APQC research has shown that the average days sales outstanding is 25 days for top performers and 58 days for bottom performers.
A poor-performing order-to-cash process impacts an organization’s ability to optimize cash flow, thus restricting access to valuable capital. Many organizations wrestle with understanding the impact poor-performing order-to-cash processes have on their businesses.
Benchmark your processes at no cost through our OSBC revenue accounting research initiative, and receive a customized report that will help you identify cost-reduction and cycle-time improvement opportunities that can free captial for your organization.
Thursday, September 27, 2007
OSBC Snapshot: Order-to-Cash
The Sustainability/BPM Connection by Becki Hack
When I read the introduction and executive summary of APQC's Business Process Management, I picture an organization as a "whole system" that must consider interdependencies or "connectivity" among not only organizational functions/processes but also suppliers and customers. And work is viewed as "a series of interrelated activities, which converts inputs into outcomes (results)."
Now, take a couple steps back to a larger picture. This sub-system of "work" (the business/organization) is only one part of a larger economic system, which is part of a larger social system, which is part of a larger ecosystem (our planet), which is part of a larger system (universe)...You get the picture.
"Sustainability" is really about this bigger "whole system" perspective of the interdependencies and connectivity among healthy business/economies, society, and ecosystems on Earth. And, just like with any BPM initiative, competing priorities and goals among "the parts" (the sub-systems) must be balanced and resolved given the ultimate objectives of "the whole." Just as Air Products says "One Company" and expects all its businesses to align their individual wants/needs/practices with the ultimate corporate objectives/abilities, we humans must also align our business/economic and societal wants/needs/actions with the ultimate objectives/abilities of life on Earth.
Thinking of BPM's view of work as a conversion process, sustainability within the business context requires businesses to first minimize the impact of that conversion process on the front and back end (like Lean for the bigger picture) as well as ultimately find a way to move beyond "compliance" mentality to a proactive, collaborative, and regenerative approach to more sustainable business practices that are promoted through the free market.
This can all seem overwhelming, but as with any improvement approach, we've got to start somewhere. Below are a few resources I recommend as a starting place to get a good foundation and a greater understanding of "the big picture."
Natural Capitalism: Creating the Next Industrial Revolution
Paul Hawkins, Amory Lovins, L. Hunter Lovins
Green to Gold: How Smart Companies Use Environmental Strategy to Innovate, Create Value, and Build Competitive Advantage
Daniel C. Esty and Andrew S. Winston
Leading Change Toward Sustainability: A Change-Management Guide for Business, Government and Civil Society
Bob Doppelt
Organizational Change for Corporate Sustainability 2nd edition: A guide for leaders and change agents of the future
Dunphy/Griffith
See L. Hunter Lovins speak at APQC's conference "The Road to Sustainability."
Wednesday, September 19, 2007
Next-Gen KM
The language of Web 2.0 sounds a little strange. Stranger still is the idea of using the words blog and wiki in boardroom meetings. Yet organizations around the world are finding that these and other applications and social networking tools are enabling new levels of collaboration and knowledge work.
Now that workers are accustomed to searching for quick-reference information in their social lives, bringing the same technologies to the workplace to encourage knowledge sharing is suddenly a natural fit. Yet, like always, the solution is not the technology itself; rather, it is identifying the appropriate technologies to enable and enhance the type of knowledge sharing best suited to your organization.
Our current consortium study, The Role of Evolving Technologies: Accelerating Collaboration and Knowledge Transfer is taking a look at how some of the most successful knowledge-sharing organizations have leveraged new technology to enrich the quality of work worldwide. Along with the traditional key findings and case studies, the research team will also produce "technology profiles" that describe how these organizations have adapted blogs, wikis, etc. for specific use.
Lending their expertise to this study are internal senior KM adviser Jim Lee and APQC President and KM thought leader Carla O'Dell.
Visit our official site to learn more about this study and review the proposal. Interested in joining the consortium? Contact project lead Gerry Swift.
What Is OSBC Benchmarking?
APQC was founded upon the belief that sharing best practices benefits all organizations and paves the way for breakthrough innovations. We think of it as worldwide continuous improvement. The Open Standards Benchmarking Collaborative (OSBC) takes that thinking to the next level by providing free access to top-notch performance metrics.
So what are open standards? Simply put, they are universal definitions of core business processes, allowing seemingly dissimliar organizations to learn from one another at a process level. Our open standards are based on the Process Classification Framework, APQC's industry-neutral process taxonomy.
