Cai Hongliang: I have been working in the field of digitalization and supply chain management. I have been working in SAP and IBM for more than ten years, mainly in the field of enterprise digital transformation . Nowadays, many companies may first sort out their strategies, business systems, and business processes when conducting digital transformation . Digital transformation of many companies is now impossible without transformation. They must transform, but they will encounter some challenges and difficulties in the process.
Digitalization will involve some systems such as SaaS, databases, artificial intelligence analysis technology, big data, etc. These are all tools. The ultimate essence is to fully consider corporate strategy, customer needs and business needs . No matter how advanced the digital tools are, they must serve the business and processes of the enterprise. If the enterprise installs a system that does not match the business processes, it may be a huge disaster.
Let’s first look at a simple example in life. Going to work - I believe everyone will go through a process of commuting to and from work every day. The figure below lists a typical process of going to work. A woman goes through these five steps when going to work in the company every morning: Walk from home to the bus stop for 7 minutes → It takes 20 minutes to wait for the bus and take the bus to the subway station → 10 minutes to wait for the subway and take the subway to another bus station → 20 minutes to wait for the bus and take the bus to the vicinity of the company → 8 minutes to walk to the company, a total of 65 minutes.
Is there any way to reduce the commute time to work to less than 1 hour? You can think about it this way: the process of going to work is quite a series of processes, with five steps. First, you can think of ways to shorten the time of each step. For example, if it takes 7 minutes to walk to the bus stop in the first step, can you use running or shared bicycles? Can the time of waiting for the bus be calculated more accurately in the second step? To shorten the waiting time, the fifth step of walking from the bus station to the company can also be shortened by using shared bicycles or other methods.
The first level is to improve efficiency by shortening the time of each step in the existing process. The second level is to improve efficiency through leanness. In this example, it is changing to carpooling and bicycle sharing. Changing the original path may involve process reengineering, or even abandoning all five processes and directly changing it to faster carpooling.
This example is to share a concept - processes are human-defined. You can use some conventional ways to change it and improve it, but there are also some unconventional and innovative ideas . In the face of formal business processes, this idea and approach is completely applicable.
Michael Hammer is the originator of process reengineering and process optimization. He is the earliest researcher. He said that process is a series of logically related activities to create value for customers . Therefore, the process must serve customers and create value. A process that does not create value is ineffective .
A process is a series of logically related activities, with each step in sequence. From the perspective of international quality management systems, a process is a set of interrelated or functional activities that transform inputs into outputs. The input includes resources, manpower, financial resources, technology, etc., and the output is the goal to be achieved. At the same time, Michael Hammer said, "If a process doesn't bother three different positions, don't put it in the process." It shows that the process can solve problems in a complex environment and solve the problem of collaboration between different positions.
What are the components of the process? The first is the input resources, including funds, technology, personnel, documents, etc. The output is the result that the enterprise wants, which may be a tangible product or a service . At the same time, there are many activities. For enterprises, there is research and development, production, manufacturing, procurement, sales, logistics, warehousing, etc. There are many participants, including internal stakeholders, including employees and shareholders, and possibly external stakeholders, including customers, suppliers, and even governments and third-party organizations.
The process must be controlled and managed to ensure that it can be completed as scheduled within the established time and budget. The activities of the process interact with each other and are structured . In many enterprises, some processes are in parallel and can be carried out synchronously, while some are in series and must be carried out step by step in order. Why should these processes be connected in series? Can some series of tasks be connected in parallel and performed at the same time to shorten the time and improve efficiency? Is it possible that each process can be reduced or even eliminated? The end result is that the customer receives value.
