While most organizations know that optimized processes are critical to their success, some are still struggling to maximize the return on their ERP investments due to process inefficiencies. Even if they did rigorous process improvement work a few years ago, they could be experiencing longer cycle times due to dynamics imposed by acquisitions, reorganizations, and market changes.
The good news is that a disciplined approach to metrics will drive dramatic process improvements — without the disruption and pain of a major reengineering initiative. But, the key to metrics success is measuring the right indicators in the right way, enabling you to precisely identify and fix only the broken processes.
Many business managers are frustrated by measures that require an unreasonable amount of data collection, take too long to produce, are not effectively tied to business strategies and goals, and, in the end, are hard to interpret and use. Often, those organizations are placing heavy emphasis on lagging financial measures unrelated to operational realities.
To improve performance, metrics must make the abstract concrete and specific, effectively answering "what does that mean?" and "what do we need to do?" It's critical to identify what you want to measure and why before you worry about how. Once you have strategic clarity, you can build the tools for successful metrics.
What are some common symptoms of process problems? Reconciling across businesses and budgets is difficult and time consuming. People are checking the checker's work. Accounts receivable issues require tapping into the organization's credit line. The SG&A is above industry norms. The time between placing and receiving orders is too lengthy. Excel spreadsheets are the most reliable source of the truth.
You may find other tell-tale signs in human resources processes. For example, staffers in the recruitment unit of a large public sector organization complained that quality candidates often dropped out of the consideration set. When CherryRoad examined the recruitment process in detail, we identified a number of points where measurably fewer contacts were made with the waiting applicants — a problem that a "time to hire" metric would not have uncovered. Once the recruitment staff began reaching out more frequently to top candidates during those stalls, they remained enthusiastically interested in the positions all the way through to a hiring decision.
To remain effective, metrics must evolve over time in response to changing circumstances and new insights into the business. An experienced partner can help your organization gain consensus on what and how to measure — the first and often most difficult step — as well as keep those metrics on track over time. In addition, they can help you avoid the natural inclination to spend too much time and money attempting to measure way too much.
To learn more about how to optimize your organization's metrics and processes, contact us at info@cherryroad.com.