Process and Content – which one trumps the other

In Kiran Garimella’s BPM Blog “Paper, paper, everywhere, but nothing intelligent to read” he responds to an earlier posting by Bruce Silver’s
BPMS Watch » More on BPM and ECM, Kiran points to the need to put content in perspective … a good idea. I had a pretty similar discussion at a workshop last week where I gave my slightly more cynical view.
I would suggest that you should be able to focus on the needs of the process without getting too wound up in the coordination mechanisms of the process (i.e. the implementation details we refer to as “documents”). This little passage was from an article I put together a couple of years back entitled “The Split Personality of BPM” (the title of my upcoming book … but more of that later).

… While all of this sounds a little academic and vague, let us consider an oft quoted but real life example. In the frothy days of Business Process Re-engineering, we heard all about Ford and their $100m invoicing system. It was planned to support the reduction in staff of the Accounts office from 500 to 400 people. Then some bright spark MBA noticed that Mazda had only five people in their Accounts function (Ford had just invested in Mazda). Taking into account the economies of scale and relative size of Mazda, they should have had around 75 people. The difference was that instead of paying on invoice, the Receiving Department at Mazda checked the delivery against the original purchase order – if all was well, then the payment was processed (i.e. without an invoice). Ford applied the same process to their situation, refined their purchasing processes and by the early 1990s had reduced their Accounts staff to just 125. And while they were at it, they saved the $100m earmarked for the new Invoicing System.

But the story goes on – although it becomes more anecdotal. Egged on by an army of consultants and numerous HBR/Sloan articles, the rest of the US auto industry followed suit – they realized they could largely do without invoices. So, when one of the major US auto manufacturers went to visit Toyota, the benchmarking team was amazed to find that they only had six people in their accounts department. Somewhat befuddled, they asked how it was possible that such a major business could have so few people in their accounts function. The answer – even simpler still. Instead of getting very good at purchasing (i.e. having to create more effective purchase orders that were matched with goods received), they paid their suppliers when they made cars! Every car had one steering wheel, a given number of doors, a sunroof, etc. It was up to the supplier to ensure that suitable supplies of quality goods were present at the plant. Sure, they now had to manage their suppliers more effectively and provide them with information access (stocks available, forward orders, etc.), but they had found that they did not need to manage specific orders or invoices.

The moral of this story – to achieve quantum leaps in business performance, concentrate on finding ways of doing what is needed, but without the traditional mechanisms of coordination. Do not follow the paper trail and then automate it. Think carefully about why those coordination mechanisms are needed in the first place and what would happen if they were removed.

Having since validated this story with Toyota (it is indeed true they just pay their suppliers when they build cars), I think we should all take notice, that innovation and performance improvement doesnt come from technology gadgets … it comes from people really stepping outside the box and seeing the wood for the trees.

 

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