The company may have done a lot of work and the customers are not satisfied. For example, when a customer buys something on an e-commerce platform, he places an order and promises to arrive the next day, but the delivery takes a week. The customer is also dissatisfied because he does not meet the time limit requirements. Therefore, in fact, time efficiency is also a value to customers. (JD.com pays more attention to time efficiency)
Looking at the example of going to work above from the perspective of the process, the resource input of this lady is to use two legs at first, and then use different means of transportation to reach the company is a kind of output. There are five processes, and the value is to be on time and not late. If the process reengineering is done well, the return is to optimize and arrange the time in one's life more rationally, such as enjoying a cup of coffee or reading a book or news after arriving at the company early. In the example, the first level is speeding up, the second level is changing cars, and the third level is moving.
In the process of speeding up, you can introduce some tools, such as using some apps to accurately calculate the time waiting for the bus to plan your own time to go out. The second is to improve the accuracy of time management. For example, if you calculate that you have to go out at 7:50 to achieve the optimal waiting time, you must ensure that you finish brushing your teeth, washing your face, and eating breakfast before 7:50. It is a process of self-management and self-optimization. I hope this life case can provide everyone with another perspective on process management and process reengineering.
Case number one
List a business case. A high-tech manufacturing company with global business operations. The complexity of the company's supply chain is constantly increasing, involving all departments of the entire company, including the strategic planning department, manufacturing department, supply chain department, logistics department, new product R&D management department, etc. . The challenge for enterprises is that the entire business is complex and huge. Nearly 300 million products are shipped to customers every year. The supply side needs to manage more than 600 suppliers, and the annual procurement expenditure is more than 11 billion US dollars. After purchasing items, through production, processing and grouping, we start from 13 production bases and deliver products to 191 countries around the world through 52 distribution centers. There are approximately 3.5 million orders that need to be delivered globally throughout the year. The other end of the logistics delivery side needs to cooperate with 30,000 terminal retail institutions, such as supermarkets and stores, including B2B and B2C models.
Therefore, whether it is from the perspective of market management and demand management, or from the perspective of supply chain management, supply side management, and supplier management, this is a very large and complex system. Then, when doing process reengineering and digital transformation, choose one of the points, such as supplier management and supply chain collaboration of the supply chain. The company lacks a systematic supplier management method. There are more than 600 suppliers, each of which is peer-to-peer, and the communication methods are very diverse, such as email, WeChat, and telephone. On the other hand, between the enterprise and each supplier, there are countless related business processes related to the bidding and quotation of materials, the confirmation of each order, the initiation of delivery, reconciliation, payment, etc., in point-to-point communication To carry and execute. This is management difficulty.
The company's communication channels are diversified, it lacks systematic and efficient communication methods, and its process management and traceability capabilities are poor. Moreover, the processes of supplier management and financial management are very scattered, and there is no unified management platform for centralized execution and process control. So much order information and a purchase volume of 11 billion US dollars represent high-frequency business activities. How can we accurately share it with suppliers in real time every week? How can we judge how much of this batch of purchase needs can be achieved after communication? This information system is too huge. What would happen if we used email or Excel to organize and summarize the data.
The company's supply chain and procurement management work are all manual or semi-manual methods, which are low-value manual and repetitive work, resulting in high execution costs, low efficiency, and opaque information . One of the most important requirements for supply chain collaboration is real-time synchronization of information to achieve transparency and reduce risks. There is no data, or there is no way to transmit the data through a certain system, and purely manual work is not standardized enough.
Digital transformation must first define each key process. Worldwide, the similarity of processes in each business area of an enterprise must reach more than 95%. It is okay to allow a small amount of differentiation, but there must be a premise of standardization and then slowly reduce the differences. Only by using the same set of standardized processes to execute business in each region can we further standardize work through a digital collaboration platform. The standardization of this process is suitable for the collaborative management of plans and orders, the management of supplier risks and supplier performance, as well as supplier access, registration and certification, etc. This can also realize the repeated application of data, avoid repeated manual work, achieve standardization of processes and a high adoption rate of the system, so that some execution work can be completed by the system, allowing employees to spend more time on higher value tasks. At work .
With order, product, customer, demand data, and supplier data, we can go one step further on this platform and add some means and methods of artificial intelligence big data analysis, which can help the system operate more intelligently. It can assist enterprises in making some decisions. This is the future, this is the prospect of the next development of automated network collaboration.
