chain and providing proposals for decisions with their trade-offs for real-time optimisation of flows.
FULL TRANSPARENCY
Instead of working with the designed process flow or the process flow that is depicted in the ERP system, process mining monitors the actual process at whatever granularity you want: end-2-end process, procure-2-pay, manufacturing, inventory management, accounts payable, for a specific type of product, supplier, customer, individual order, individual SKU. Process mining monitors compliance, conformance, cooperation between departments or between client, own departments and suppliers, etc.
VISIBILITY ACROSS THE SUPPLY CHAIN
Dashboards are created to suit your requirements. These are flexible and can be easily altered whenever your needs change and/or bottlenecks shift. They create real-time insights into the process flow. At any time, you know, how much revenue is at stake because of inventory issues, what root-causes are and which decisions you can take and what their effects and trade-offs will be.
If supplier reliability is not at the target level at the highest reporting level, you can easily drill down in real-time to a specific supplier and a particular SKU to discover what is causing the problem in real-time. Suppliers could also be held to the best-practice service level of competitive suppliers.
MAKING INFORMED DECISIONS AND TAKING THE RIGHT ACTIONS
The interactive reports highlight gaps between actual and target values and give details of the discrepancies, figure A. By clicking on one of the highlighted issues, you can assign an appropriate action to a specific person, figure B. Or it can even be done automatically when a discrepancy is detected.And direct communication with respect to the action is facilitated in real-time, figure C.
Fig. A, details of the discrepancies. Fig. B, pop up to write a task. Fig. C, exchanging information.
HOW PROCESS MINING CREATES VALUE IN THE SUPPLY CHAIN – WRAP UP
Process mining is an effective tool to optimise the end-2-end supply chain flows in terms of margin, working capital, inventory level and profile, cash, order cycle times, supplier reliability, customer service levels, sustainability, risk, predictability, etc. Because process mining monitors the actual process flows in real-time, it creates full transparency and therefore adds significant value to the classic BI-suites. Process mining can be integrated with existing BI-applications and can enhance reporting and decision-making. We consider process mining to be a core element of Industry 4.0.
Business Process Management with Process Mining to provide greater agility and consistency to business processes.
Robotic Process Automation (RPA). Robotic process automation uses software robots, or bots, to complete repetitive manual tasks. RPA is both the gateway to artificial intelligence and can leverage insights from Artificial Intelligence to handle more complex tasks and use cases.
Artificial Intelligence. By using machine learning and complex algorithms to analyse structured and unstructured data, businesses can develop a knowledge base and formulate predictions based on that data. This is the decision engine of IA.
Importantly, the biggest challenge for a company is not in choosing the right technology, but in having a lack of digital culture and skills in the organisation. Investing in the right technologies is important – but the success or failure does not ultimately depend on specific sensors, algorithms or analysis programs. The implementation and scaling of Intelligent Automation/Industry 4.0 requires a fundamental shift in mindset and behaviours at all levels in the organisation. The crux to success lies in a wide range of people-oriented factors.