The Open Standards Benchmarking Collaborative provides an opportunity to compare your organization's process performance to that of others. Simply fill out a survey with your process data, and you will receive a custom report that compares your organization against our database and also includes comparisons against industry, regional, and size-by-revenue peers. These results are provided at no cost.
Why would we give away hundreds of thousands of dollars' worth of metrics for free? APQC is a nonprofit organization, and we're dedicated to improving the productivity and quality of work around the world. The more organizations that participate in our research, the better we're able to fulfill our mission of disseminating best practices.
What kinds of processes does OSBC benchmark? We have a number of surveys within the human capital management, financial management, information technology, innovation, knowledge management, product development, and supply chain process areas. You are welcome to submit as many surveys as you'd like--you'll receive a custom report for each. You can even use OSBC for no-cost internal benchmarking; just have individual business units complete the same survey, and their reports will include the internal comparisons.
Learn more about OSBC research and visit the official OSBC FAQ.
Monday, September 17, 2007
What Is Consortium Benchmarking?
Plan, Collect, Analyze, Adapt.
The four phases of APQC's award-winning benchmarking model result in rich quantitative data as well as in-depth qualitative case studies. Though your organization can undertake its own benchmarking project at any time, you'll find that when it comes to time, cost, and quality, there's strength in numbers.
APQC gathers together a group of organizations that are interested in benchmarking a specific topic. We use input from these organizations (the study sponsors) to design our data-gathering tools--the detailed questionnaire, a metric survey of performance and practices, and the site visit guide, a list of qualitative questions to be answered by organizations with world-class performance in the study area. These exemplars are known as best-practice partners.
Best-practice partner candidates are nominated by APQC (based on secondary research and firsthand experiences) and the study sponsors. We then contact and screen the candidates to determine which organizations have the best qualifications and are willing to participate. Study sponsors then select five organizations to be studied as best-practice partners.
Over the course of approximately two months, best-practice partners host site visits (whether in person or via Web conference) wherein they explain their successful practices and share their lessons learned. After the site visits, the APQC team records the information in the form of case studies.
During this time, partners and sponsors are also completing the detailed questionnaire and submitting their responses to the APQC team.
APQC, in partnership with external subject matter experts, analyzes both the metric and qualitative data to produce key findings (best practices). At the study-concluding knowledge transfer session, participants receive a copy of the final report and enjoy presentations from subject matter experts and best-practice partners.
Many particpants report that the greatest value of consortium benchmarking is the ability to network with and learn from other professionals who face the same challenges within their organizations.
Learn more about our current consortium studies.
Friday, September 14, 2007
What Is the PCF?
The Process Classification Framework (PCF) is one of APQC's points of pride. As you may have often heard, benchmarking requires "apples-to-apples" comparisons; the PCF is how APQC ensures we're providing just that.
As an industry-neutral process taxonomy, the PCF lets organizations of all stripes compare performance in key areas. It is a living document molded by input from organizations in all industries and sectors. Learn how the PCF can benefit your organization, in the words of PCF steward John Tesmer.I love learning how people and companies do business around the world. Industry, regional, and even political factors influence business, but there is one central theme: the Process Classification Framework. It translates the intricate operations of individual organizations into a universal language that enables universal growth.
Working with the PCF gives me the opportunity to see exactly how people and companies are using the it in their businesses. I see where it matches up with what they already do, where it doesn’t, and how it can be made more relevant.
This vantage point is helpful at APQC--We use feedback from customers and PCF users to guide research and service offerings. Much of what we do ends up back in the hands of the people who use the PCF; the cycle improves quality and productivity around the world, from the smallest local company to the largest multi-national corporation. I’m excited about the PCF because its open standard is the future of business.
As John says, the PCF is the foundation for much of APQC's research. Learn more about the PCF and download your complimentary copy.
Questions about the PCF? E-mail John Tesmer.
Ready to start benchmarking your processes? Check out our Open Standards Benchmarking Collaborative metric research.
Thursday, September 13, 2007
Share Your Sustainability Successes
It hardly needs to be said that sustainability, the triple bottom line, and other corporate responsibility concerns are cropping up on strategic priority lists across the globe. Sustainability is a concern universal among industries and business sectors. But in an arena in which so many of us are recent entrants, how can we be sure of the best tacks to take?
Fortunately, APQC has a 30-year history of helping organizations learn from one another in emerging focus areas. Our upcoming winter conference (Feb. 5-8, 2008) is designed to help organizations share their successes in sustainability and other corporate responsibility initiatives. Even if you're not yet a sustainability all-star, we invite you to share the story of your organization's journey on "The Road to Sustainability."
Learn more about our sustainability conference and submit an abstract to present.
