3 Ways Process Mining Helps Reduce Manufacturing Costs
The manufacturing industry is saturated with processes, making it a ripe industry for Process Mining. Some stay within the manufacturing facility itself, while a great many others reach out and impact areas of the supply chain.
From inventory to finance, from asset tracking to customer service – all of these processes affect the business’s ability to run smoothly.
How do you know if your processes are optimized, though? Are you seeing the best possible ROI on your process improvements? Are you processing payments on time, while at the same time ensuring you have the overhead for your next production run covered?
Process Mining can help you reduce overhead in your manufacturing company:
- by tracking down and eliminating gaps or redundancies in your production environment;
- by streamlining your procurement procedure;
- by helping determine the optimal mix of make-to-stock versus build-to-order, for your production facility.
Let's have a look at them in more detail.
1. Process Mining for the Production Line
Running Process Mining software on logs from your production systems (ERP, MES, CNC, and any other IT-based system) will give you a complete and detailed picture of your processes' “as-is” status.
As a result, you'll be able to identify all the bottlenecks, gaps, deviations, or any other irregularities.
Perhaps you'll even find a delay at the midway point of the production line. It turns out that a worker is needed to continue the process at a point between two pieces of equipment. Can that step be automated? Where is that employee when the line comes to a halt? Can the other process that the worker handles be reworked, allowing more oversight and a faster response?
Using your process map and examining all of the unrelated processes around the primary will give you a starting point, eliminating that delay.
Process Mining also allows for the creation of more accurate and realistic process performance indicators (PPIs). They're a great way to track improvements made to your processes against a baseline you set from the original process map.
2. Process Mining for the Procure-To-Pay Process
By analyzing your Procure-To-Pay (P2P) processes, you can determine which suppliers deliver the best service, in terms of on-time delivery and prompt payment processing. In doing so, you can improve your Order-To-Cash process, noticeably.
From there you can look into this relationship conversely, by analyzing your payments to these suppliers, as well as how often you have to change your orders after submitting them.
Keeping your company on top of these issues helps you become a preferred customer of your suppliers, which in turn leads to smoother ordering and procurement, and more savings down the line.
Further along the supply chain, you can combine your order and procurement data with information from your inventory tracking system, to locate more delays that may be affecting your company’s bottom line. Eliminating them goes a long way towards streamlining your entire production process and cutting the wasted expenditures on unusable inventory.
Reducing inventory costs by monitoring inventory on hand and turnover is another way your procurement procedure benefits from Process Mining. Watch for areas where additional stock may be needed, or for parts you aren’t using as frequently, suggesting that you can order less often or in lower quantities.
3. Process Mining and the Make-to-Stock versus Build-to-Order Ratio
Deciding how much money and resources to invest in make-to-stock versus build-to-order is one of the most crucial decisions manufacturers must make. Each model offers concrete benefits, and each comes with a corresponding set of drawbacks.
So do you decide without risking the company’s bottom line?
Process Mining can provide crucial insights in regards to the ROI of both options, as well.
It enables transparency into the production line that’s necessary to obtain accurate supply levels; order type and frequency; lead times; and more. This data is retrieved automatically by the Process Mining software from event logs left behind by inventory control, order processing, CRM, and ERP systems, among others.
A business analyst with human level insights can dive deeper into the resulting process maps and analyze which model is proving more productive.
Does it make more sense to have high stock of certain items? Or is the bottom line better served by ensuring proper supply levels?
Since customer behavior changes seemingly on a whim these days, Process Mining can provide a continuous source of such data, enabling the decision making process to be much smoother and more rapid.
Process Mining as a Strong Asset in Manufacturing
With Process Mining in your production, you can cut costs, increase production efficiency, bump up your ROI on process improvements, and enhance business relationships.
Furthermore, you can uncover the reason some processes seem to take longer than they should. You can find the bottleneck that’s been eluding your audit team and eliminate it. You can also track your procurement processes, looking for, and cutting waste spending at every level.
And, finally, you can make on-the-fly determinations about the most cost-effective production model to follow.
Are your manufacturing processes optimized? Talk to your operations manager to learn if you already use Process Mining in your daily operations. Let us know.
Want to find out how Process Mining helps in the manufacturing industry? Click here to learn more about Process Mining Software for Manufacturing .
Michal Rosik Chief Product Officer & Product Visionary at Minit
25. 06. 2019