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Kristofor Williams October 11th, 2007

IMMM Integration Measurement Maturity Model. Kristofor Williams October 11th, 2007. Introduction. Integration Measurement Maturity Model. Primary goal is to demonstrate concrete business value that eCommerce and integration IT activities contribute to organizations.

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Kristofor Williams October 11th, 2007

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  1. IMMM Integration Measurement Maturity Model Kristofor Williams October 11th, 2007

  2. Introduction

  3. Integration Measurement Maturity Model • Primary goal is to demonstrate concrete business value that eCommerce and integration IT activities contribute to organizations. • Can assist in understanding “what to measure” based on an organizations process maturity. • Provides a framework to answer the questions: • Who (Population). • What (Standards). • How (Measurement Methodology). • Why (Demonstrate the business value of eCommerce and Integration IT activities). • Can move the dialog between the business and IT from emotional to data driven conversations.

  4. Data Driven Conversations • IT is required to do more with less. • At the same time manual tasks are being pushed to the back office. • eCommerce provides many tangible benefits to the enterprise but: • IT should continue to engage the business in business terms. • Old methods of measuring the business value of eCommerce have room to grow. • i.e. eCommerce saves paper (Green Computing). • Remove emotion and drive towards data driven conversations. • “We need to get this customer on-boarded because it represents X dollars in business”.

  5. Measurements • The “data” in data-driven conversations come from measurements. • Start small. • Know what you want to measure before you measure it. • Examples: Hours Saved, On-Time Delivery (OTD), Variance Reduction. • Conduct informal surveys to test if the data to support your measurement exists.

  6. The Measurement Problem “ When it comes to specific measures concerning employee skills, strategic information availability and organizational alignment, companies have devoted virtually no effort for measuring either the outcomes or the drivers of these capabilities. This gap is disappointing since one of the most important goals for adopting the scorecard measurement and management framework is to promote the growth of individual and organizational capabilities.” —Robert S. Kaplan and David P. Norton, The Balanced Scorecard • Apply a measurement model to identify “what to measure”.

  7. Organizational Processes • Processes are the key to adding velocity to customer satisfaction, operations and overall competitive advantage. “Continuous Process Improvement: A never-ending effort to expose and eliminate root causes of problems; small-step improvement as opposed to big-step improvement.” — APICS (Association for Operations Management) Dictionary 11th Edition • Apply a measurement model based on your organizations process maturity. • Conduct informal random surveys to assess organizational process maturity. • Organizational process maturity can vary by user, department, or enterprise. • Kaizen: Continuing improvement for everyone – managers and workers.

  8. Integration and Process Maturity • Integration Measurement Maturity • Follows Process Maturity Integration Measurement Maturity Process Maturity

  9. User Tier • Process Maturity: • Process improvement occurs at the user level. • Standards: • None. • Measurement Methodology: • ABC (Activity Based Costing) Concepts • Population: • Users • Customer Service Rep, Receiving Staff Integration Measurement Maturity User Process Maturity

  10. Example – User Tier • Activity Based Costing (ABC) Concepts • Analyzes “activities”. • Assigns “cost drivers” to activities. • Measure units produced or hours consumed. • Differentiates value added (VA) from non value added (NVA) based on the customer’s viewpoint.

  11. Department Tier • Process Maturity: • Process improvement occurs at the departmental level. • Standards: • Key Performance Indicators (KPI’s) • Measurement Methodology: • SCOR, Balanced Scorecard • Population: • Manager or Director • Sales, Logistics, Receiving Department Integration Measurement Maturity User Process Maturity