Can't make it to the conference? Share your story with APQC Pulse.
The Impact of the Index by Matt Gersper and Marisa Brown
Imagine that your organization has the ability to precisely measure performance in major handoffs within your international supply chain. How many orders would you expect to see processed seamlessly through each handoff? The answer may be significantly fewer than you think.
Imagine that once a purchase order is created, your systems can track the frequency with which:
Further, imagine that your company-wide performance across all eight of these major supply chain activities averaged 80 percent—in other words, 80 percent of the time, the activity was completed on time and according to expectations set by your company. Though 80 percent may seem acceptable, the result of this level of performance across 10,000 transactions would be only 1,678 transactions completed according to your expectations. The remaining 8,322 would incur one or more problems, slowing the transaction and shrinking your bottom line with unintended costs.
How does 80 percent on time and complete become just 16.78 percent? The answer lies in the Supply Chain Performance Index. The cumulative effect of error rates is illustrated by the following formula:
80% * 80% * 80% * 80% * 80% * 80% * 80% * 80% = 16.78%
Unfortunately, real-world error rates can be much greater than 20 percent: A June 2007 article by Global Economy magazine reports that “in the first quarter of 2007, only 47% of container vessels globally arrived at the ports on time, the lowest level on record.”
When we insert this data into the index we just discussed, the level of performance across 10,000 transactions drops to just 9.65 percent on time and complete. More than 90 percent or 9,000 shipments would be hampered by a problem or problems at one or more handoff points:
80% * 80% * 80% * 47% * 80% * 80% * 80% * 80% = 9.65%
What could possibly cause such poor performance? As can be expected, the problem lies in the global nature of the process: Each stakeholder is acting independently, with incomplete information. Their decisions are motivated by self-interest because they cannot see (and therefore cannot make) their decisions in the context of a global process. Adding to this fundamental problem of perspective are other communication failures: cultural differences, industry jargon, lack of importer-set standards and expectations, etc. Inefficient supply chains cost corporations millions of dollars in hidden costs, severely impacting company profits.
The Future of Measurement
Financial opportunity abounds for international supply chains that effectively manage the proliferation of Free Trade Agreements, improve sourcing options, and implement new supply chain finance programs for international suppliers. In CFO’s Agenda for Global Trade Benchmark Report, Beth Enslow of AberdeenGroup concludes, “A $1 billion company can free $10 million to $40 million in cash by better controlling its basic global trade processes.” GDM recently collaborated with Enslow, a leading industry analyst, on an extensive data mining project for the International Compliance Professionals Association (ICPA). The project examined the operations of five Fortune 500 companies and identified more than $500 million in potential savings. How large is the opportunity for your company?
To learn more about global trade benchmarking, contact Matt Gersper of Global Data Mining or Marisa Brown of APQC.
Meet Our Members: August
August brought us three new members: Air Force Operational Test & Evaluation Center (AFOTEC), Foster's Group, and NexGen Advisors. Learn more about these great companies and the best practices they have to share.
Air Force Operational Test & Evaluation Center
Web site: www.afotec.af.mil
Mission: AFOTEC tests and evaluates new weapon systems in realistic battlespace environments to provide decision makers accurate, balanced, and complete assessments of mission capability. From concept development to system finding, we maintain an operational focus to ensure our warfighters have the right tools to win tomorrow's battles.
What We Do Well:
What We Want to Learn:
Interested in networking with AFOTEC? Contact APQC relationship manager Suzi Bruin.
Foster's Group
Web site: www.fostersgroup.com
Vision: Our vision at Foster's is to be a great drinks company - first choice for consumers, customers, investors and our people.
What We Do Well:
What We Want to Learn:
Interested in networking with Foster's Group? Contact APQC relationship manager Charles Nevels.
NexGen Advisors
Web site: www.nexgenadvisorsllc.com
Mission: NexGen is dedicated to delivering and implementing solutions that add extraordinary value in a matter consistent with our clients' core values and goals.
What We Do Well:
What We Want to Learn:
Interested in networking with NexGen Advisors? Contact APQC relationship manager Lisa Kulikovskis.
How Does Your Organization Innovate?
We worked with IBM and Innosight to find out how to help our member companies innovate more effectively. A survey of 90 companies revealed distinct innovation archetypes. Learning your organization's archetype will help you figure out how to facilitate innovation within your corporate culture--and how to avoid wasting time and money on failed initiatives. Check out "Innovating on your own terms" in our Knowledge Base to find out your organization's innovation style.
You can also benchmark your organization's innovation processes against those of others through our OSBC metric research.
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