In fact, this prospect is not far away. Now many companies are slowly applying some technologies and gradually improving them. Based on this premise of data collaboration, the level of intelligent decision-making of enterprises is improved. The premise here is that the company needs to define the process first, how to implement the coordination of plans, demand, sourcing, supplier management, etc. After the process is defined, a digital network platform is used to "standardize + solidify" the process, and finally achieve "automation + intelligence".
Enterprise service transformation and process reengineering, such as the previous industrial upgrading, from the original manual workshop to Industry 1.0, Industry 2.0, 3.0, to the current development stage of Industry 4.0, many elements are constantly changing in this process. What are the core elements? In the era of manual workshops, there were mainly tools like axes and hammers. The Industrial Revolution introduced electric motors and internal combustion, etc., and even new technological tools such as cloud computing and intelligence provided us with such capabilities. Our production model even states that we want this process system, including changes in the way we see it, from link to link.
In recent decades, the development of the industry has been towards the trend of intelligence. When some digital and intelligent technologies are combined with business, the production process will also undergo new changes. There will also be some new changes when digital technology is combined with products and organizations.
First, for example, in the past, machine design mainly used some tools and software to draw pictures, and then did three-dimensional simulations, etc. The work between them was still relatively separated. Now there will be some new digital design platforms. Based on these platforms, employees can carry out collaborative design, carry out modular design, and further optimize the original extensive model. There is also the car development process. It used to be that ten years ago, it might take about five years from the initial concept design to the finalization of the car. But now the cycle has been significantly shortened, and a new model can even be produced in one to two years. The model can be launched on the market. The disruptive design has also been greatly improved, and the overall design concept has also been greatly improved. Now there are new networked collaborative design platforms and some more efficient design tools, which provide the ability to improve processes, reduce costs and increase efficiency.
Second, it is even more obvious during the production stage. This is especially reflected in supply chain management, including scheduling optimization in the factory, and quality optimization, etc., which has greatly improved the overall production efficiency. For example, quality optimization. In the lean production process, quality always comes first. Eliminate waste, eliminate defective products, and increase the yield rate from 98% to 99.9%. You can reduce waste and the value saved is revenue. Space. In the process of quality optimization, it will involve the application of some digital means, such as using image recognition for quality identification, and the overall quality throughout the entire life cycle from design quality to manufacturing quality to service quality, etc. Quality control can use the power of data to connect.
Zheng Maokuan: The following cases will focus on service-oriented transformation and bring about model innovation.
The above cases include shortening working hours and industrial production. No matter how to optimize, the space for optimization is limited, and what is really needed is to solve the problem. Many examples of service-oriented transformation actually involve innovation from a problem-solving perspective . For example, if you want to solve the problem of shortening working hours, you can change your car, move, etc. Enterprises' service-oriented transformation is to explore from the perspective of changing cars and moving.
Case 2
Shaangu Power, a well-known domestic company, has proposed the goal of "building a modern service-oriented manufacturing enterprise". This company originally engaged in R&D, manufacturing, and sales of some large-scale equipment for the engineering field, such as large blowers and production line equipment. In the past 20 years, Shaangu Power has gradually sought some new breakthroughs. This company does not want to simply sell products, because no matter how good the quality of the product is, or how well the product sells, the value it can bring to customers is limited, and the business revenue space it brings is also limited. Go up and make a change.
Shaangu Power began to research several directions more than ten years ago. The first is the intelligence of products, the second is the intelligence of processes, and the third is the intelligence of services. This corresponds to three different concepts.
First, the intelligence of products. By improving the equipment and devices of products, and increasing the degree of digitization, automation and intelligence, the intelligence level of users' core equipment and process production lines can be improved. This is to start from the underlying logic and turn the original stupid devices into intelligent devices.
