Tag Archives: Business Intelligence

Smart Business Process: Wal-Mart Proves (Again) That Reducing Costs & Adding Customer Value Leads to Profits

Wal-Mart aired its latest performance data today and revealed that, despite the recession, they have maintained profitability. Shining a light on Wal-Mart is kind of silly given that virtually no other organization in the world (and most countries, for that matter) are in the same league.  The point is that we can all learn from their lessons. The lessons this week are absolutely central to the argument for  smarter business process management. Wal-Mart applied several elegant tactics with what appears to be precision execution. Firstly, they reduced their inventory which contributed to the goal of reducing costs by 6%. Secondly, they recognized that their customers are facing deep income cuts of their own and identified which product discounts would be perceived as most helpful. They leveraged their world-class inventory data to identify specific products and discounted prices considerably. The result was an influx of new customers who compensated for lower sales per customer thereby producing profits that exceeded everyone’s expectations.

Lessons Learned – What Small Business, Non-profits and Governmental Organizations Can Take-Away From Wal-Mart (without stealing)

In the spirit of keeping it simple, the following lessons can be brought home to your organization:

  1. Visualize, illustrate and understand your supply-chain
  2. Negotiate discounts with your suppliers
  3. Reduce your inventory and reduce inventory costs
  4. Ask your customers what they believe will add value to their lives and modify your offering to reflect that demand…now
  5. Let your prospects and customers know that you have satisfied their demands – promote yourself effectively
  6. Establish clear and specific performance expectations including those for positive financial results
  7. Measure and report results openly (even the bad news)

It doesn’t matter how big or small you are and it is frankly irrelevant which industry you hail from…you can apply all of these lessons and tactics. I have done so in commercial for-profit enterprises, governmental programs as well as in non-profit settings.

BPM – whether it is enabled by software or not – is key to each and every one of these tactics.

  • If you cannot “see” your supply chain;
  • if you cannot model how you will reduce inventory;
  • if you cannot illustrate how you will engage and interact with customers to understand where and how you can create value in your value-stream;
  • if you cannot develop a straightforward mechanism for gathering, measuring and reporting performance data, then you will find managing your business very difficult compared to those who can.

The best strategy and the best intentions will be trumped by lousy, inefficient and absent business processes. Between you and me – when I run across reasonably successful organizations that lack identifiable and manageable business process and controls, I know they are successful quite by accident. Ignorance in managing organizations and performance is not bliss.

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Business Process Data: On Dashboards and Windshields

Reading about IBM’s “Stream Computing” in Business Week magazine this week, I am reminded of a time in a meeting several years ago when I groaned: “I don’t want a better dashboard; I want a cleaner windshield. I want to know what’s coming and a dashboard can’t tell me that. Those are lagging indicators.  At best, a dashboard tells me what I have done in the recent past. I want to know what my suppliers and customers are doing as they approach…before they get here.”

On My Windshield

I never did get my Windshield. Today, we’re lucky if we have a dashboard. It would  put many of us in a small minority if we could have near-real-time indicators of what just happened  on our desk-tops. From a business process management perspective, how would life be if I could see changes in my supply chain before they affect me? If I could see my suppliers’ dashboards, would that be enough to give me an idea of what I could expect?  If, instead of relying on marketing, I relied on interoperable business data between my company and my customers, could I see their demand before they pick up the phone and place an order? That information would help me in innumerable ways.I suspect very large companies can afford supply-chain and distribution information management and reporting but what is a mid and small sized organization to do?

Is it possible that my contracts with suppliers and customers might involve strategic dashboard exchange? Of course  it is. In a business-to-business relationship, my clients might even think they were doing business with a pretty smart guy if they knew I needed to know something about their data prior to them needing to know they need me. I bet they would be happy to give me that information in small packets called “Bugs”. Throughout the day, “bugs” would hit my “windshield” and I would know what’s coming down the road. You could have a lot of fun with this metaphor. Landscape, traffic signs, intersections, accidents, traffic jams, you name it.

Operations, Finance, Marketing and Sales: Performance Metrics During the Race

Dashboards are helpful. Don’t get me wrong. I find them especially helpful once I have arrived. I can quickly look back over the course of the trip (or the day at work) and understand where I have been, what my top speed was, how many miles I covered and how much fuel I used (plug your favorite business metrics in here). A windshield, however, lets me calibrate  what is happening in the midst of a high-speed race. As a former football player, I can tell you that my stats after the game were a lot less important to me than was knowing where the line-backer was when I pulled out on a sweep. Failure to see my adversary or my teammates often caused me great pain. Successfully anticipating blows led to touchdowns.

