Today, the supply chain can be a strategic differentiator for electronics OEMs, rather than just a cost center. Siemens is embracing this new reality in its Digital Factory (DF) Division.
Siemens DF is both an electronics OEM and has electronics OEMs as customers. The company provides hardware and software to manufacturing companies worldwide with an aim to help make manufacturing processes flexible and efficient and reduce time to market for products.
We sat down with Gia-Thi Nguyen, global process management/project manager at Siemens to talk about the company’s supply chain journey and what others might learn from it. He has been tasked with leading Siemen’s digital transformation program called “Order Management for Tomorrow.” Nguyen is passionate about digital transformation initiatives and the impact of Industry 4.0 on today’s enterprises.
EBN: Can we please share some insight on some best practices Siemens implements in terms of running an efficient supply chain?
Nguyen: There is no simple answer when it comes to running an efficient supply chain – especially when it comes to the supply chains of companies that offer a diversified portfolio of products, solutions and services – like Siemens. One thing I think we have exceled at is using our supply chain as a differentiator among our global customers. For example, on the customer-side, we’ve found that when products and services have minimal differentiation in price or function, being able to efficiently confirm delivery as requested, or change the lot size has given Siemens an edge over the competition.
One challenge we often see is that logistics costs can be higher than the actual product itself, so having an efficient supply chain is a must when considering how to manage complex, moving parts. We have recognized that many solutions need engineering and specific customization, which requires the exchange and availability of information and insights along multiple functions from product design, planning, engineering or execution.
EBN: What are the biggest challenges Siemens faces in terms of order to cash supply chain?
Nguyen: In terms of customer facing order to cash challenges, we shape our digital transformation initiatives around end-to-end back office processes to provide the most value-added services to our customers, throughout different regions. Face-to-face interactions will always remain important, but more self-service and automated orders are now more prevalent than ever, but that means additional challenges as well. When it’s not required to have a direct conversation with customers in order for them to place an order, structure and content of data must be correct.
Having electronic orders is just a prerequisite, processing them automatically across all different ERP systems is the key. Doing that with thousands of customers and suppliers who do not want to be hassled into cumbersome IT projects with Siemens and their other partners to have specific IT interfaces is the real challenge. The urge for standardization to reduce complexity along the supply chain can be tricky: why should everyone change just for you? Therefore, as no global standard currently exists in the exchange of trade information that is also flexible enough for corporate processes, the focus is not on reducing complexity but mastering any complexity thrown at you.
EBN: What are some of the key strategies or initiatives that you’ve put into place to address these concerns?
Nguyen: We’ve implemented new digital business platforms that address the entire customer journey. This includes innovative technologies such as global MDM that incorporates the digital life cycle of all relevant information from R&D, production, sales or logistics, as well as platforms where you can configure and checkout just like on a B2C ecommerce site – with the obvious differences that come along in the B2B realm.
However, I would highlight the growing importance of process mining. Nearly everyone agrees that transparency is important. However, implementing transparency must be quick and should not cost a lot in terms of time and resources. On another note, the transparency must be used and easily understood by anyone in the organization: the ones on the “front line” or in the boardroom. Transparency in the form of monthly reports is still important, but with process mining we have actual processes that can be interactively visualized and analyzed on the spot, both on daily basis and in a matter of seconds. When you have discussions of defining KPIs that need to be implemented across the organization in multiple IT systems, often times months and years may have passed. When using Celonis process mining, the amount of data is correlated and automatically yields a great number of metrics. The advantage is that this data is factual and irrefutable as no conversion, mapping or translation is done.
Before using Celonis, Siemens was not able to see which specific manual activities were the most frequent on a global scale, by countries, by customers, or by portfolio. Furthermore, unlike traditional queries, with process mining, the parameters of the analysis can be chosen by anyone within the organization to meet his or her needs on the fly without prior customization. Our process mining tool O2C Monitor is rolled out globally within our corporation across all divisions. Process mining gives Siemens access to a standardized tool that provides the flexibility needed across the organization to gain insights into how business processes across departments are operating.
Using the technology, we have seen immediate transparency ‘out of the box.’ This has given Siemens the ability to change internal back-end processes to add more value for our customers through improved lead times. Our digital transformation strategy has come a long way here – from order managers being “typewriters,” to working in highly automated systems only handling exceptions. Now, we are taking the next step by enabling our back-end processes to become more data-driven to increase customer proximity and satisfaction.
EBN: What are the goals that Siemens has in terms of achieving overall excellence?
Nguyen: For Siemens, order to cash is always at least a two-layer process, with not only multiple interfaces to customers, but to regional companies and headquarter locations as well. Siemens has a vision of ‘zero touch,’ which begins with order entry from the customer and goes until the cash collection within the order processing/fulfillment areas in our regional companies. The Celonis framework helps us depict this process along three dimensions: automation, rework and cycle time. With Celonis process mining, we have been able to use these ready-available metrics and define a new global KPI around it which we have called “Digital FIT Rate” and incorporated into our order to cash solution. This KPI is helping us to track our progress towards ‘zero touch’ and we have made tremendous progress already in the first months after introducing this new KPI.
— Hailey Lynne McKeefry, Editor in Chief, EBN