Second, the intelligence of the process is to improve the intelligence of the process from design, manufacturing to delivery, etc. The focus is on applying informatization and intelligent technologies and platforms to continuously optimize various elements of enterprise operations. The first is to shorten the time process from automobile research and development to delivery from the original 5 years to one year to improve the company's market responsiveness; the second is to improve the success rate of project performance. Many projects will be delayed during the execution process, or the delivery will encounter various problems. For various problems, through some digital and intelligent management and control in the process, we can ensure that the project performance rate can be improved in a large area and a wide range. In the process, there are more or less needs or demands for process system reengineering. For example, it may be necessary to personalize some products, conduct networked collaborative design between different departments during the design stage, and explore intelligent production models and networked collaborative manufacturing models in the process.
Finally, the service is intelligent. Like big data applications, artificial intelligence applications, and cloud services, connect to devices and customers to build a service ecosystem. At the same time, we will innovate service models based on such connections to provide customers with more valuable services. What enterprises deliver to customers is not just products, but product-based services or services purely oriented to customer needs.
When doing process improvement, we will pay attention to the process-driven concept. Each process is based on data-driven, combined with process-driven, to form a multiplier effect to greatly improve production efficiency, improve service capabilities or reduce costs.
Shaangu Power will undergo three stages of change during its development process. The first stage is the way the company provides products and after-sales services. The second stage is to provide solutions plus value-added services, which is based on concept innovation and improvement of process systems. It can provide some value-added services such as spare parts, equipment maintenance, and enterprise performance evaluation. Now in the third stage, combined with the digital transformation of enterprises, overall upgrades, smart products and smart systems, and smart services, we can provide customers with different solutions, which is called a full life cycle service system solution. plan. From the first stage to the second stage, more attention is paid to model innovation; from the second stage to the third stage, data intelligence is added, that is, data-driven elements and concepts. Throughout the process, continuous improvement and process reengineering are required.
The new business model explored by Shaangu Power is to provide full life cycle management services for equipment, which is more accurate, efficient and convenient. At the same time, during the entire transformation process from simply providing products to providing "product + service" solutions/models, the company's R&D process, production manufacturing process, and service process will continue to iterate based on changes in the overall concept.
Case three
John Deer, an agricultural machinery manufacturer and agricultural management service provider in the United States, originally sold agricultural tractors and other agricultural machinery products. In the past few decades, we have also been exploring a shift from the perspective of simply selling products and producing a better agricultural machinery to the concept of providing better services to farmers . John Deer has also shifted from product thinking to systems thinking to create an application-scenario-oriented ecosystem and create a new business system.
Based on the change of John Deer's concept, the original agricultural machinery system has become a small link in the large ecological system, and its core is the service of agricultural management, such as providing climate data services for farmers and providing seed optimization services for farms. The system provides overall capability support such as irrigation systems based on climate data.
John Deer's entire business process has undergone tremendous changes, from selling products to creating a full life cycle service system around agriculture. Based on such an ecological system, it also provides tremendous support for farm management improvements and process upgrades. The company has discovered huge value in operating services on farms in the United States and Europe.
Gao Bo: There will be three parts below. The first is personal understanding of digital transformation process reengineering, and then two cases, one is about a manufacturing company, and the other is a case about a traditional To C-end home appliance company.
Many companies are trying digital transformation, and each company's implementation method is different. More companies will first think of cutting in from the perspective of automation or informatization. In fact, most companies have experienced a long process of automation or informatization, and they will have a deeper understanding of this. If you want to do digital transformation, you must lay a solid foundation. It is a systematic project that is deeply integrated with lean, informatization, and automation, and connected in series with process reengineering .
To what extent should automation be achieved, what should be done first and then what should be done? After methodical analysis, automation provides more data support for lean optimization. After the deep integration and interconnection of these three modernizations, enterprises can collect a large amount of useful data, and the long-term accumulation of these data will help optimize processes and other aspects . After optimization, each point can be solidified and the core assets of the enterprise will be formed.
