The evolution of digital technologies continues unabated. They give us benefits like speed, efficiency, connectivity, and scalability in both the personal and professional spheres – and there is no end to this trend in sight.
This digital transformation, however, also faces the increased expectations of potential customers. For companies to meet customer demands in these times, they not only have to integrate their processes seamlessly, but also adapt and manage them based on real data. This transformation is challenging companies to rethink their existing process flows and replace them with more efficient processes. Robust and optimized, yet flexible processes along the entire value chain help to improve competitiveness, since they simultaneously boost improve productivity, cut costs, and improve quality.
Process mining is a driver for boosting efficiency
Process mining is a technological computing concept aimed at identifying real processes (that is, processes that are actually executed), monitoring them, and improving them by deriving executed process steps from data from information systems (SAP, Oracle, transport systems, and so on), extracting them, and assembling them as process flows that can be analyzed by the IT.
Interest in process mining has increased rapidly in recent years and more and more companies are already using it. Process mining has become a recognized technology on the market that makes it possible to examine process flows in real time in a cost-efficient manner. It includes automatic process discovery, process conformity (structured target/actual comparison), and process improvement. In addition, all processes can be enriched with relevant business information from other sources. As a result, when a company executes a certain process, the corresponding information – such as company code, supplier or customer number, terms of payment, and invoice amount – can be analyzed in the process context at any time.
Use cases and potential benefits of process mining
How well does process mining work in reality?
Scheer has already explored the value added by process mining in various areas of the value chain. We first determined that the technology works reliably in a variety of environments, returns valid results, and is also suitable for long-term use. Our experience has also shown that every company defines different focuses and every deployment has to be custom-tailored to the specific challenges a company faces. Every company that uses process mining also has to be aware that the technology itself can’t simply solve problems at the touch of a button. The added value only arises in combination with experienced process mining experts and the involved specialist departments. There must be a common understanding of the problem at hand and the developed solution must be user-centric for it to actually achieve the targeted improvement in day-to-day business. The optimization can take on many different forms: it can involve the automation of business processes, the provisioning of custom-fit information, avoiding mistakes and wrong decisions, or the improved utilization of working capital. Practical use cases for the supply chain are described in the following sections.
How companies can increase efficiency in purchasing
In the purchasing areas, projects often see a pattern known as “maverick buying”. It involves circumventing the purchasing department when ordering, resulting in the company missing out on discounts and favorable delivery terms or failing to meet required delivery quantities. This type of behavior is unwanted and can result in both higher ordering costs and additional work. Since process mining presents the purchasing processes as a real process flow in the analysis, these patterns can be easily identified, while potential reasons can be determined through intelligent root-cause analysis. The behavior can then be improved through better standardization of the process, user training courses, or intelligent assistants.
Since analyses are based on process data, they also make it possible to identify bottlenecks in the process flow. For instance, the time until blocked orders are released again can be measured. Inefficiencies in this area can result in delays or fallouts in product manufacturing, which has negative impacts on the entire supply chain. Interactive dashboards show users the orders that have to be processed with the highest priority. This can help reduce lead times for critical cases.
Shipping quality is an important factor for customer satisfaction and customer retention
Businesses in the logistics sector have faced major challenges since the COVID-19 pandemic began impacting national and global supply chains. Interruptions in supply chains resulted in goods shortages and price increases. As a result, logistics managers were forced to adapt transportation routes, means, and facilities to this situation and optimize them. Reliable, robust supply chains are a basic prerequisite for ensuring profitability and increasing market share.
Customers value delivery reliability, accessibility, flexible transportation facilities, and sustainability. Process mining makes it possible to measure and analyze these quality features and launch improvement initiatives as a result. This, in turn, can increase customer satisfaction.
The process mining tool analyzes the data to determine all relevant process steps within the individual booking operations and present it in chronological order, and is then capable of calculating partial lead times between individual steps and the total lead time until the shipment is generated. Since many process steps can run fully automated, delays in the process usually result during customer communications, due to incomplete or incorrect booking requests.
