BPM in Manufacturing - A Gap Analysis
Business Process Management (BPM) is a natural fit in manufacturing, yet many organizations remain unaware of the benefits BPM technology can provide. Three forces will drive the adoption of BPM in manufacturing: the lack of skilled workers will increase the pressure to improve existing workforce effectiveness, Lean Manufacturing will require highly adaptive information technology, and the Industrial Internet of Things will extend the boundaries of innovation in manufacturing processes.
“Workforce development is necessary to meet the anticipated demand, but by itself is insufficient for manufacturers to maintain competitiveness”
Effective Labor (the Skills gap)
According to a 2014 report jointly authored by The Manufacturing Institute and consulting firm Deloitte:
“Over the next decade, nearly three and a half million manufacturing jobs likely need to be filled and the skills gap is expected to result in 2 million of those jobs going unfilled.”
Three quarters of the anticipated job vacancies will be due to “baby boomer” retirements rather than business growth; manufacturers will see a significant amount of experience exiting the labor force over the next 10 years. They also find that the available laborpool lacks the necessary skills in science, technology, engineering, and math (STEM), in problem-solving capabilities, and in basic technical training.
Workforce development is necessary to meet the anticipated demand, but by itself is insufficient for manufacturers to maintain competitiveness. Another element to a long-term strategy is making the existing labor force more effective through automation – not just machine automation, but work process automation as well. Consider all the lost time in paper-handling and manual data exchange. Think of processes such as project time tracking, new customer account setup, product data management, purchase requisitions, capital authorization requests, and other processes that keep an organization running. These processes are frequently manual, use paper forms, and require either routing through an internal mail system or having someone walk the information through the process steps. This kind of inefficiency impacts workers who are among an organization’s highest paid: engineers, analysts, managers, accountants, supervisors, directors, and senior executives. Note these are also the people who possess the high-demand skills. Automating business processes frees time for these people to apply talent where it is most needed.
Continuous improvement efforts (the Process/Technology gap)
Continuous improvement strategies such as Lean and Six Sigma have done much to increase the effectiveness of manufacturing operations. However, there remains a gap that practitioners of these philosophies frequently overlook: the power and capabilities of available technology is not reflected in the implemented processes, not the least of which is work process automation.In his book “Competitive Advantage”, Michael Porter introduced the concept of the “value chain,” which describes how an organization delivers value. Porter’s chain is similar in concept to other lifecycle models, tracing value from origin (inbound logistics) to termination (product service). Each link in the chain has its own internal “chains” (or “value streams” in Lean terminology), and each of these have their own set of processes. Undergirding all of these processes are foundational services provided by organizational infrastructure, HR management, and technology.
Typical Lean kaizen and Six Sigma DMAIC approaches will involve people whose upstream or downstream processes intersect with the “as-is” or “to-be” state (the horizontal axis of Porter’s value chain), but frequently do not include people from the enterprise systems in the discussion (the vertical axis). This eventually leads to disconnection between process and technology – the “gap”.
A large part of why this occurs is due to the weight of processes surrounding information technology; changes resulting from continuous improvement efforts are typically expected to be implemented in timeframes which range from a few minutes to a few days. By comparison, changes to enterprise software systems take weeks to months to implement, and frequently operations-level change requests end up on a prioritized waiting list due to IT resource constraints. BPM offers an alternative approach; process owners can quickly manage workflow changes themselves using visual tools such as BPMN editors and test their changes in a sandbox environment before going live – usually without needing assistance from IT. In a properly architected enterprise platform, they can create “blended” applications, using components from a variety of software packages knitted together using workflow. The answer to the question “How many applications do my workers need to learn to do their jobs?” is reduced to “one”.
Adapting innovation (the IT/OT gap)
An additional challenge manufacturing organizations face is the competitive threat of disruptive innovation. The increasing capabilities and falling costs of embedded systems make smart, connected devices ubiquitous on the factory floor. Information from these devices enables unprecedented analytics. Mobile devices provide information where the worker is rather than forcing the worker to go where the information is available. When combined, these technologies provide potential competitive advantage, but providing an enterprise architecture that supports themis insufficient. They must be woven into the fabric of operations – they must become actors within business processes, and this is where BPM technology can be applied.
One common misconception regarding the Internet of Things (IoT) is that it’s about putting devices on the internet. This misses the point: IoT is the collaboration of smart connected devices. By itself, a vision system is little more than an intelligent sensor providing “go/no-go” information. But when a vision system exchanges contextual information with a robot it becomes a much more robust solution. When the vision system and robot are also part of a process workflow, new capabilities become possible. This is the realm of “mass customization” and “lot size 1”. Product specifications can be provided through the workflow to the smart connected devices, including material locations and availability. Assembly history is provided back to the workflow to facilitate further production activity.
This convergence of Operational Technology (OT), which includes things such as machine controllers, robots, servos, user interfaces, and others) with Information Technology (workflow engines, ERP, MES, and PLM) is the underpinning of initiatives such as “Smart Manufacturing” in the US and “Industry 4.0” in Germany. Along with the Internet of Things, BPM is a key enabler for these initiatives.
The fundamental benefits of business process management – workflow automation, implementation velocity, and collaborative integration – will become essential elements of the next industrial revolution. Those organizations who successfully tap those benefits will find a competitive advantage over those who do not, but success will require leaders in information technology and manufacturing operations to establish common ground, bridging the skills, process/technology, and IT/OT gaps.