Different types of enterprises will think about one question: how should digital transformation be carried out and where is the starting point? Is there any direction or methodology? If we divide the enterprise from the perspective of customer type, it can be divided into two categories, To C-side and To B-side; if based on the degree of product customization, enterprises can be divided into process industries and discrete industries.
If the company is in the B-side process industry and produces customized products in large quantities, it can be placed on the starting point and path of transformation that belongs to rooted manufacturing. The focus of digital strategy is still to focus on efficiency and achieve excellent operation or allocation of production resources. Digital application is also a focus, focusing on the continuous optimization of personnel, quality, equipment and energy consumption in the production and manufacturing process. The current trend of enterprise development is more towards multi-variety, small batch, highly customized production and best product practices. The focus of the strategy is to be product-centric, create a value chain for the entire life cycle of the product, focus on the realization of the value stream of end-to-end products, and improve product quality and excellent services.
If the product is consumer-oriented and the degree of customization is not high, such as mineral water and milk, it can be included in the fast delivery system. The key point is to focus on the order and fulfill the customer's needs on time with guaranteed quality and quantity. Digitalization in this area should be based on creating an order-centered and transparent supply chain throughout the process.
If it is a company that is highly customized for the C-side and does large-scale customization, such as the home furnishing industry and commonly used 3C appliances for daily use, they all fall into this field. The strategic focus of this type of enterprise must be customer-centered, and the direction is to provide customers with the ultimate shopping experience and user experience. It should be to create an interconnected, large and comprehensive mass customization platform. On this platform, a large amount of user information can be collected to understand user habits, purchase intentions, and user dissatisfaction. Feed back the user's data into the process to meet the user's needs for mass customization.
Whether it is process reengineering or digital transformation, what is the starting point and what kind of thinking dimension does the company use to do it? The top management of the company is most concerned about the growth of sales and selling products better, which will bring an opportunity for rapid growth to the company. There is also a significant reduction in the research and development cycle, because many users have very high timeliness requirements, so shortening the product development cycle has become particularly critical.
One thing that traditional manufacturing companies have been doing is automation, replacing people with machines. Due to personnel costs and difficulties in management, enterprises have replaced personnel with advanced equipment and automation methods in large numbers, and greatly increased production capacity .
In addition, many companies are concerned about the very high material costs and hope to reduce material costs and optimize inventory turnover through various means. In the process of transformation, or in the process of building new factories or building smart factories, there are two relatively clear paths. First of all, the horizontal one is a state based on the entire life cycle of the product, such as product order acquisition-production and manufacturing-delivery-reaching the user/consumer end, as well as market launch or marketing or after-sales feedback, opening up a value chain chain. Another point is that the vast majority of manufacturing companies are more concerned about the improvement of operations centered on production and manufacturing, and their strategies are about improving transformation and upgrading centered on production and manufacturing. By improving some flexible automation capabilities and connecting them in the system, more data can be connected and integrated horizontally and vertically. This will help the company to receive orders and control, and can do more cross-process and cross-domain operations.
Starting from improving the user experience or improving the efficiency of contract performance, to promote a large increase in the number of customers, companies can connect user habits and user concerns, feed them back to the manufacturing end of the company, and provide services that reduce costs and increase efficiency . For example, what should be done on the product design side to shorten the design cycle, so that the designed products will make users more satisfied and have a better user experience. Even how to set up the product pricing system, later marketing methods, product distribution, etc., the company must connect these in series throughout the process.
Case 4
A Fortune 500 company, its industrial products cover all aspects of home appliances and home furnishings, and it is making model innovations in all aspects. Starting from improving user growth, the company has done a lot to improve user experience and customer retention, improve customer awareness, and improve the operational efficiency of user management. The user growth in the first year was not very obvious. By the third year, the number of users increased by nearly 10%.
