The Big Picture, Redefined
What exactly is business process management? And how can you put it to work for your company?
BY FRANK JOSSI
Goebel Fixture Co. in Hutchinson has a well-earned reputation for creating custom installations for such retailers as Nordstrom and Cole Haan. For much of the past two years, however, the 72-year-old company had been suffering as the number of projects declined and the amount of competition grew. “We’d been hit hard and suffered significant losses,” says company president Robert E. Croatt. “We had to make some significant changes such as streamlining our processes if we were going to compete in this industry.”
Croatt was also looking for looking for ways to trim costs without additional cuts to his labor force, which had dropped from a high of 200 to 135 employees. For help, he brought in MTI Business Services Consultant Dave Ahlquist to take a look at Goebel’s work process and suggest new approaches that might lead to cost savings and improved productivity.
Ahlquist applied the principles of the business process review, a derivative of business process management (BPM), which is itself a structured method that deeply examines how a company does business and offers suggestions to bring about a more focused and productive system.
A CLOSER LOOK
A company will undertake a BPM initiative to get an overall, big-picture look at a business process (or multiple processes), with the goal of making those processes more efficient and better able to adapt to changing business conditions. In that sense, it’s similar to Lean Manufacturing, Six Sigma, and other programs designed to curtail waste, maximize value, and rework specific processes. In fact, part of Ahlquist’s approach has involved using Lean techniques. Sometimes the end result includes redesigning a process on a shop floor or reducing the steps involved to complete orders. In other cases it can lead to employing software to create a single file for every customer across all databases or connecting software systems to one another through an application. “You look at things and you might find the lead time is too long and it takes too long to get an order out,” says Ahlquist. “Or you might find there is too much inventory on hand. We focus on many areas—operations, sales, how new products are developed, quality processes— in trying to find the one area that is holding a company back.”
There are also a range of specifically designed software tools to help drive BPM-related micro- and macro-level changes. More than 100 vendors sell into the BPM market, and their offerings range from large-scale solutions to tightly integrated individual modules to Web-based task management portals and much more. IDC, the Framingham, Mass., IT research firm, projects the business process automation software market—the BPM market, in other words—will top $3 billion in U.S. sales by 2009. Many of these vendors offer a middleware layer connecting front end and back software programs in an information-sharing arrangement that merges order entry with inventory and financial systems, for example.
That doesn’t necessarily mean, that a company undergoing a review will have to pony up money for new software. While that often happens, it’s also true that a company’s existing software can be used to make its business processes more productive.
No matter what approach you take, however, the end goal for all BPM initiatives is the same: wipe out the obstacles to higher productivity and profitability. With that in mind, let’s take a look at how three Twin Cities-area companies used it to change the way they conduct business.
GOEBEL FIXTURE: REWORKING JOBS AND ADDING NEW SOFTWARE
Croatt’s the first one to tell you he operates a “very high end” business that, until recently, hadn’t changed much over the years. During the company’s business process review, Croatt learned that Goebel employed 16 steps from the premanufacturing stage until “the time the project hits the saw,” he says.
And that, as it turns out, was way too many. Every step added time and money to the process.
The Goebel system started with a planner, who identified the materials required for a project. That list went to a buyer, who purchased them. Buyers rarely had a good understanding of projects, so when suppliers had questions, a Goebel buyer had to turn around and ask the planner for answers. The result? Buyers purchased too many supplies, or not enough, or the wrong products for the job. Or they went over budget.
As a first step, the company decided to make a simple change: Now, the planner also buys the material. It worked. “They’ve much more efficiently purchased the materials and got them onto the shop floor on budget—and they own the budget,” say Croatt. “It’s been very successful.”
A second improvement involved computers. For years the company had used AutoCAD to design its displays. Employees would take the measurements and program their computer- operated saws. The system was ripe with human error and manual processes that slowed projects down. The solution turned out to be Solid Works, a software application that works in unison with AutoCAD and provides productionready drawings.
