Question

COURSE PROJECTS

Siemens Makes Business Processes More Visible

Siemens AG is a German manufacturing conglomerate that produces systems and components for industrial automation, healthcare, energy, building, and transportation markets. The company is headquartered in Munich and Berlin, with 372,000 employees worldwide, and global revenue of €83 billion (ap-proximately U.S. $99 billion) in fiscal 2017. Siemens is the largest industrial manufacturing company in Europe, with branch offices abroad. This is clearly a company that prizes innovation and continuous improvement of the efficiency and quality of its busi-ness processes.

Siemens has thousands of business processes, some of which are very complex. Management was seeking better ways of making the business more efficient and turned to business process min-ing technology. In 2014 the company established a unit called Process DAsh (which stands for Data Analytics, smart handling) to actively support global process optimization in all Siemens divisions. It started collecting and analyzing ERP data to identify bottlenecks in its production, delivery, and payment bottlenecks in its production, delivery, and payment processes using Celonis Process Mining analysis and visualization software for this purpose. Celonis partners with SAP, and its software runs on the SAP HANA in-memory database platform. Process mining software analyzes data in enterprise application event logs to determine how business processes are actually working in order to identify bottlenecks and other areas of inefficiency so that they can be improved. The technology can analyze millions of transaction records and spot deviations from normal workflows. A push of a button produces a snapshot of an entire business process. Process DAsh used the Celonis software to take all the individual data in a large number of information systems and use them to construct logical models of existing business processes and automatically visualize them. The software documents actual processes in real time, as the sequence of events is taking place.

When process mining software is used to analyze the transaction logs of an ERP or CRM system, data visualization capabilities in the software can show users what processes are running at any given time. The software documents actual processes in real time, as the sequence of events is taking place.

To find the cause of unexpected delays in invoice processing by examining the logs of the accounts payable module in its ERP system. Users can see at a glance where inefficiencies occur through bottle-necks, unnecessary detours, and manual interventions, or where compliance issues might arise. Some process mining software, including Celonis, enables users to drill down to view the individual documents associated with a process. Celonis has capabilities for comparing users’ tar-get operating models to the as-is process, providing an automated fit-gap analysis. Celonis analyzes root causes for deviations and performance loss, high-lighting the issues which have the greatest impact on process performance. At the touch of a button, the user can see a comparison between the target and actual process and also visualize the main cause of delays and additional expenditure.

If a process model doesn’t already exist, the soft-ware will try to create one automatically, sometimes using artificial intelligence techniques such as ma-chine learning (see Chapter 11) .

If a process model is available, the process mining software will compare it to the event log to identify discrepancies and their possible causes. For process modeling, Siemens uses a Celonis tool called Pi Conformance and Machine Learning. The software predicts which customer orders are likely to arrive late using algorithms that continuously learn from Siemens’ performance. Siemens started using Celonis analysis and visualization tools to learn how quickly it pays its suppliers. Some suppliers offer discounts for early payment.

Siemens was often unable to take advantage of these discounts because it was unable to pay quickly enough. The company used process mining to analyze data from its ERP, accounting, and payment approval systems to understand why this was happening. Siemens also used process mining to study inefficiencies in the way it takes orders from and is paid by its customers (order-to-cash processes). Before implementing the Celonis software, Siemens had to manage its business processes manually. Individual supervisors were responsible for specific processes. When things did not go as planned, such as when a machine broke down or a parts shipment arrived late, there was no easy way to determine exactly how these occurrences impacted overall operations. There was some resistance to process mining among some long-term Siemens managers who thought they already knew how to handle processes efficiently.

Lars Reinkemeyer, head of Siemens global process mining services, was able to promote analytics adoption by identifying individuals who were receptive to process mining and enlisting them to promote the new technology. Since Siemens AG implemented process mining, it has been able to identify slowdowns in parts procurement, late

CASE STUDY QUESTIONS

1. Identify the problem in this case study. What management, organization, and technology factors contributed to the problem?

2. Description of the problem and its organizational and business impact.

3. Describe the capabilities of process mining soft-ware. Was this an effective solution? Explain your answer.

4. How did process mining change decision making at Siemens?

5. What management, organization, and technology issues need to be addressed when implementing process mining systems?

Answer 1

1. Identify the problem in this case study. What management, organization, and technology factors contributed to the problem?

2. Description of the problem and its organizational and business impact.

(Since 1st and 2nd question asks the same thing, I'll club them)

Siemens' obvious unwillingness to bring out new technologies to the market is impressive from a point of view of consistency and durability but dangerous in a market that already needs the newest inventions. Siemens is not satisfied about making a system work, she wants all of the ideas to work well as better.Siemens has been working on the Virtual Twin project for 10-15 years, but expect it to take another 10-15 years to refine it. Most of the technologies are based on the cloud of MindSphere, defined as an open IoT operating system. MindSphere provides a single harmonized layer of data which combines software tools and physical devices. Digital Twin is one of the core innovations at Siemens.

3. Describe the capabilities of process mining soft-ware. Was this an effective solution? Explain your answer.

Flow mining is a family of methods that look at event log data and see what entities are doing. A method can be built dynamically by looking at the actions someone takes to complete a mission. You will continue to see where bottlenecks exist or where inefficiencies are within the process by continuing to compile such data over time.

Siemens used process mining tools to increase efficiency of the manufacturing. Siemens originally handled the business operations manually.

Individual managers were responsible for maintaining individual procedures on track, but when events didn't go according to schedule, e.g. when a shipment of parts came late or when a system went down, production ceased, there was no awareness about how it affected overall activities. Before that, people were looking at specific systems and seeking to grasp how they affected other issues. The modern accountability is a major change over how things have been done in the past, but not everyone accepted at Siemens, not at first.

4. How did process mining change decision making at Siemens?

Driving the acceptance of analytics by business managers by recognizing the individuals who were open to the modern methodology and targeting them to help evangelize the technology. However, since the process mining program was implemented, operating enhancements have been made in some industry lines that are using it. To now, automatic process control has helped Siemens detect slowdowns in the production of components, late component delivery and inefficiencies in billing that cost the company millions of dollars.

5. What management, organization, and technology issues need to be addressed when implementing process mining systems?

When it comes to process mining, an automation technology providing an insight into market processes."What we do is have X-ray images, "said Lars Reinkemeyer, Head of Global Process Mining Services at Siemens AG. "We used to have little resources to get insight into such vast quantities of data. Now we're asking why we've never looked at process efficiency before."The German engineering company, which produces devices and products for the industrial production, healthcare, electricity, transportation and transport industries, used to have no knowledge into the performance of its internal processes.

Therefore, it began gathering and reviewing ERP data two years ago to try to find bottlenecks in manufacturing, distribution and payment processes. It all begins with 70 SAP ERP solutions from Siemens. They tie in systems that monitor items like product records, moving parts in the production activities of the business, as well as billing and payment. The ERP data is ultimately loaded into a SAP HANA database, and Reinkemeyer and his colleagues analyze it using a business analysis platform from Munich-based tech provider Celonis.

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