The Importance of Anticipation: Getting Out of the Blind Spot

We are living through the negative consequences of not anticipating what lies ahead. We’ve all become so enamored with the rear-view mirror and the mounted DVD players in our SUVs that we have forgotten to simply out the window in front of us and drive defensively.

This may all seem trite and I may sound like I am beating this metaphor to death but I think we need simple reminders these days. Look outside your vehicle and assess what is happening down the road. Many companies have done this very well and managed to keep staffing levels and inventory at quite safe levels. Other companies were so busy fiddling with their dashboards and cell phones and doing their make-up while they drove that they missed their exit and went over a cliff.

What do you need to know about the road ahead and the drivers around you? What kinds of “bugs” do you want hitting your “windshield”? This is a great question for your next executive team meeting. It’s also a great question for your business analysts and your line staff.

  • what would you need to know about your customers’ “demand behavior” that would allow you to do your job better?
  • what would you need to know about your suppliers and supplies?
  • what would you need to know about the economy?
  • political changes around the state, country, world?
  • currency and credit changes?
  • social trends and patterns?
  • legal developments?

Keep in mind that as you’re driving in LA, for example, you don’t want to know what’s happening on the roads in Brussels. Keep your expectations “close” to you. There is little true and accurate value in looking “down the road” for more than 30-60 days at a time. Conditions on the roads are changing far too quickly. Pay attention to the drivers next to you where it matters most. The next bend in the road is far more important than the bridge several hundred miles away.

Give your data needs some attention, ask your suppliers and customers for data and use it effectively. Good data makes good information. Reliable information becomes intelligence and enough intelligence used appropriately over time makes one wise.

Knowing Where to Tap

We’ve all heard the old fable about the consultant who charges $1000 to tap the machine. $1 for the tap of the hammer and $999 for knowing where to tap. I submit that most of us – not only the consultants – know where to tap. The conditions for knowing where to tap include taking the time to inventory the various sources of information that might be reasonable indicators of just what it is that needs tapping.

This week for me included a couple of days at a conference dedicated to expanding the use of automation and electronic records in the mental healthcare field. If anyone ought to know about conducting an inventory of conditions to discover the point of greatest leverage for change, you would think it would be the mental health experts. Sadly, they are so busy treating people and have so few resources – particularly where public mental health is concerned – that managing how they deliver care is not their highest priority or area of greatest domain expertise. What I observed (and have observed consistently for nearly twenty years) is a field of well-meaning professionals struggling to know where to tap.

The same can be said for nearly every field and the legions of business owners and managers who don’t have the time, resources, background or expertise to know where to tap. However, knowing where to tap can be be about more than time, education, expert experience or dedicated resources. I want to argue that knowing where to tap begins with adopting the right perspective.

Metric Perspective

You don’t need to know everything about your current state. You don’t have to have well-articulated workflow and business process models and diagrams. You don’t have to start with an inventory of business rules. Gaining the right perspective concerning your current state of business operations begins with looking at the data you have in-hand. Even the most rudimentary business has a few sources of meaningful data:

  • a business plan
  • business goals
  • profit and loss statement
  • sales figures
  • market data
  • customer satisfaction
  • employee satisfaction
  • number of complaints
  • number of defective products
  • data related to time (delivery, production, receipts, etc.)
  • employee turn-over/retention
  • customer retention
  • any mandatory reporting
  • audit results
  • industry standards and benchmarks

Metric-Drive Process Improvement

Even a quick look through the data you have at your disposal will reveal the processes and workflow in greatest need of improvement. Since 85% of what your customers experience is process-driven, you will undoubtedly discover what your high-priority changes are. This doesn’t require a specialist and sophisticated training. It requires business discipline. Ignoring these facts and conducting business as usual starts to look a lot like benign neglect of the facts and your bottom-line.

Start Now

Have the courage and the discipline to gather this and other basic business data and dedicate the time and human resources to manage your own improvement. Workflow and business process improvement are not luxuries. They are practices you cannot afford not to indulge in.

Workflow Low IQ/High IQ: the Good, the Bad, and the Really Ugly

Normally, I wouldn’t name companies. Today, however, is a different story. Several factors have led me want to rant & rave a bit. Firstly, this once mighty economy is in a recession. Secondly, last month, 65,000 net jobs were lost. Thirdly, American colleges are enrolling 75% fewer computer sciences students and foreign students are racing back to their home countries having received a wonderful education in engineering or some such domain because our government won’t let them stay as productive members of our workforce. Fourthly, I have had a series of experiences in the past two hours that bring to life the consequences and underpinnings of the first 3 points in this paragraph.