The software moves the measurements from the desktop to the machines, reducing steps and errors along the way. “Although it takes longer to create the drawings, we’re saving a lot on the programming side by eliminating the potential for human error,” says Croatt. “The way to look at software is that it is only a tool—you have to have the right strategy and objectives to support it.”
The BPM process has reduced the number of steps involved in orders from 16 to three. The company once spent six to eight weeks on projects; it now spends about four weeks. Though the company has made great progress, more “procedural adjustments need to be made,” Croatt adds. “It’s awork in progress.”
THE TILE SHOP: MIDDLEWARE DEBUT
To homeowners and contractors undertaking remodeling jobs, the Tile Shop has long been one of the primary stops because its stores offer an expansive selection. The Plymouthbased company has 35 stores in 14 states and plans for more. One recurring glitch, however, was the issue of sales people being to access a database with real-time inventory, says Keith Cooney, the company’s IT manager.
The Title Shop developed its own point-of-sale (POS) software based on Microsoft’s .NET framework and code while using enterprise resource planning from J.D. Edwards, now a part of Oracle. Under the old system, an order would enter the system and be sent for fulfillment to a warehouse in Michi- PRAGMATEK delivers because Success is the Only Option. pragmatek.com 800-833-3164 “The way to look at software is that it is only a tool—you have to have the right strategy and objectives to support it.” ‘’ Trisha Mowry, Metal Craft Machine and Engineering gan; a few days later, customers came to the store to pick up their purchase. Too often, the inventory showed products as being in stocked which were not.
Cooney hired Midwave Corp., an Eden Prairie integrator that specializes in Oracle applications. Midwave Technical Consultant Praveen Ramachandran assisted in the implementation of Oracle’s Fusion Middleware, which he says created a more seamless connection between Tile Shop’s POS and the J.D. Edwards inventory system. “We modified the J.D. Edwards solution so it offered real-time inventory to the front-end POS application,” he says.
Just as importantly, the integration of the two systems through middleware has other advantages. Cooney now has the ability to see transactions in real time and watch product inventory levels all the chain’s stores.
Underlying BPM software solutions, at least in some cases, is an emerging trend called “service-oriented architecture,” or SOA, which allows clients to create and reuse computer code. Oracle’s Fusion Middleware is written in SOA, in fact. Cooney envisions the code of this project can be redeployed for an e-commerce solution that will be unveiled over the next several months. “We can reuse some of the code and we won’t have to modify two or three or four applications” when creating an e-commerce site, he says, adding that the new application will allow clients and contractors to order titles online. “It’s going to reduce implementation time for new projects in the future.”
METAL CRAFT MACHINE: ORGANIZING AND ENGINEERING
Elk River-based Metal Craft Machine and Engineering has 79 employees working on custom precision supplies for the medical industry. Trisha Mowry, who shares the duties of company’s vice president duties along with her brother, Sean, says the company has used process improvement and lean manufacturing principles to boost productivity.
The company recently instituted a Lean Manufacturing protocol known as 5-S, which stands for “sort, straighten, sweep, schedule and sustain.” Under a 5-S regime, employees organize their work spaces so tools are easily within reach and in an identifiable pattern, and all appropriate materials are gathered and sorted for a day’s work, The area also must be cleaned at the end of the day, says Mowry. The plant taped off different areas of the shop floor to separate staging areas, for example, from the inventory areas, another principle of lean manufacturing.
With the help of MTI Business Services Consultant Glenn Pence, the company also began another campaign to move orders more quickly to the shop floor. In the past, employees would sometimes hold on to job orders for a time before purchasing the supplies, therefore lengthening the work order completion time to an average of three weeks. Since many job orders were simply repeat business—clients asking for more of the same—the company decided to bulk up on certain supplies. “We haven’t run into complications, it has worked out well,” says Mowry. “We cut the timing from the day the order is recorded to the day we cut chips from three weeks, in the worst-case scenario, down to a week.”
Mowry continues to work on other process improvements and has even installed a “Lean suggestion board” in the plant. “Quite a few” employees have added their own concepts for improving productivity and she and her brother consider each and every suggestion. “We’re always trying to improve our business,” she says.