The Elusive Process Improvement Nirvana

[From iSource Business, October/November 2002] While technology can help you streamline your operations and set your company on the path to Process Nirvana, it can also put you on the road to Process Perdition. One global chemical company is working to avoid the pitfalls and reap the benefits of aligning technology and process.

Companies are not just collections of people, processes, structures and strategies, writes James Champy, chairman of Perot Systems' consulting practice and one of the deans of business process re-engineering. Rather, Champy asserts in his 2002 book X-Engineering the Corporation, companies are essentially "combinations of processes," with customers, suppliers and business partners participating alongside the companies' own employees in the flow of processes that allow enterprises to function, survive and even thrive.

Technology, the author writes, will be a key element in helping companies improve the performance of the processes upon which they depend. But while Champy allows that the application of technology, in many cases, has helped reduce cycle times and improve quality, he warns that in other cases "it has made some processes so impenetrable that you need a pilot's course in navigation to find your way."

If charting a course through process re-engineering is indeed akin to piloting an airplane, Kathy Chrien and Jeff Heller likely have earned their wings. Chrien is enterprise resource planning (ERP) process team lead for both the supply and demand planning process and purchase-to-pay process at Philadelphia-based Rohm and Haas, working on the $6 billion chemical company's five-year ERP implementation. Heller is procurement process manager at Rohm and Haas, where, among other things, he has been helping to implement e-procurement across the company's 15 business units.

The challenges that Chrien, Heller and their respective teams have encountered in the course of the technology implementations at Rohm and Haas, as well as the strategies they have used to align the company's processes with the new technologies, offer an instructive case study in how one enterprise is striving for Process Nirvana in the age of e-business, especially because the ERP rollout impacts every Rohm and Haas supply chain function. However, this article highlights the sourcing and procurement functions in particular.

Three Questions about Processes

But before we get to Rohm and Haas, let's take a look at three fundamental questions relating to process. First, in the age of all things "e," why do processes still matter?

Earlier this year John Bermudez, an analyst with Boston-based consultancy AMR Research, reported that just 15 percent of manufacturers had successfully implemented more than a handful of the applications they had purchased from supply chain planning solution providers, despite the cost of the software and the claims of the providers. But rather than pointing the finger at the software companies, Bermudez suggested that often manufacturers have only themselves to blame for implementation failures. "Many corporations find that to use the new supply chain applications, they must not only learn the technology, but really understand how their existing supply chain processes work now and the transformation required to gain the desired cost reduction and responsiveness," the analyst wrote. Trouble is, too few companies have an organizational structure that can support the cross-functional process changes necessary to best take advantage of the new technology.

Meanwhile, Forrester Research analyst Bruce Temkin, in a report entitled "What Drives e-Procurement Success," draws a direct link between the willingness of a company to redesign its processes and the extent of the benefit the company is likely to reap from moving its purchasing online. Citing the Report on e-Business prepared by Cambridge, Mass.-based Forrester Research and the Tempe, Ariz.-headquartered Institute for Supply Management (formerly the National Association for Purchasing Management), Temkin says that "extreme renovators" - companies that report significant changes in their purchasing processes - report cost savings levels from online purchasing that are twice as high as the average for all buyers in the ISM/Forrester Research survey.