Low IQ – High IQ

Let me clarify: low workflow IQ means that an organization has workflow issues. They are suffering from low productivity, low efficiency, low quality, high error rates, a high rate of redundancies in work, little to no value-add in their activities, long process time, low employee and customer satisfaction, etc. A high workflow IQ essentially indicates an organization experiencing the opposite results.

The Good – Companies with Very High Workflow IQ

  1. Netflicks. Totally dependable and absolutely consistent in their process. As a customer, I am thrilled. They are a marvel.
  2. Jajah.This alternative to greedy phone companies is a joy. So easy to use and totally reliable. I emailed customer service a question very late at night as I was trying to reach someone in India and received a reply within seconds explaining exactly and simply the solution. I have saved hundreds of dollars using these guys.
  3. Lexus. Their service center is heads and shoulders above anything in the industry. I love them. Quick, clean, professional, thorough, honest. Everything flows there.

The Really Bad & Ugly – Companies with Really Low Workflow IQ

  1. Wells Fargo. One of the largest banks in the country with very sophisticated systems. Sure. In one visit to the bank, 2 tellers and a loan officer each plugged my account number in and pulled up 3 different accounts belonging to 3 different people. Human error? Whatever. One of those people had a $100,000 line of credit and the loan officer asked me how much I wanted to withdraw!
  2. Petsmart. Fish food normally stocked and available on their website isn’t stocked. The “fish guy” hasn’t any idea what kind of fish I am referring to nor the brand of food. I show him the brand and he walks away to get the “guy in charge” who tells me that in the 4 months he’s been there, he’s never heard of the brand (6 other products from same brand sit squarely on shelf in front of us). I ask him if he can order it for me and he explains I will need to go home and place an order online. I will. With the distributor in Japan.
  3. Time Warner. This behemoth digital media company takes the cake. My DVR machine breaks down, I take it in to a local Southern California outlet (because they won’t pick it up) where I join 18 people standing in line. One staff member walks away from his station and returns 30 minutes later to watch the TV hanging in the corner. The other, a tireless young woman, runs back and forth across the store to slow printers and the stock room deep in the back, retrieving various boxes for customers. Another fellow tries to answer the questions of a mostly Spanish-speaking customer for a full 45 minutes. How a store in this particular Southern California city with a population mix of 51% Hispanics doesn’t have a single bi-lingual staff member is appalling and beyond me. How they can send an employee running to a store room in the back to fetch boxes everybody needs is mind-numbing. How they can ask 3 staff members to share one slow printer several yards away from every workstation is mind-blowing.

Complain, complain, complain

I know it sounds like I am complaining. I am. I am not telling you this from the standpoint of a consultant or a manager. I am sharing from the perspective a customer. When businesses adapt to the business 2.0 and web 2.0 environment and adopt workflow optimization methods, their customers sing their praises and they succeed. When companies bury their heads in the sand and plead ignorance, they irritate customers and lose business.

What to do?

Wonder what it’s like to do business with you?

  1. Play “undercover customer” for a day
  2. Ask your customers for feedback and act on it
  3. Hire competent people and train them properly
  4. Examine your workflow and remove waste
  5. Reduce quality concerns (at least 10 of the 18 people standing in line at Time Warner were returning a “box” of one kind or another. Issues with suppliers?)
  6. Stop whining about losing business and the rise of global competitors and do something about it. Compete for customers again.

Workflow & BPM for the Sake of Crisis Management and Business Continuity

You may have heard the story and seen the headlines this week: Largest Recall of Meat in US History. You may have seen the other headline: FEMA Trailers Spewing Toxic Fumes in Louisiana. Both stories, and countless like them every year, reflect one of the oft-overlooked reasons to manage workflow and analyze business process: improving quality for the sake of safety and avoiding crisis.

Had the California-based meat processing plant assigned a workflow analyst and – more importantly – had they had the integrity to fully-implement a food safety and quality program, they could have avoided the embarrassment of being outed by a Humane Society undercover video sting that captured illegal employees on tape shoving disabled and handicapped cows into slaughter. School kids across the country eat that meat for lunch. Had FEMA had any quality controls in place and contracted with a supplier that managed its processes in accordance with standards, 30,000 trailers – home to Hurricane Katrina victims – wouldn’t be victimizing their inhabitants a second time – with toxic fumes, no less.