In addition, the platform has many categories, including industrial products, home appliances, and home furnishing. Therefore, a user reverse-driven mechanism is built on this basis to connect various data of users in series, and to continuously optimize the process through various feedbacks from users. , build the whole scene. After doing this, starting from the eighth month, customer complaints dropped by 3% compared with the previous two years.
Another highlight is the establishment of an integrated supply chain system, the establishment of a new logistics model, and the reduction of logistics handling times. By analyzing a large amount of user data, the produced products are pre-produced and stored in the place closest to the user, which improves logistics efficiency, reduces the number of times of handling, and helps reduce logistics costs by about 2%.
On the other hand, it focuses on the manufacturing end. On the production and manufacturing side, a large amount of automation and informatization have been gradually promoted, and cross-industry cases have also been used for reference, such as some advanced cases in the 3C electronics industry and the automobile industry. The final effect is that personnel investment has been reduced by about 14% to 15%. The core point is to optimize the inventory turnover days on the manufacturing side, and the inventory has dropped by nearly 10%. After implementing a large number of automated substitution methods, the per capita output value has increased and the number of personnel has been reduced a lot.
Case five
This is a case of a manufacturing company. The senior management of the group has to do some benchmark factories and projects to lead the digital transformation of the group. The whole process of logistics automation and intelligence can be regarded as the entry point.
First of all, 6 warehouses are built in the warehouse. The types of products stored in the 6 warehouses are different. They are connected in series, and all the warehouses are perfectly connected with the orders. The entire production line is completely unmanned. operate. Even after each product is taken out and automatically transferred to the workshop, the workshop brings the products to the production equipment. Financial costs can be connected with production lines, logistics and warehousing.
On the basis of completing the logistics and warehousing, a lot of improvements have also been made inside the factory. Warehouse materials will encounter sorting problems after they are transported to the site. In the past, sorting relied heavily on manual labor, and the sorting efficiency was not very high. After customizing and developing the hardware, you can automatically identify the incoming materials, and then connect with the order and ERP, you can automatically sort the materials to each production line or each station, and put the materials and products independently and collectively. into a storage shelf or grid, which greatly reduces the sorting rate of personnel. In a nutshell, it means using automated means to sort materials and distribute them to where they are needed according to orders.
In addition to the external warehousing, many internal improvements have also been made. The core of this is about the sorting of finished products off the line. The products are not delivered on the same day after the production is completed every day. There are also a lot of products produced every day, and the products will be temporarily stored in the warehouse. After three to five days of storage, they will be delivered to upstream companies, and the products and quantities required by each company are different. , specifications and packaging methods are also different. In this case, there are a large number of products stored in the library. If it is still selected by personnel, it will consume a lot of manpower and material resources. Therefore, it is necessary to optimize, reduce manpower, double the per capita output value, and reduce the inventory turnover days.
summary
How does enterprise digital transformation overcome the hurdle of process reengineering?
First of all, in digital transformation, business process reengineering is a necessary thing. Because in the past 20 years, many companies have continued to use some systems to digitize and informatize. For example, OA has been widely used within companies. However, many enterprises today still prefer inefficient and fragmented information islands, and the costs are high. This current situation is in conflict with the characteristics of today's user competition and digital business ecology. There is a gap. There is no way to establish a more agile and efficient process between the current situation of the enterprise and user requirements to meet the needs.
Second, after the process is determined, digital transformation will have goals and a basis for solidifying the process. If the process is not so perfect or is very redundant and inefficient, or even the process takes 10 days, and the effective link is only 1 day, and 9 days are invalid, then this is not a very good process and needs to be optimized or even implemented. Reinvention. Having a good user value-oriented process is half the success of an enterprise's digital transformation.
Third, digital transformation is not simply about moving business processes from offline to online. A good process may in turn promote business through digital means and better serve customers, rather than a purely offline-to-online relationship. Business process reengineering is the only way for enterprises to undergo digital transformation and quickly respond to serve customers. This is a very important reason why we discuss this topic.
Reprinted from: How to overcome process reengineering in enterprise digital transformation? - Know almost