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What are the real time applications of process mining?
According to The Process Optimization Report, 83% of business leaders see processes as their greatest lever for value and their fastest lever for change. But visualizing and optimizing those processes can be a challenge. Which is why a growing number of organizations are turning to process mining to unlock the actionable insights required for successful business transformation.
Gartner’s Magic Quadrant™ for Process Mining Tools report suggests that by 2025 as much as 80% of businesses will embed process mining capabilities in at least 10% of their business operations.
A process mining tool uses event log data from source systems (e.g., ERP, CRM, HCM, even desktops) to build a high definition picture of how an organization’s processes run. This event data provides an objective visualization of how processes operate in practice, not in theory. Process mining solutions enable an organization to:
Map the process flow and identify and address inefficient processes
Discover and capture hidden value opportunities
Quantify the value of (and therefore prioritize) process improvement initiatives
Target, deploy and monitor process automation such as robotic process automation (RPA)
Measure the impact of process improvements
Monitor ongoing process efficiency and establish an automated situational awareness that detects and addresses process anomalies
Provide the valuable insights to feed and train AI solutions that move beyond traditional process mining
As Gartner’s report summarizes: “Process mining tools deliver visibility and insights to technology innovation leaders that enable smart decision making and strong performance on an organization’s critical priorities.”
So when will you use process mining, and how is it being used as part of business process management on a day-to-day basis? The answer is almost everywhere. Every business process has multiple constituent parts and organizations are using process mining to enhance almost every business function you can think of. Here are some of the most typical applications.
Finance
Process mining techniques offer a range of opportunities to uncover untapped value in finance or accounting processes, from improving cash flow and reducing costs to driving productivity and minimizing errors.
Accounts Payable
Timely payments are critical to cash-flow. Process analysis and process management can be used to centralize and prioritize open invoices, resolving any payment blocks to ensure on-time payments.
To maximize days payable outstanding (DPO), however, payment term mismatches between the PO, invoice, and vendor master data can be automatically flagged to ensure payments aren’t actioned earlier than necessary. Similarly, the Celonis system uses process mining data and machine learning algorithms to detect duplicate invoices and prevent duplicate payments.
Process intelligence also helps identify and eliminate unnecessary manual, error-prone steps in the invoicing cycle – measuring process performance and highlighting opportunities for process optimization or automation, and maximizing the volume of touchless invoices (where no manual intervention is required). An optimized invoicing cycle also ensures higher cash discount realization – ensuring negotiated supplier discounts are never missed due to blocked invoices.
Learn more about our purpose-built Accounts Payable apps, including the Duplicate Checking App, Invoice Ingestion App, Parked & Blocked Invoices App, and the Currency Checker App.
Read more: What is Accounts Payable? The process, business objectives and KPIs that matter
Customer success story: GE Healthcare
A global leader in medical technology, GE Healthcare increased free cash flow by $1.3 billion in a single year by leveraging Celonis’ process mining solution. In a series of continual, bottom-up, data-driven process improvements, GE Healthcare used Celonis to help identify value opportunities in its day-to-day operations and unlock working capital.
Accounts Receivable
Process mining in AR supercharges on-time payments processes relating to the reduction of past due debt. Data-driven insights enable greater understanding of outstanding customer balances and help to determine who AR teams should focus on when addressing problem underpayments.
Much like touchless invoices in accounts payable, process mining technology can be used to streamline processes for touchless collections – particularly in terms of uniting sales and shipment data in a single place and using the insights to automate manual, potentially error-prone steps.
And with all favorable customer payment terms captured by process mining, no invoices are incorrectly coded. Changes can be flagged – particularly any deviations from protocol – and master data can be proactively checked and changed.
Process intelligence insights can even be used to enhance credit utilization, drawing on captured customer credit behaviors to assess risk. This leads to quicker, data-informed credit decisions and, with automations, a faster approvals process.
Learn more about our purpose-built Accounts Receivable apps, including the Collections App, Disputes app, and the Credit App.
Read more: What is Accounts Receivable? The process, KPIs and metrics that matter
Customer success story: PepsiCo
Celonis enabled PepsiCo to unlock millions in accounts receivable by optimizing its billing and collections processes. Process mining insights highlighted that improvements to its Days Sales Outstanding (DSO) would deliver the greatest returns, and identified specific actions to accelerate customer collections.
Procurement
Often process driving a key business activity isn't a single process at all, it's a series of interconnected processes and tasks. For example, fragmented contract data spread across multiple (often siloed) systems can create a lot of extra manual work for procurement professionals. At the same time it compromises their ability to manage supplier relationships successfully, to maximize company purchasing power, and to de-risk supply chains. Process mining can offset or eliminate these burdens.
Maximizing return on spend under management (SUM) by optimizing contract usage and reducing contract leakage is a good example. Ensuring the correct contract terms are applied to every purchase requisition and purchase order, for example, is far simpler with a clear process map and contract data unified in a single system. Requisitions without contracts are detected, and have the correct contract automatically applied.