  12. The perfect order must satisfy the following requirements: • A product is considered perfect if the product ordered is the product provided. • A quantity is considered perfect if the product ordered is provided in the ordered quantity. • A delivery is considered perfect if the location and delivery time ordered are met upon receipt. • A customer is considered perfect if the product is delivered to the specified entity • etc. The perfect order must satisfy the following requirements: • A product is considered perfect if the product ordered is the product provided. • A quantity is considered perfect if the product ordered is provided in the ordered quantity. • A delivery is considered perfect if the location and delivery time ordered are met upon receipt. • A customer is considered perfect if the product is delivered to the specified entity • etc. 850/ORDERS 855/ORDRSP 856/DESADV Level 1 Metric Performance Attribute Definition Performance Attribute The performance of the supply chain in delivering the correct product to the correct place at the correct time, in the correct condition and packaging, in the correct quantity, with the correct documentation to the correct customer. Perfect Order Fulfillment Total Perfect Orders Total Orders Supply Chain Reliability Simple Example: Total eCom OrdersvsTotal eCom Orders Total Orders Total Perfect Orders = eCom contribution to the Perfect Order. Example – Department Tier • SCOR - (Supply- Chain Operations Reference) published by The Supply Chain Council. • Member organization that publishes hundreds of KPI’s to monitor the health of an organizations supply chain. • Multiple levels of measurement.

  13. Enterprise Department Integration Measurement Maturity User Process Maturity Enterprise Tier • Process Maturity: • Process improvement occurs at the enterprise level. • Standards: • 6S • Lean • TQM • ISO 9001 • Measurement Methodology: • Continuous Process Improvement (CPI) • Population: • VP or C Level • Sales, Ops, COO, CEO • Integration Measurement Maturity • Follows Process Maturity

  14. A Note About CPI Standards • Many types of CPI Methodologies • Lean • Six Sigma • TQM • ISO 9001 • Etc. • Which ones do your organization utilize?

  15. Making Sense of CPI • All CPI methodologies contain at least one aspect of these four areas:* • Cycle Time • ISO 9001: Monitoring processes to ensure they are effective. • Mean and Variance • TQM: Get processes "in control“. • Defects • Six Sigma: 3.4 Defects Per Million Opportunities. • Reduction of Waste • Lean: Overproduction, Waiting, Extra Processing, Transportation, Inventory, Motion, Defects. • TQM: Reduce Chronic Waste. • Pareto Principle (80-20 Rule) • 80 percent of results are attributed to 20 percent of causes. • * Dr. Kiran Garimella

  16. Example – Enterprise Tier • Out of control processes and high variance. • Analyze using enterprise CPI methodology. • Can eCommerce contribute?

  17. Example – Enterprise Tier • eCommerce can decrease all of these variances. • Implement eCom Orders to reduce defects in order entry. • Implement eCom Orders to interact with ERP system to perform part number and pricing checks. • Implement eCom Advance Ship Notice to reduce extra processing waste in receiving. • Implement eCom suite of signals to manage high transaction count in VMI agreements thus reversing rising OTD trend. • Organizational CPI team verifies that a process contains high degree of variance. • Could be related to human error. • Defects in manual order entry (Defects). • Could be related to waste. • Check customer part number and pricing (Process Waste). • Customer, Supplier, or Enterprise in receiving dock spending hours upon hours performing manual receipts (Extra Processing Waste). • Cycle time such as On Time Delivery (OTD) has increased. • Order Entry, Inventory Control and Shipping staff burdened due to recent implementation of Vendor Managed Inventory (VMI) agreements.

  18. Summary • IMMM can provide a framework to demonstrate the concrete business value of eCommerce and integration IT activities. • Understand “what to measure” based on an organizations process maturity. • Answer the questions: • Who (Population). • What (Standards). • How (Measurement Methodology). • Why (Demonstrate the business value of eCommerce and Integration IT activities). • Data Driven Conversations.

  19. Questions?

  20. References and Resources • “The Power of Process: Unleashing the Source of Competitive Advantage” • Kiran Garimella, Ph.D. • “APICS Dictionary” • APICS • “Managerial Accounting” • Wegandt/Kieso/Kimmel • Lean Enterprise Institute (Jim Womack) • www.lean.org • SCOR Model 8.0 • www.supply-chain.org • International Organization for Standardization (ISO) • www.iso.org • Object Management Group (OMG) • www.omg.org • Dilbert • www.dilbert.com

  21. Addendum 1: Labor Required for IMMM Enterprise Department Integration Measurement Maturity User Process Maturity

  22. Addendum 2: Software Required for IMMM Enterprise Department Integration Measurement Maturity User Process Maturity

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