Baker s Dozen: 13 Ways Process Intelligence Drives Supply Chain Value

Baker s Dozen: 13 Ways Process Intelligence Drives Supply Chain Value Anthony Aming Enterprise Business and Applications Architect / Baker Hughes Anthony Aming, Baker Hughes Dave Brooks, Software AG Dave Brooks Senior Director, Strategic Business Solutions

How Do You KNOW? 27 June 2011 ProcessWorld 2011 2

KNOW What Capabilities Matter Integration Visibility Control Flexibility Integration Information Exchange Visibility Control Agility Process Transparency Process Assurance Process Flexibility Data Transport & KPIs Thresholds / Simulation Transformation Universal Translator Frictionless Data Volume Velocity Quality Value Dashboards Rules Alerts Orchestrated Processes Dynamic Routing Multi-Channel management Exchange Process Workflow Mid-flight Visualization Single View process Interfaces changes Give the Business a Dashboard, a Steering Wheel and the Responsiveness that provides agility 27 June 2011 ProcessWorld 2011 3

KNOW Where Value is Created or Lost Upstream/Downstream Overall O2C Cycle time DSO Impact Inventory impact System handoffs A D I L U Customer Customer Submit PO Receive Ack Advance Ship Notices SLAs / fines Customer Sat impact Receive ASN Pay Invoice Receive Shipment Enterprise B C F G H Receive Customer Order Check Order Compliance E Create Factory PO Transmit PO to Supplier Send ASN J Custom Billing System K Generate Invoice M Receive Ship Notice Late Delivery SLAs / fines Customer Sat impact Supplier Review Order Exception Handling Call Center / Support personnel Late / Missing / Stuck orders N Create Sales Order O Generate Pack Ship P Ship to FF Q Prepare Shipping Documents Returns Reverse logistics costs Scrap Customer Sat impact 3PL/Partners Additional Fulfillment Costs Accelerated manufacturing (overtime / extra shifts) Other Costs R Consolidate Boxes S Update Shipping Docs and Changes T Ship Goods # Process Step Identifier Expedited shipping Express / Air vs. Ground Alternative methods / carriers Focus Area 27 June 2011 ProcessWorld 2011 4

KNOW What s Real The Opportunity: Convert Real-time to Real-Value Business event Data captured Value Process Intelligence Intelligence delivered Action taken Engaged with customer Truck at loading dock Opportunity Customer has left the store Truck has left the dock Missed Opportunity Time Reference: Richard Hackathorn The BI Watch: Real Time to Real Value 27 June 2011 ProcessWorld 2011 5

How Do You KNOW You re Successful...? Measure It! VOLUME QUALITY RISK VELOCITY VALUE 27 June 2011 ProcessWorld 2011 6

Supply Chain Key Performance Indicators Publically Available Data 27 June 2011 ProcessWorld 2011 7

KNOW How You Perform Relative to the Competition Oilfield Tools From Publically Available Data 27 June 2011 ProcessWorld 2011 8

KNOW Your Process is Working Ensure the right transactions happen in the right timeframe Full visibility of round trip transactions Configured to support exception management: identify both errors and delays 27 June 2011 ProcessWorld 2011 9

KNOW What s Going On Outside Your Direct Control Track & Trace Outsourced Invoice Processing Completed Steps End-to-End Model Metrics & Dashboard 27 June 2011 ProcessWorld 2011 10

KNOW What Good Looks Like Internal Benchmarking: Leaders and Laggards Best Practice eg: Sales Center #3 Benchmarking activity level Worst Performer eg: Sales Center #14 Performance Differences revealed at Benchmarking 27 June 2011 ProcessWorld 2011 17 11

KNOW The Root Cause Understand Failures, Drivers and Quality Metrics 27 June 2011 ProcessWorld 2011 12

KNOW The Score (or SCOR!) Real-time Joint Scorecard Customer Supplier 27 June 2011 ProcessWorld 2011 13

Baker s Dozen (the first 6) 13 ways Process Intelligence Drives Value 1. Leverage different kinds of metrics (Volume, Value, Velocity, Quality, Risk) 2. Analyze Trends 3. Understand Root Cause 4. Bake-in Complex Event and Business Rules 5. Provide Alerts to spur action 6. Enable Operations personnel to get to the action level 14 27 June 2011 ProcessWorld 2011 14