Inaccurate supplier lead time data can cause production delays and expensive last-minute sourcing (procurement fire-fighting). But with a process model visualizing accurate as-is operational data, organizations have a clear picture of true lead times. With this insight, corrections to master data can be implemented and supplier on-time delivery performance challenged.
Using the valuable insights from Celonis process mining, procurement professionals can streamline order processes by removing manual steps that add no value, increasing the volume of touchless orders.
Processing free-text orders tends to be manual and inefficient, forcing procurement teams to sift through contracts, vendors, catalogs and to ensure purchase orders are correct. With free-text analytics, however, free text requisitions can often be matched to catalog items, increasing catalog usage, productivity, and process efficiency.
Learn more about our purpose-built Open PR Processing AppRead more: What is Procurement? The process and KPIs that matter
Customer success story: The State of Oklahoma
In 2022, the State of Oklahoma’s agencies spent $3 billion of taxpayers' money without oversight due to a complex procurement process that lacked transparency. Celonis provided Oklahoma’s Office of Management and Enterprise Services (OMES), an end-to-end digital twin of their procurement process. The benefits of this process mining capability are jaw-dropping. OMES’ auditing process is now 200x more efficient and $11.4 million less expensive. It has identified over $174 million in potential savings through better contract usage and cut its procurement cycle time by 64 days.
Supply Chain Management
When it comes to material availability and excess inventory, supply chain professionals are constantly challenged with finding a ‘Goldilocks zone’ (not too little, not too much) for their organizations. Current levels of volatility in both supply chains and consumer demand make this exceptionally difficult.
On the one hand, maintaining a safety stock level is essential to safeguard customer supply. On the other, having too much stock or production materials is costly in terms of storage, transportation and excess inventory write-offs. Process mining insights enable organizations to monitor consumption trends and supplier lead time data in real time. This analysis ensures they can maintain optimal levels of inventory at all times, and that future materials orders provide sufficient days of cover.
Similarly, boosting on-time in-full (OTIF) deliveries means knowing which material shortages will have the greatest impact on other products and service levels. Process data analysis can prioritize materials in this way, determining which materials are most important to maintaining customer orders.
Excess inventory can also be a function of a slow turnover rate. The end-to-end view of cross functional, business-wide processes provided by process mining – seeing the actual process in action not in theory – enables supply chain professionals to identify drivers of slow turnover (such as over-supply of materials to a particular region).
Learn more about our purpose-built Inventory Management apps, including the Material Shortages app, Control Center app, and the Master Data Improvement app.
Read more: 6 ways to manage material shortages the smart way and meet supply chain SLAs
Customer success story: Freudenberg
German sealing specialist Freudenberg FST describes its interactions with Celonis as a “huge game changer” by introducing real-time transparency into its global supply chain. This was particularly vital in managing supply chain disruptions during COVID-19. Process mining technology has enabled Freudenberg to quickly identify supplier delays, inventory levels, and production bottlenecks. This means it can make faster decisions to mitigate shortages, reduce liability risks and costs, and provide more accurate information to customers.
Customer Service
Here, there is often a blurring of functional lines as so many of the processes impacting customer experience also intersect with supply chain management and even finance. What follows, therefore, are examples of how process discovery and optimization can be employed to target customer experience improvements holistically – while typically also delivering efficiency or financial benefits.
Ensuring on-time delivery is fulfillment of an organization’s promise to its customers. Late deliveries can stem from a number of anomalies in the existing process, from single-item stock outs on multi-item orders or unanticipated supply shortages, to outdated delivery lead time master data or protracted processes for addressing blocked orders.
Process insights can highlight the common causes of delayed deliveries. They can also reveal each of the contributing process inefficiencies, and deliver appropriate solutions (from updating master data lists to triggering automations that split deliveries rather than delay them).
Similarly, late or inaccurately fulfilled orders are major drivers of product rejections and returns (plus associated customer dissatisfaction). Analysis of throughput, returns or cancellation data can help pinpoint and address the root causes of the fulfillment failures (inadequate inventory replenishment processes, for example). This avoids similar customer disappointments in the future.
Some product returns are inevitable. Customers change their minds, they deliberately order multiple variations of products with the intention of keeping only one, they buy duplicate gifts…there are many variations of this familiar story. Optimizing returns is now a standard business process and returns are an accepted part of the circular economy, with customers expecting a simple, low touch returns process.
Process mining solutions can analyze live return processes to identify bottlenecks and customer pain points, such as long lag times between return request submissions and receipt of a return merchandise authorization (RMA) number. With this insight, companies can, again, pinpoint and streamline the process glitches to provide a more positive experience for customers.
Learn more about our purpose-built Order Management apps, including the Open Order Processing app and the Shipped Not Invoiced app.
Read more: 7 Ways to Improve Your Delivery Performance with Celonis
Customer success story: Johnson & Johnson
Johnson & Johnson established a global Process Mining Center of Excellence using Celonis software to create analysis templates that provide teams with a clear starting point to rapidly see value. These templates enable a “crawl, walk, run” methodology where teams can easily start deriving insights, customize analysis for their needs, then drive widespread process improvements. The iterative approach has delivered significant benefits globally, including a 30% touch time reduction and 40% price change decrease in Latin America from optimized delivery processes.
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