Crisis Management Planning Core to Business Continuity (Survival)

I have conducted crisis management planning with organizations and was always surprised at how little forethought went into it. It’s symptomatic of leadership and personnel at all levels. I became convinced early on that the very best way to spot potential crisis before it hits the headlines is to apply workflow and business process analysis tactics and principles. An organization that doesn’t know what its employees are doing is ripe for crisis. An organization that doesn’t see process issues and risks as a high-priority is setting itself up for disaster. Failure to examine and analyze anything more than the bottom-line is failure some companies frankly deserve.

Crisis management planning often involves scenarios that managers need to respond to answering questions like: what would you do if the phones were dead? What would you do if the power went out? Who will handle the press relations if there is a violent death on-site. Little to no attention is paid to the glaring and obvious opportunities to assess how quality of work can cause a crisis and how easily it can be mitigated by re-engineering workflow. ISO 9000 and other standards help industries by offering best practices and some industries are vigorous in their audit of quality controls. Sadly, enforcement is weak in many industries and self-induced adherence to best practice is a discipline many organizations lack.

The irony is that, of all things that could go wrong, workflow-related phenomena are easily identifiable, easily modified, easily monitored and measured and the consequences of failure to do so can mean complete ruin. FEMA’s reputation and that of their supplier is in serious trouble. I would imagine their supplier will be crippled by this. The meat processor is not only hiring illegal workers which reflects a breakdown in HR and personnel workflow but these workers are afraid for their jobs when their input and output aren’t maximized by leveraging a supply of sick and crippled cows. I would imagine this business is counting days till their doors close permanently. They should be.

What Crisis is Waiting to Happen in Your Shop?

All of us are responsible for risk management. When workflow and business process analysis become the domain and tool of IT only, nobody else knows how to detect workflow-related issues and risks with any precision. If you’ve gathered issues and risks as a function of developing requirements, what have you done with them since the day you gathered them? As a business or systems analyst, do you bring them back to the attention of management with any frequency? Do they become quality improvement initiatives? Is there a project manager assigned?

Management by Crisis

I have a particular disdain for management by crisis. Waiting until something happens as a strategy for prioritizing workflow and process re-engineering is a mistake. This is where analysts and developers need to step up and invite risk management folks and corporate counsel to meetings and raise red flags. When I meet analysts who tell me “this is a disaster waiting happen” and managers who say “if anyone outside this building knew how shoddy this process is, we’d be done for,” I cringe.

Healthcare Crisis

Let me give you an example. At a recent community healthcare meeting, healthcare leaders were reflecting upon the fact that most citizens believe their doctors and hospitals have access to their medical records across organizational boundaries. The fact is, with the exception of 0.1% of the population, that’s not true. Fragmented health information and barriers between healthcare partners that prohibit exchange are at the root of America’s healthcare quality chasm. Sadly, the public has no idea. As a result, healthcare is a dangerous pursuit for all of us. The risks are great. Hospitals are full of quality and patient-safety landmines. Rather than allowing public misunderstanding to persist, we should be honest and get to work more openly. I think people would be willing to support initiatives to develop workflow and processes that lead to integrated healthcare information if they only knew how badly disjointed systems are today. When these projects are limited to technology and systems staff, we’re luck to crawl across the finish line. These are NOT technology projects.

A Good Reason for Funding

Workflow and process design are not free and they’re not cheap. Business leaders looking for a cost-benefit analysis and ROI ought only look as far as FEMA and the meat processor this week to know that weaknesses, issues and risks must be mitigated. Planning and prioritizing that doesn’t resolve blatant risks – risks brought vividly to graphic life in a simple workflow diagram and in basic performance measures – can shut company doors overnight. Without warning, poor construction, manufacturing, HR, hygiene and customer service risks can cause instant implosion.

In some cases, folks, there may not be enough warning to suddenly prioritize an issue and launch a project. Think way ahead and allocate resources carefully.

Competition and Cost of Quality

When I beat this drum, business leaders tell me they cannot fund quality improvement initiatives because their competition doesn’t do it. If they were first, their prices wouldn’t be competitive. I say, make higher prices for quality products a competitive advantage. Sell your product on the basis of its quality. The recent troubles faced by Chinese toy manufacturers may bear out the wisdom of this approach. Suddenly, toys from China aren’t expected to be so cheap anymore. And remember, the next time you think cheap is competitive, the top-selling Christmas gift in 2007 was a $300 video game. People buy quality.