KnowYourSupplyChain.com 27 June 2011 ProcessWorld 2011 15

Baker Hughes 27 June 2011 ProcessWorld 2011 16

Baker Hughes At A Glance Oilfield tools and services; integrated operations and reservoir consulting Revenue over $14 Billion 9 Regional / 19 Geo-market Teams >50,000 Employees in 90 Countries Global Supply Chain critical to BHI s success 27 June 2011 ProcessWorld 2011 17

Baker Hughes, Inc. $14B Company Oilfield Tools and Services 27 June 2011 ProcessWorld 2011 18

What We ll Cover Visualize the Procure to Pay System and Process Baker's approach in delivering Business Process Instrumentation (BPI) Get a firsthand account of how Baker Hughes, (BHI), a global oilfield service company is able to measure and improve its performance against its competition on critical key performance indicators like Cash-to-Cash Cycle Time Gain insight the strategies and best practices Baker uses to leverage BPI to drive millions of dollars of value to the business Wrap-up 19 27 June 2011 ProcessWorld 2011 19

Use Case: Purchase Order Value Appears to be Too Great 43,213,456 39,453 13,554 97,533 106,343 Fix Purchase Order Problem 43,213 39,453 13,554 97,533 20 27 June 2011 ProcessWorld 2011 20

Business Process Instrumentation Customer Submit PO Pay Invoice Receive Shipment KPI KPI KPI KPI Receive Customer Order Check Order Compliance Create Factory PO Transmit PO to Supplier Custom Billing System Generate Invoice KPI Review Order KPI Decision Error Support Handling Exception Handling Exception Sub-Process Create Sales Order Generate Pack Ship Ship to FF Prepare Shipping Documents KPI Accept Reject Escalate Consolidate Boxes Update Shipping Docs and Changes Ship Goods 1. Establish Process 2. Determine KPIs & Measure Baseline 3. Orchestrate Process & Implement Workflow 4. Identify & Prioritize Process Improvements 27 June 201127 June Software 2011 AG ProcessWorld - Get There Faster 2011 21

Business Process Instrumentation: Step by Step Identify business process to instrument Locate triggers at key points within a process in relevant application Design Console for realtime visualization and monitoring of: Volume Velocity Quality Value 22 Establish alerts for certain conditions Link to Business Intelligence tools for deeper analytics 27 June 2011 ProcessWorld 2011 22

Supplier Invoice-to-Payment Process Model Event Metric Event Metric Event Metric Business Process Instrumentation (BPI) 23 2009 Baker Hughes Incorporated. All Rights Reserved. BPI Metric Event Storage Console 23 27 June 2011 ProcessWorld 2011 23

Business Process Instrumentation Steps Define the process and steps or events to be monitored Define success and failure Success means the solution provides the visibility and metrics to give the organization the agility to be flexible and adaptable to be more productive, adds value Define key actors and systems Actor eg: Invoice Approver in the accounts payable process Systems eg: SAP, webmethods, Maximo Define business metrics that are a combination of: Business facts (e.g., sales order amount) Dimensions (e.g., region, product center) Transactional data (e.g., sales order number) Do as many as needed, but limit as much as possible 2011 Baker Hughes Incorporated. All Rights Reserved. 24 27 June 2011 ProcessWorld 2011 24

BPI Steps (cont.) Define business rules and alerts Preemptive alerts for expected results that have not occurred in a timely fashion For example, invoice creation should be followed by releasing document to accounting (Released to Accounting RTA) within X days. Accounts Receivable Credit and Collections would receive an alert when RTA has not been created within expected time frame. KPI alerts Used for monitoring when individual transactions are outside expected results Trending alerts Used to monitor patterns across multiple data points when an overall process is deviating from normal 2011 Baker Hughes Incorporated. All Rights Reserved. 25 27 June 2011 ProcessWorld 2011 25

Tracking the Value Cash Conversion Cycle CCC = DIO + DSO DPO CCC = Cash Conversion Cycle DIO = Days inventory Outstanding Average Stockholding Period DSO = Days Sales Outstanding Average Receivables Processing Period DPO = Days Payables Outstanding Average Payable Processing Period 27 June 2011 ProcessWorld 2011 26

Tracking the Value Everyone Is Involved! Customers BHI Suppliers 27 June 2011 ProcessWorld 2011 27

BHI Customer End of Job-to-Payment Life Cycle Job Completion Invoice Creation Date Invoice Released to Accounting and Booked as Revenue Invoice Delivery Payment Expected Invoice Payment Job Completion to Invoice Creation Invoice Creation to Invoice Payment Days After Job Completion to Invoice Creation Invoice Posted & Presented to Customer Customer Process Invoice and Pays according to Terms On-Time Payments Delays in Invoice Creation after Job Completion Delays in releasing Invoice to Accounting Delays in Invoice Delivery/ to Customer Delays in Customer Invoice Processing Delays in Receiving Payment from Customer Activities Causing Late Payments Total Lapse Days Actual Payment Days Total Cycle Time 28 27 June 2011 ProcessWorld 2011 28

