Why industry cannot afford to ignore BPM

BUSINESS Process Management (BPM) allows a business to grow even in tough times.

BUSINESS Process Management (BPM) allows a business to grow even in tough times. However, most small manufacturers fail to understand that BPM, and initiating effective business processes, is extremely important and perhaps even critical for smaller manufacturers.

BPM solutions enable manufacturing companies to do ‘more with less’ through well-managed business processes. We see that many companies have adopted BPM solutions and have achieved great results. But we also find that typical users of BPM solutions tend to be medium to large sized businesses.

Too often the smaller manufacturer takes the view that, “It’s too expensive and too complicated for my business”. “Why do I want BPM? Accounting is all I need”.

The main concern of any manufacturing business owner is the cost of the technology vs. the ROI of the technology.

Small manufacturers certainly worry about customers and cash flow more than they do IT system upgrades. Their view is that as long as the PCs are running okay and the accounting software keeps financial records, their business is on track.

However, as a business grows, issues start to appear: the more customers you have, the more administration work is created. So you need more staff to keep more records and ensure everything matches. As a result, operational costs go up much faster than profits. The owner then realises that the business is stuck with a situation – more customers, but less profit: The business has outgrown its processes and operating procedures.

Without integrated processes in the business system, smaller manufacturers lose their competitiveness as well as the potential for growth and expansion. And as the popularity of BPM increases, so does the level of competitiveness from those manufacturers, large and small, that have adopted technology that can reduce the manufacturing process cycle.

The advantages of BPM for manufacturers are obvious – it maxmises productivity and profitability with minimum resources by putting system processes in place and ensuring information flows within the business.

In contrast to the rich human resources and centralised information systems that most big manufacturers can draw upon, smaller operators have limited non-production staff resources and sometimes isolated data in different systems.

These ‘admin’ people have to spend hours keying customer orders into one system and updating contact details in another. So quite often, owners find that employees ‘waste’ time on consolidating and correcting important information.

Having streamlined and automated processes, manufacturing businesses are able to free non-production employees from tedious admin tasks and make better use of their time and skills. It not only slashes the unnecessary time on admin work, but also helps elevate motivation and performance.

A centralised system reduces human error and keeps information up to date at all times. Everyone in the business can browse the job status at any time, be aware of next steps and know who is responsible for what. When a customer rings, anyone can pick up the call and provide accurate information.

Apart from improving customer satisfaction, BPM also provides manufacturing companies with great visibility into business workflow – owners are able to get real-time information, monitor production and respond quickly to business opportunities. In fact, being flexible and adaptive is one of the advantages smaller manufacturers have to win business against larger competitors.

Despite the benefits of BPM, in reality, manufacturers rarely take into account business processes when using their business management software or assessing new software. Often it is assumed that process driven business software is simply not affordable for small manufacturing businesses.

It is true that the upfront cost and licensing of BPM solutions can be more expensive than standard accounting software. However, accounting software is unable to provide the level of transparency and process management offered by a BPM solution.

Manufacturers are advised to look at the long term ROI and the potential for business growth that BPM provides. A good BPM system can handle far more requests from customers, more efficiently and with less staff. It gives business owners peace of mind when opportunities arise and they are confident that they can grasp the opportunity and grow the business instead of worrying about having limited resources.

To take advantage of this new technology, manufacturers should find a solution that integrates the process with accounting and build the business on a single platform. It will provide them with a competitive edge in a tough economy.

* Paul Berger is MD of Australian-owned business software company Happen Business www.happen.biz

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