By Edward G. Enquist, Kenton C. Toomey, and Richard Artes
The addition of technology or resources to a company, such as capitol equipment, a new employee, a business system, or e-commerce capability, must be based on two fundamental premises. First, the core infrastructure supporting the new investment must be stable and capable of maintaining the new functionality. Second, there must be a clear and definable benefit that is measurable and quantifiable, such as a monetary return on investments (ROI) or operational improvement. Many times, the new resource, such as an enterprise resource planning (ERP) business system, creates a need for infrastructure repair instead of improving processes. This backward approach used by many companies is risky, costly, and time consuming, and it often produces poor results.
The infrastructure for manufacturing and distribution companies must be able to support the ERP business management system and its natural extensions such as customer relationship management (CRM) and e-commerce capabilities.
The eight primary business processes
There are many best-practice models for measuring the performance of manufacturing and distribution companies. This article lists eight primary business processes that companies must master to achieve high performance. These processes are limited to business- and manufacturing-related activities and do not cover financial, human resource, or engineering requirements in depth. The eight primary business processes are:
- Strategic, business and sales & operations planning (S&OP).
- Demand and customer relationship management.
- Knowledge and skills development for employees.
- Customer and operational scheduling.
- Business systems’ effectiveness.
- Data management operation and accuracy.
- Product and process value improvement.
- Inventory, capacity, and throughput.
If your company executed all of these primary business processes well, it would likely demonstrate high performance. Assuming this is true, then what constitutes high performance in each of these primary business categories?
To answer this question, you should take a look at The Business Excellence and Lean Manufacturing Performance Assessment, which is available at www.leanops.com. You’ll find a series of performance questions for each primary business process, as well as an assessment for each process. You can use the question mark help function to access a more detailed description of each process and question. (Notice there is an ERPSuperSite visitor’s shortcut; just click on the words.) The sum of the questions answered describes the nature, value, and performance of each process. When you take the assessment, you can remain anonymous by name and company; however, we need your standard industrial classification (SIC) demographics, company size, and e-mail address to report your results against a benchmark.
How the assessment works
There are eight to 12 performance questions for each of the eight primary business processes. Your responses are qualitatively based on your knowledge about and experience with your company’s operations. You are asked to rate each question on three dimensions:
- Importance to you and your company
- Your estimate of your current capabilities
- Your understanding of the priority to change management to close the performance gap
Ratings are based on a 1 to 10 scale, with 10 being high or important. We calculate an average value and performance gap for each business process. For example, if on the average, you rated the importance of a business process 7.3, and rated your average capability of 3.1, your average performance gap for the business process would be 4.2. We compare this gap to best practice requirements and industry averages for other companies in our database that share your demographics.
As a general guideline, if your average performance gap for a primary business process is greater than 4.2, you should consider reviewing your infrastructure before you invest in a new business resource such as ERP, CRM, or e-commerce solutions.
If you feel a question is not important to you or your company, give a 1,1,1 rating. Based on your results, we’ll compare your performance and performance gaps to our industry database and provide automatic feedback on your results.
The assessment is free. Your results are calculated and returned to you automatically. At your request, we’ll provide our interpretation of your assessments when you contact us by e-mail.
Take the assessment!
Think that your organization’s business processes need to be revamped? Click here to take the Lean Operations online assessment. Drop us a note or post a comment below telling us how you kept the information and supply chain synchronized.
Edward G. Enquist has 15 years of manufacturing, engineering, and supply-chain management experience.
Kenton C. Toomey has over 30 years of manufacturing and supply-chain management experience.
Richard Artes has over 25 years of business and manufacturing management experience.