Consoles DSO Reduction SHOW ME THE MONEY TOTAL LAPSE DAYS GETTING THE MONEY DSO is controlled by Lapse Days Actual Payment Days Show Me the Money Actual Payment Days 2011 Baker Hughes Incorporated. All Rights Reserved. Total Lapse Days and Getting the Money Lapse Day 29 27 June 2011 ProcessWorld 2011 29

Total Lapse Days Daily 2011 Baker Hughes Incorporated. All Rights Reserved. 30 27 June 2011 ProcessWorld 2011 30

Total Lapse Days Console Lapse Days Reduction 2009 Baker Hughes Incorporated. All Rights Reserved. 27 June 2011 ProcessWorld 2011 31

Getting the Money Invoice Delivery Cycle Time 2011 Baker Hughes Incorporated. All Rights Reserved. 32 27 June 2011 ProcessWorld 2011 32

Show Me The Money Daily 2011 Baker Hughes Incorporated. All Rights Reserved. 33 27 June 2011 ProcessWorld 2011 33

Show Me the Money Console APD Reduction 2009 Baker Hughes Incorporated. All Rights Reserved. 27 June 2011 ProcessWorld 2011 34

BHI Customer End of Job-to-Payment Life-Cycle Rules & Alerts Total Lapse Days (TLD) Days to Create Debit Memo Request from DMR Complete Date Days to Create PGI from Delivery Date Days to Invoice Create from DMR/Delivery Date Days to RTA from Invoice Creation Days to Send Invoice from Invoice Creation Actual Payment Days RTA to Payment (APD) Invoice Amount exceeds $1,000,000 RTA amount exceeds $1,000,000 Credit Memo amount exceeds $100,000 Payment amount exceeds $1,000,000 Days to Deliver Invoice from Send Invoice Days to RTA is after Send Invoice 2011 Baker Hughes Incorporated. All Rights Reserved. 35 27 June 2011 ProcessWorld 2011 35

Sample Filters GEO Hemisphere Geo Region Geo Market Country Sales Organization Product Center Plant Profit Center Payer Name (Customer) 2011 Baker Hughes Incorporated. All Rights Reserved. 36 27 June 2011 ProcessWorld 2011 36

Drill down to details 2011 Baker Hughes Incorporated. All Rights Reserved. 37 27 June 2011 ProcessWorld 2011 37

Extending the Reach Additional Consoles available now Controlling the Cash Out (APD) Getting Goods & Services (DIO) Getting The Work Doing The Job Beacon & WellLink POWER (POWER- Application Support) Technical Support Portal (C&P) SOLV (IT Tickets) HR (Functional HR Support Process) IT Tickets (Incidents) IT Tickets (Requests) Assets (Purchasing IT Assets) 27 June 2011 ProcessWorld 2011 38

Institutionalizing Business Process Instrumentation Online BPI Catalog speeds requirements and adoption process Silver Gold Platinum Titanium (coming soon) 27 June 2011 ProcessWorld 2011 39

Where Are We Going Next? Predictive Analytics / Smart Forecasting Use combination of historical trends and simulation to estimate Future Performance Build in Risk Parameters and assumptions for What-if scenario modeling Process Mining & Root Cause Analysis Send Optimize data to Process Performance Manager for process improvement Benchmark leaders and laggards 27 June 2011 ProcessWorld 2011 40

Baker s Dozen 13 ways Process Intelligence Drives Value 41 1. Leverage different kinds of metrics (Volume, Value, Velocity, Quality, Risk) 2. Analyze Trends 3. Understand Root Cause 4. Bake-in Complex Event and Business Rules 5. Provide Alerts to spur action 6. Enable Operations personnel to get to the action level 7. Understand how to really add Value to business 8. Tie to business strategy (all levels of reporting) 9. Provide Near-Real-Time Visibility and Control (hourly, daily, weekly and monthly) 10. Make it Industrial Strength: Available 24X7, scalable, Global 11. Foster rapid implementation; resist boiling the ocean 12. Spend more time on data analysis than on collection 13. Establish long-term strategy with governance and continuous improvement 27 June 2011 ProcessWorld 2011 41

Thank you! Questions?