End-2-end process organization in the chemical industry

I n d u st ry Pap er Focus Topics 2012 for th e C h e m ica l I n d u s t ry 1 2 3 4 5 6 7 2 End-2-end process organization Operational excellence has become a strategic imperative for global companies as they face more challenging customers and tough competition. Increasing complexity of organizations (global opera- tions, evolving production networks, mergers and acquisitions) requires companies to continuously focus and improve their operational performance. In this context process orientation is becoming more and more important for global chemical producers. End-to-end (E2E) perspective has become one of the leading principles, as global company structures have become increasingly complex during the last decade. Even simple processes like accounting or operational procurement are spread over organizational structures with global governance, regional shared services and local business partners. Global chemical companies seek to harmonize their business processes across diverse business units and geographical regions for several reasons: • better understanding and visualization of processes • continuous improvement of processes • transparency on operations • standardization of transactional processes • increase intercompany coordination and integration after M&A • easier outsourcing of process capabilities Redesigning processes that run from end-to-end across the enterprise lead to dramatic enhancements in performance. End-to-end process organization ensures that all activities in a business process work together and are aligned for the common purpose of serving customer needs. Focusing on redesigning and measuring the customer-facing and internal processes creates improvements in cost, quality, speed, profitability, and other key areas. Business process management Business process management describes how the organization works to accomplish a particular objec- tive, i.e. the set of activities performed by one or more persons following certain business rules. Today most enterprises value processes as strategic assets and business process modelling is widely used to realize end-to-end management of processes. There are several factors necessary to sustain business processes, such as process design (showing the detailed steps of how it is to be executed), people (who execute the processes in terms of skills), IT infrastructure (to support the process), measures (to track process performance), and owner (who has the responsibility for the process and its results), see Figure 6. For instance, ownership of core processes is a critical success factor. Without a clear assignment of ownership, management and evaluation of the process cannot be executed. Besides, in today’s complex corporate structures many processes interact with multiple functions of a company. This level of interdependence almost dictates the necessity of a single owner who has the end-to-end view of the process. For example, the order-to-cash process is associated with sales, finance and distribution. Therefore it is essential to have an owner who has cross-functional overview of the order-to-cash process. 10 Industry Pa p e r F o cu s T o pics 2 0 1 2 f o r t h e C h e m ica l I n d u s t ry Figure 6: Three different L1 views in business process manage- ment. Process- oriented view Mi L2 Bu xin Di (Pyramid levels lk str g pr L1–L5), functional ibu /B od ... L3 view (process under le n uc tio the function) and tio din n business scenario n g L4 view. L5 Process Modeling Levels Business scenarios Production Quality Procurement Logistics Functional view (process library) E2E process government execution in the chemical industry Current organizations of chemical companies are often not suitable for an effective E2E process govern- ment. Most small and medium-sized enterprises follow a functional structure on second level, many multinational companies in chemical industry are characterized by a business unit set-up supported by central functions. Both organizational principles do not fit an end-to-end process approach on first sight. For example, the order to cash E2E process includes process parts from sales, finance and supply chain management. The basic question is how to implement organizational end-to-end process respon- sibility. One pure scenario is a complete organizational change to process orientation. In reality, and from the current management perspective, this scenario is quite unrealistic because EBIT and asset oriented set-ups promise higher synergy effects than a complete change to process orientation in one step. So we are looking for feasible organizational solutions with significant benefits and a good chance for im- plementation within existing enterprise structures. With this understanding there are three basic types of process organization in the chemical industry: 1. Process owner matrix 2. Major user model 3. Governance model 11 I n d u st ry Pap er Focus Topics 2012 for th e C h e m ica l I n d u s t ry In the process owner matrix (Figure 7) process owners are defined to manage the processes across whole functions. Process owners manage the whole process cluster with an E2E authority. They are re- sponsible for establishing the design, ensuring that the design is followed and improving the processes continuously. This model has many advantages through a defined leadership for end-to-end process harmonization and improvement.