In a customer project for a shipping company, two quality indicators were identified whose measurement, analysis, and improvement with process mining are important to customer satisfaction and customer retention. One of these quality indicators is “response time for bookings”. It measures the time between a booking request from a customer, which is placed electronically (online, via e-mail) or by phone, and the booking confirmation or rejection by the shipping company. The promise to respond to a booking request within a certain amount of time is often part of service level agreements. The response time is made up primarily of the verification of customer information, the check for container availability on a certain shipping route, and calculation of the freight costs.
A second quality indicator is “booked and loaded on time”. In this case, for example, the booking confirmation, generation of customs and shipping documents, the planned departure and arrival times, and notifications of on-time loading of the freight can all be derived from the data. This makes it possible to identify schedule variances. Some of them are due to customer failure to load the container on time, but they can also be caused by overbooking a container ship.
Customers expect the fastest possible delivery without mistakes, which is why transportation service providers have to ensure that the agreed services are delivered reliably. Process mining makes it possible to permanently monitor transportation quality, to ensure that customer expectations are met. It also provides early warnings for reasons why customers might switch to a competitor.
Process mining provides a foundation for decision-making for your intelligent transportation planning
Transportation planning plays a key role in the overall supply chain and will likely continue to gain in importance.
Process mining makes it possible to track shipments over multiple stages, from planning and execution to billing of freight costs (end-to-end view). A project with a shipping company, for example, found that freight planning and freight rates are often changed manually. The suggestion scheme and quality of the master data were improved in response, so manual changes are no longer needed as frequently.
In the future, emissions management will continue to gain in importance in the transportation planning context. Process mining enables an integrated view here, instead of examining individual factors in isolation.
At the same time, process mining also offers many use cases for freight forwarders and carriers: future process mining analyses could also include the fuel consumption and type of vehicle used, for instance. Freight forwarders can then use this information to reduce the fuel consumption of their fleets and shrink their CO2 footprints.
Due to demographic trends, the labor shortage will continue to intensify in the future, and transportation sector is no exception. An article in the trade journal Verkehrsrundschau from July 2022, for example, stated that Germany already has a shortage of 80,000 to 100,000 heavy truck drivers, and orders have to be turned down as a result. The article cites poor working conditions as one reason for this, among other aspects. Process mining provides process data that can be used as the basis for more sustainable transportation planning. In turn, this would enable companies to position themselves as attractive places to work in the employment market.
Wide-ranging applications of process mining in the supply chain
Process mining makes many use cases possible based on transactional IT data in logistics and in the overall supply chain. We have presented a small selection of relevant use cases in the value chain in this article.
Focusing on the most important questions is essential for a successful project. What’s more, close, communicative collaboration between specialist departments and consultants is essential to identifying optimization potential.
Outlook
More use cases can already be identified for the near future. Germany’s new Supply Chain Act, for example, poses completely new challenges to many companies. Since process mining isn’t limited to structural analysis of the executed processes; it can also be enriched with additional data and supplier ratings. and ESG data is being included in the analyses in initial projects. As such, processes can be reviewed for their sustainability, sustainable decisions can be supported better, and compliance with legal requirements can ultimately be monitored better.
These are just a few examples of how process mining can be used effectively in logistics and in the overall supply chain. There are many, many more – companies face no limits to creativity. Only one thing is clear: focusing on the most important questions is essential for a successful project. In addition, much of the optimization potential can be identified through close, communicative collaboration between specialist departments and consultants.
As such, process mining can be used as a central platform for establishing and analyzing a transparent, sustainable value chain. This, in turn, can enhance stakeholder confidence, accelerate business growth, and cut costs by increasing efficiency.
Authors: Fernanda Carcamo, Dr. Andreas Kronz, and Fabian Zoller
