Since this is my first post in 2012, let me start off by wishing everyone a Happy New Year! As you know from Ambica’s post last week , The Operations Council is kicking off 2012 with a topic that members have struggled with for years, value chain management. When we polled the membership last year, only 3% of the membership felt they were effective at managing end-to-end processes (yes, only 3%). Troubling to say the least.
It’s especially troubling because it turns out institutions that manage end to end processes effectively grow revenue 42% faster than ineffective institutions and are 28% more effective at improving process efficiency. One of the differentiating characteristics between effective institutions and ineffective institutions is the use of enterprise level performance metrics. It’s critical to track performance end-to-end rather than siloed operational metrics. As one member once said, “An end-to-end process is only as good as its weakest step, so improvement initiatives provide more sustainable benefits if they address the overall value chain.”
That’s why we like the best practice we profiled from an institution we call Clements Bank. Clements takes a three pronged approach to addressing the overall value chain. They:
- Identify key criteria and questions to measure end-to-end process maturity
- Create teams to perform in-depth process maturity audits and develop action steps for processes with low maturity scores
- Establish governance structures to oversee end-to-end process improvement initiatives The case illustrates an important point… fixing one small part of a large, complex process can make that entire process much more efficient.