Executing a business strategy more effectively and consistently than your competition is called Operational Excellence.
It involves setting up your business for growth by understanding what the market wants and creating an uninterrupted value stream that continuously feeds the need.
While there is no single right path to operational excellence, we believe AI and automation technologies, when used in right place at the right time, can grow your business and help you deliver operational excellence.
The Role of Automation and AI
If ever a technology was unknown, it is Artificial Intelligence (AI). This is partly because it is still relatively unfamiliar territory for most businesses. And partly because the technologies in AI themselves keep evolving.
Artificial Intelligence (AI) refers to the simulation of human intelligence in machines that are programmed to think like humans and mimic their actions. The term may also be applied to any machine that exhibits traits associated with a human mind such as learning and problem-solving.
These concepts are not normally associated with ERP systems but when you look at the definition of AI and the problem-solving capabilities of modern ERP solutions, it’s clear that AI will, in time, play a big role in your business.
Thanks to Covid-19, however, business process automation, has seen a huge surge, with many businesses transforming their internal operations to meet evolving market conditions and customer expectations. Not only have we seen companies reviewing their existing processes and applications with a view to increasing automation but looking to expand to new technology to encourage better and more personal customer relationships and interactions.
This shift toward automation is expected to continue through 2022.
Time to spring clean your automation processes
When it comes to truthfully examining the AI and automation conversation, it’s worth remembering that AI and robotics are nowhere near the point where they can replace human decision making for supply chain businesses. The technology is not advanced enough.
Automation, on the other hand, does have immediate value to provide to businesses right now. At its most basic, automation helps you increase efficiencies and enhance accuracy in your day-to-day operations. But more importantly, it removes the noise from your business and channels relevant information and actions to you and your team.
People often think about automation in terms of production managed by machines. However, here we are looking at how automation can eliminate the need for your employees to worry about mundane tasks that your ERP solution can easily manage.
It’s likely that your business already uses an ERP system, which means that you’re already enjoying some of the benefits automated processes deliver. But in 2021, it’s worth examining whether your ERP solution is truly supporting your automation aspirations and ultimately your growth strategy. When it comes to modern ERP systems, the level of automation that can be delivered right across your business might surprise you. And it has the potential to deliver even more benefits, including:
- Reducing time wastage by creating business rules, workflows and alerts that relate specifically to individual users
- Enhancing control on costs and selling prices to improve margins
- Automating frequently performed tasks thereby creating more free time in your employees’ day to engage with more strategic tasks
- Providing every user with quick, relevant and accurate access to data and KPIs in real-time
- Customising information and controls to specific users via system dashboards, reports and screens
Most businesses have grown organically over the years. Often, that organic growth has resulted in multiple, duplicated or outdated processes. There can be a tendency to think ‘this is how we’ve always done it’ or ‘if it ain’t broke, don’t fix it’. The trouble is, the people who think a process isn’t broken are often too close to it to see the consequences. It may be working ‘fine’, but what if it could be carried out so much better?
If your current ERP system is not delivering on the benefits listed above you run the risk of missing out on automation capabilities that could future-proof your business and propel you ahead of your competitors.
Your ERP system should be enabling you to enforce business rules, processes and mandatory actions 365 days of the year; allowing you to move away from micro managing your staff to spending more time focusing on more strategic decisions and plans. Some examples of these might include the following:
- Get alerts – If a staff member goes to sell a product below margin, you may want to trigger an action to stop it or at least receive a warning
- Highlight important or critical information – If a customer hasn’t paid you, you might like to highlight them in red making them highly visible to your counter staff or sales reps
- Prevent issues before they happen – If you have excessive levels of a particular item in stock, you may want to prevent an order being placed for more.
- Hide important or critical information – If you’ve taken on a junior sales rep you’ll probably want to hide your cost price from them.
- Send out automatic reminders – If a customer is over their credit limit, then why not trigger an automatic email reminder to them?
- Request authorisations – If a staff member puts up a purchase order over a certain amount, you may want authorisation sought on it before letting it go.
A paper from CapGemini proposes a useful methodology if you are considering a spring clean of your ERP software. Called the ESOAR methodology, it stands for Eliminate, Standardise, Optimise, Automate and Robotise:
- Eliminate: Expunge wasteful activities impacting time, cost and effort
- Standardise: Rethink the basics to ensure customisations serve a clear business purpose
- Optimise: ERPs/workflows and existing IT landscape
- Automate: Automate standardised process using in-built ERP functionality or best-of-breed tools
- Robotise: Robotising repetitive and rule-based transactions
This methodology can provide a useful approach if you plan to interrogate what your ERP platform can do for your business. It’s also a good place to start if you’re looking to grow your business and deliver operational excellence.
People, processes and automation work together
Right now we are not at a stage where AI is robust enough to take over business decision-making. We’d suggest that it’s unlikely we will ever reach that point. People are just too important.
For now it’s about deciding what tasks are best performed by technology, and which should be undertaken by people. Would software (and hardware) doing a task be better (or faster, or more accurate)? What does a person add to the process that technology cannot? Is that an essential component? Will doing the task by computer make not just that individual process more efficient, but positively impact the chain of processes of which it forms a part?
CapGemini refers to this as the ‘human-in-the-loop’ design, using an AI-based operator to orchestrate operations between machines and humans, and concludes that it is:
“better than machine-only, at a cost that is lower than person-only. By developing models and frameworks that re-engineer processes for the digital age, we can deliver business outcomes that are superior than could be achieved either by machines or humans on their own.”
The result for business leaders is an organisation that is built on a core of operational excellence.
Operational excellence and business growth
There is no argument that AI and automation (even though the terms are distinct from each other, they are often used interchangeably) have the potential to deliver huge returns on business efficiency.
By delivering greater efficiency, companies have the space to reallocate resources and grow. Automation platforms, such as ERP software, will have a hand in that too, mining data for deeper insights, identifying new income streams to explore and helping companies adapt to emerging technologies.
And of course, embedding operational excellence within your organisation becomes a collaborative effort between your people and technology tools.
Speaking to ITProPortal, Mark Lycett, Professor of Information Management at Royal Holloway, University of London, said:
“AI is pushing at some of these human skills but we’re a long way off where it will replace human intelligence.”
In the same article, Anabel Gutierrez, senior lecturer in digital marketing at the University of Kent, added:
“AI will be designed to enhance what’s done by humans and improve their performance.”
Embedding AI and automation into business processes is clearly not an either/or scenario. Yes, there will be change. Many businesses will need to evolve how they approach this new, more integrated relationship with their technology.
Upskilling will be critical as a new generation, tech-enabled workforce adapts to the hybrid requirements of technical know-how with strategic nous. It is indeed a brave new world, and one where a mindset prevails to create sustainable improvement on a daily basis within an organisation. And that’s the core definition of operational excellence right there.
Read more on how to deliver operational excellence and drive growth in your business with automation and AI in our how to guide.