What is Lean Automation?

Lean automation is a methodology that uses elements of Lean six sigma with business process automation. It focuses on reducing waste in the execution of business processes before automating tasks. In this post all about automation solutions for Supply Chain

LEAN BEFORE AUTOMATION. WHY THE TWO MUST GO HAND IN HAND

Technology cannot help with a bad design of process flows; it does help though with the following:

  • Improve the speed of execution by eliminating manual tasks

  • Improve data quality by reducing the errors due to manual data entry

  • Reduce equipment downtime by alerting users when machines operate outside optimal ranges

  • Enable cross-company collaboration by streaming data in a format that is compatible with different systems

Automating bad processes usually returns no benefits for the company and it could even worsen the Supply Chain team’s performance in some cases.

PROCESS AUTOMATION VS ROBOTIC AUTOMATION

It is important to clarify what automation is before trying to understand if and how a company can automate their Supply Chain using a lean approach: There are two main types of automation:

Business Process Automation: This covers admin tasks, and it helps with many users’ activities that are performed at the desk like:

    • Data entry

    • Alert teams when certain tasks are completed

    • Saving, formatting, and storing files

    • Reporting

    • Getting attachments from emails

    • Monitoring that equipment is functioning well

    • Generating and sending reports and documents

Robotic Process Automation: While the goal of BPA is to streamline work processes in an organization to make quicker and more accurate decisions RPA's primary function is to replace time-consuming human tasks with software types called Bots. More about Bots in this Wikipedia article. Some examples of Bots are:

  • Chatbots that take the initial questions from a customer on a website before passing to customer service

  • Auto-fill bots that fill in forms before submission

  • Email bots to reviewing or even reading emails to create documents – sales quotes or orders - depending on the content.

THE MAIN DIFFERENCE BETWEEN LEAN BPA AND RPA

There is a fundamental difference between BPA and RPA: while BPA requires organizations to rethink their processes to become lean and more efficient, RPA simply replaces humans with software.

RPA can run on top of inefficient processes; it is often more expensive to design and maintain and their main benefits are about savings on personnel wages. RPA suits large organisations that operate with a high level of complexity for which BPA might require a bigger effort. With simple bots addressing specific tasks large companies can save time and labour costs.

BPA is more of a holistic approach and marries Supply Chain best-practice with digital tools, BPA tools are less expensive than BPA and with no-code technology these can be mastered fast even by teams with low IT skills. SMEs and companies in FMCG – where agility is a must – can benefit more from BPA than from RPA

RISKS OF AUTOMATING INEFFICIENT BUSINESS PROCESSES

Companies with high admin costs and issues around supply chain visibility might be tempted to jump into the implementation phase too soon in an automation project. Attempts to automate ineffective business processes result is the following problems:

Lack of visibility

Ineffective processes often miss steps where data is captured, if the process is automated the missing data will cause related tasks not returning the desired results. With a manual process, there are opportunities to reverse analysis and add missing data later, while an automated process will simply ignore the missing data and either return wrong numbers or simply fail and return an error.

Increased complexity

A common issue with bad processes and automation is having users to work twice, once performing their task manually using spreadsheets and a second one triggering the automation tasks. This happens when the user does not trust the data returned and wants to check the results.

High costs

Automation carries costs: maintenance licence and support. Applying automation to ineffective processes means not realising enough savings in terms of admin time to justify the investment.

Resistance to change

End-users are the first to understand if the company tries to automate bad processes. Aware of the workflow’s bottlenecks, teams can anticipate the risks of working with automation tools while operating under complexity and inefficiency. Resistance to change and low adoption can either be symptoms of simple mistrust in technology or genuine concern about the automation capabilities.

HOW TO CHECK IF YOUR SUPPLY CHAIN PROCESSES ARE READY TO BE AUTOMATED

Preparation and planning are critical for automation projects to succeed. Before committing to purchase any software, companies should identify: the goals of the automation tools, clear success criteria, key members of stuff that will form the project team, and agree on a budget and a timeline: Let’s see the checklist in details:

Identify the goals of the automation project: Is the company trying to reduce admin time? Then measure how much time and of how many users the automation should eliminate. Is automation going to reduce errors due to manual data entry? Then be specific about the incidence of the errors and what level of accuracy must be achieved. Does the team want to receive alerts when certain documents are received? The more specific the goals are the better guide the implementation team will have with sourcing for the right tool in the marketplace

Define what success looks like: Depending on the goals identify clear measures of what a successful automation project looks like. If one of the goals is to reduce admin time by 30 hours a week, is a reduction of 25 OK or not? It is important to have success measures as these will guide the team towards stirring a project in the right direction if the benefits are not fully achieved.

Create a dream team: Nominate key users to form the project team, there should be at least one member of each team who will benefit from the automation and who will use the new tools. There is no need to tech-savvy team members, but it is important to have users with a good understanding of business logic, the end-to-end process and possess good problem-solving skills

HOW TO EVALUATE AUTOMATION VENDORS

When evaluating business process automation vendors, companies should consider first the vendor ability to understand and meet the company’s requirements like goals of the automation and success criteria.

The next step is to evaluate the software vendor as a solution provider. Gartner provides an excellent evaluation method that includes two main elements:

Ability to Execute

  • Core services offered: Can they integrate with existing core systems? What support do they offer? Can they provide ongoing updates/ upgrades?

  • Overall Viability: Is their business financially healthy? Are they capable of further investing and improve their capability?

  • Sales Execution & Pricing: Are their prices competitive? Is their pre-sales process effective in matching customers need to their solution?

  • Customer experience: Can they demonstrate the success of past deliverables? What do their customers say about them?

Completeness of vision

  • Market Understanding: Do they understand the latest market developments?

  • Industry Strategy: Do they have a strategy to allocate resources, skills, and offerings to meet the need of the industry they want to reach?

  • Innovation: Are they capable of innovating and consistently update their product or services?

WE ARE A SMALL COMPANY; CAN WE AFFORD AUTOMATION?

Business process automation can be surprisingly inexpensive. Microsoft Flows – now called Power Automate – starts at less than £10 a month per user (prices as per November 2020) Just to name one. More about automation costs in this article

Not only can small companies afford automation but, in most cases, automation can return a better ROI compared to large organization thanks to improvements in the process flow that BPA enables.

Large organizations might struggle to make their processes more effective because of the rigid structure and the large headcount.

WE ARE A FLEXIBLE TEAM, AUTOMATION WILL MAKE US TOO RIGOROUS

A common misconception about business process automation in Supply Chain is that the technology will make processes too strict therefore teams might lose flexibility. The problem with this idea is that it sees technology as the driver of processes and decisions.

Business Process Automation is a technology that takes away tedious work from the team plate. With more time to focus on things that matter Supply Chain teams can become more flexible and use the technology to automate elements of processes that they design. Automation of supply chain processes with Lean then enables agility and flexibility.

CONCLUSION

Business Process Automation is a technology that helps to streamline and automate workflows, it returns the best results when is it implemented together with process review to smoothen up processes and procedures and it should never be used to simply save admin time of companies that operate with ineffective processes. BPA is relatively inexpensive and suits SMEs better than large corporations.