Process improvement and real-time supply chain visibility at Electrolux
As I mentioned in my post last week, I was inspired to write about the Electrolux presentation given by Jean Lastowka at the recent Gartner BPM Summit. The presentation was about how process improvement and real-time supply chain visibility are game changers for Electrolux. But what makes this story unique is Jean attended the BPM summit last year where she considered herself a BPM beginner. But hearing on the stage this year, you would have never consider her a beginner as she talks about how BPM is making a dramatic difference in her organization today.
For those of you not familiar with Electrolux, it is a Swedish company with 58,000 employees in over 60 countries. They manufacture and sell cookers, ovens, dishwashers, laundry products, vacuum cleaners, air conditioners and products of professional use. The company has started to make the move from a manufacturing organization to a consumer-driven business which, as you can imagine, comes with its own set of challenges. The biggest challenge was to break up organizational silos to improve customer-facing processes in an end-to-end manner. Obviously you always step into someone’s territory if you improve processes end-to-end. For this, it was key to have the leadership team behind the project. This was exactly the case at Electrolux. Process improvement was seen more as a management discipline than technology. Management set the objective to make processes transparent and to simplify, improve, and manage them.
So for phase 1,
Jean started the project (initiated by a new ERP implementation) by creating a BPM framework defining governance, roles, communication, and methodology based on the C-level objective to simplify processes. With this, the process improvement initiative was nicely integrated in the corporate strategy and thus became a high priority in the organization. Because of this, teams directly approached the BPM competence center to support the mapping of as-is processes and to improve them. The competence center checked first which teams are interested in process improvement and chose them to participate first. Early results were used to convince the other departments to participate. After the collaborative process design/improvement exercise, done collaboratively by business and IT, the processes were implemented in an ERP system.
Phase 1 benefits for business…
- Processes gave visibility to the business and influenced other functions/silos transparent
- Now decision making is based on the full understanding of end-to-end processes
and for IT:
- Improved translation from business requirements
- Now ERP implementation is based on improved processes.
During phase 2,
the objective was to achieve higher process visibility. Electrolux wanted to see what was happening across the entire distribution network in real-time. They wanted to know: How many orders are coming in? Which orders are coming through which distribution center? Where are the orders coming from? Answers should be provided in real-time and filtered by product line.
The BPM team wanted to analyze trends so problems could be fixed before the customer discovered that there was an issue. Which is why having real-time information and analytics were a key part of their process improvement strategy. They could no longer wait for a daily shipment report; it was critical to identify problems in real-time and have the order corrected immediately. Understanding these requests created immense benefits.
To get the supply chain visibility they need, Electrolux chose iKnow from Software AG to define metrics and monitor KPIs gathered from the ERP system. iKnow at Electrolux is today providing visibility for:
Phase 2 benefits:
- Real-time information vs. a day old BI report
- Inventory issues found before consumers discover them
- Identify and correct process bottlenecks before the consumer is affected
- Helping the business to deal with exceptions instead of dealing with everything
During this initiative, Electrolux learned that by defining to-be processes before the ERP implementation and enriching the operational system with iKnow Process Intelligence, Electrolux got a supply chain solution that improves processes and provides actionable information. Jean also mentioned how important an appealing visualization of data is. Working with data is just more fun if it looks good. It also helps to use the dashboards to turn real-time data into real-time information and with this, turn them into real-time action. iKnow comes with very nice dashboards that really want to make you play/work with it. You find example dashboards for service level agreements, inventory management, and others here.
One of the key pillars of success for Electrolux was the collaboration between business and IT which isn’t always easy because they speak different languages and use different tools. But they realized they had the same objectives and by achieving end-to-end process visibility they are able to move from a reactive to a predictive management approach. Having consistent objectives for business and IT helped a lot in getting both parties to work together and drive results.
In the next phase, Electrolux will move from the order-to-fulfillment process to order-to-cash, covering multiple channels. iKnow will be used for the BPM team as a follow-up step to process mapping.
A big thank you to Jean Lastowka for the great presentation! Me and the entire audience were really impressed with what the Electrolux team was able to achieve in just one year.
You find further reviews of Gartner BPM Summit sessions in Sandy Kemsley’s blog: http://www.column2.com/
About Joerg Klueckmann
Joerg Klueckmann has written 11 posts in this blog.
Joerg Klueckmann is head of Enterprise BPM at Software AG. He studied sociology, business administration and intercultural communication at FSU, Jena, Germany, and at Louisiana State University in the U.S., where he graduated with distinction. Prior to joining Software AG, Joerg was head of product marketing at Intershop and IDS Scheer. He has written numerous articles about business process management, business innovation and process intelligence.
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