Dr. Gerken, what challenges are companies currently facing in terms of supply chain management?
Dr. Gerken: Recent developments illustrate how important efficient supply chain management really is - for example, shorter product cycles, the reduction in vertical integration and the tendency to outsource more and more production steps are leading to greater dependence on external suppliers and service providers. And this is happening across national borders, because as globalization progresses, the increasingly international exchange of goods and commodities has long been part of day-to-day business. The more different suppliers, business partners, subcontractors and other parties involved have to be coordinated, the more difficult it becomes to manage all material and information flows effectively and to provide the required material and human resources at every point in the supply chain in the right quantities. Consequently, setting up and managing a supply chain is a complex process in which a large number of decisions can be made in a short space of time on the basis of large amounts of information. The consequences of wrong decisions are enormous - all the evaluation criteria that are crucial for companies, such as product quality, delivery reliability and delivery capability, as well as the competitive price of products, depend on a functioning supply chain.

What irregularities reduce performance along the supply chain?
Dr. Gerken: External disruptive factors such as weather and natural disasters or short-term delivery problems at suppliers are of course difficult to prevent. It is more interesting for companies to take a look at internal processes. Anyone who keeps an eye on machine utilization, employee resources and information management in addition to classic supply chain issues such as material requirements planning and quickly identifies deviations from standard processes, unnecessary process steps, incorrect planning or delays has the opportunity to sustainably improve the performance of their supply chain.

And how can irregularities in the supply chain be detected?
Dr. Gerken: The analysis of a supply chain is normally based on the ERP system used in the company - usually SAP - as this is where all the key data comes together. Classic analysis tools offer functional reporting of the most important logistics KPIs. For example, delivery reliability, delivery capability, inventory turnover, turnover and profit can be viewed on a department and material-specific basis.

However, this is precisely where the limitations of conventional BI tools lie. They only ever analyze individual parts of the SCM chain. They do not show what the process-related context looks like, for example how it affects the entire production process if delays occur in different plants or at different stages of production. This is precisely where the greatest benefit for a company lies. As in medical diagnostics, the greatest possible transparency is the key and at the same time the absolute prerequisite for identifying functional faults and subsequently developing solutions. With process mining, a big data analytics technology, this is exactly what is possible: the analysis of all process data in real time provides companies with a cross-process overview of the entire supply chain and possible optimization potential.

Process Mining visualizes processes end-to-end and in real time. This gives users a transparent view of logistics processes.

© Celonis SE

Where or how do you differentiate process mining from the general term 'big data'?
Dr. Gerken: Process mining is a form of process management that, unlike traditional analysis methods, does not simply model business processes but identifies and visualizes them in detail. This works because all processes along the supply chain are now IT-supported and leave behind data traces. Process mining therefore makes use of the large amounts of data generated in the company to generate real added value in the form of detailed process visualization.

For example, when a department initiates an order for raw materials from a supplier, this leaves a time stamp in the system. More of these time stamps follow when the order is received by the supplier, when the material is delivered to the plant, when it is sorted into the warehouse and so on. All this data is stored in the ERP system. The process mining technology accesses the databases of the corresponding systems and provides a complete overview of all process sequences by evaluating even the largest data volumes in the terabyte range. In this way, deviations from the standard process can be detected reliably and, above all, exploratively, without being suspected beforehand. The user simply logs into our software and can use various filters to zoom into the detected deviations down to document level in order to see which individual cases have led to a detected process deviation.

How does the implementation work? Is a lot of work still needed to integrate the data from different systems?
Dr. Gerken: Process mining can be used on almost any standard IT system. A company or business unit often uses several different systems that are all involved in one process. Process Mining brings together the individual process steps stored in the individual systems and then visualizes the process as a whole. The software can be implemented easily within a few weeks. Proven APIs1) are available for many of the standard systems, which enable straightforward implementation of Celonis' process mining technology. Interfaces for specific systems can be provided individually and within a few days directly at the customer's site.

What weak points can be detected with this?
Dr. Gerken: What many users initially find interesting is the visualization of their throughput times between the various process steps, which then add up to the total runtime of a process. For example, a late delivery to a customer is normally noticed immediately. However, if an order is only delivered on time because the final production steps were brought forward after the raw materials had to wait too long in the incoming goods department for stock to be taken, this usually remains hidden. Process mining, on the other hand, would make this unnecessary process deviation immediately visible. The same applies to the design of transport routes. Sometimes machine parts are flown halfway around the world for a few work steps that need to be completed - only those who are aware of this can optimize routes or relocate production branches in order to save costs.

Even an initial pilot usually shows such interesting results when analyzing the process data that in the past more than 80% of companies have decided to adopt the solution in their operations and gradually roll it out further. For example, companies such as Siemens and ABB have been using Celonis Process Mining for many years and have been able to sustainably optimize their supply chain.

What are the specific benefits of using process mining for supply chain management?
Dr. Gerken: Once you have recognized the strategic importance of the technology, it is obvious what enormous savings can be achieved. Process mining is an analysis option that brings transparency to all processes at an unprecedented level of detail - from customer requirements to delivery to the customer. Against this background, convincing sample calculations can be created. If, for example, the inventory turnover rate is improved by several percentage points, this can be directly converted to warehouse costs, meaning that an average medium-sized company can achieve cost savings in the seven-figure range.

Are there other typical areas of application for process mining besides supply chain management?
Dr. Gerken: Of course! Process mining is a fundamental technology and can be used in all sectors, all areas of a company and for all digital processes. The technology is already being used by more than 200 customers from more than fifteen sectors, including Fortune 500 companies such as Siemens, KPMG, Deloitte, Bayer and Vodafone as well as a large number of medium-sized companies. The logistics sector is just one of the many possible areas of application. Many of our customers use the software to optimize their processes in purchasing, human resources or IT service management. Process mining also ensures greater transparency and efficiency in sales, auditing and even production.