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Process Mining Project
Process Mining Project
Consultancy Report
This report has been made in This Report has been compiled by Simona Garabagiu,
Association with Avans Douha Kabbani, Bowie van Etten, Levi Snijders, and
University of Applied Sciences Dylan Sleuwaegen. Final wordcount: 2424
Table of Contents
TABLE OF CONTENTS.......................................................................................................................................1
1. INTRODUCTION................................................................................................................................................2
2. FINDINGS..........................................................................................................................................................2
The relevant execution gap being addressed in this report is thus defined as the inability of
WoodCorp to meet their on-time-delivery-target of 80%. Therefore, this made the research
question: What avenues of on-time delivery improvement can be identified using Celonis process
mining?
Three main avenues of improvement were found for on-time delivery. These are generalized process
improvement (standardization, implementation of controls), the performance per factory, and the
performance per carrier. Ending this report with a conclusion, and recommendations regarding
improvements to be implemented.
2. Findings
2.1. General Process Based Performance
When considering roughly 20.000 cases, WoodCorp has far too many process variants, significantly
affecting their process efficiency and throughput time. The result of 7.692 different variants indicates
a great lack of internal controls and standardized procedures, which in turn lead to a lower on-time
delivery rate that creates significant additional costs. Therefore, it is of primary interest for
Woodcorp to reduce their late deliveries by integrating standard process improvements.
Standardized Processes
A primary improvement entails the integration of standardized process to reduce these undesired
activities. Standardized processes for WoodCorp include employee manuals or automation to reduce
process variants and eliminate counts of undesired activities. WoodCorp should look at the following
undesired activities to enhance process efficiency and improve on time deliveries.
Internal Controls
WoodCorp lacks a high level of internal control. Our analysis focusses on on-time delivery rates and
their respective additional costs, and the volume conformance of production. Even though the costs
of low volume conformance of production cannot be quantified due to lack of information about
unit costs, information about the production conformance to ordered Kg’s could be retrieved after
applying the minimum and maximum order tolerances. WoodCorps average volume conformance to
the ordered Kg’s by customers only reaches 49,35%. Insinuating that in around half of the sales
orders Woodcorp is unable to deliver the ordered amounts, while considering the minimum and
maximum order tolerances. Therefore, WoodCorp should implement additional internal controls to
be able to produce the ordered quantities more accurately.
As WoodCorps on-time delivery rate must increase to 80%, internal controls should be implemented
to become able to reach their desired on-time delivery rate. Some internal controls have already
been discussed in previous chapter. Besides those examples, there is one primary recommendation
to achieve a higher volume conformance and on-time delivery rate; Reconsidering their Push & Pull
Strategy.
What we derive from our analysis is that WoodCorp’s Order to Cash process has been
overcomplicated. Too many process variants create the inability to effectively monitor their process
and create 4 major undesired activities that increase the total throughput time. If WoodCorp were to
When WoodCorp also uses the push strategy, it becomes more difficult to manage inventory levels,
determine prices as the times of procurement may vary in unit costs, and determine the volume that
must be additionally produced as there is existing inventory that needs to be considered when
setting prices. However, regarding the nature of the industry and high-volume production,
WoodCorp should maintain additional inventory to exercise time efficiency regarding delivery dates.
A pull strategy with overproduction has 3 primary benefits;
- Overproduction results in higher volume conformance and increased customer satisfaction.
- Overproduced inventory can be stored and reused for new orders, decreasing total
throughput time resulting in a higher on-time delivery rate.
- Overproduction lowers prices for customers or creates higher profit margins as higher
volume production reduces unit cost.
WoodCorp does need an Inventory Management System to ensure effective inventory control.
Standardized procedures will generate higher process efficiency, and the switch to a Pull strategy
with overproduction for large orders will address on-time delivery for small orders that can be
shipped from inventory and to reduce process throughput time.
The factories have an influence on the delivery process through the time at which they finish
production, and the time at which they hand the products over to the carrier for shipment. These
times should take into consideration the agreements made with the carriers, and the shipping time
required to get the products to the customer. Being a company that ships worldwide, WoodCorp has
had some problems with this, which adds significantly to the late deliveries.
Firstly, late shipments will be discussed. These were defined as cases where, by the time the
products were shipped by the factory, the delivery date had already passed. Celonis showed that
there are 1,605 such cases, where the cost of delay is entirely attributable to the factory. In total,
these cases resulted in an additional cost of delay of 1,922,569.75 EUR.
This problem might be resolved by either party, or both together, as they could cooperate more
closely to better coordinate shipment times on the end of the factory, and delivery times on the end
of the carrier. As shown below, the time between the production finish and the shipment of the
goods was also calculated in Celonis, which clearly shows that the factories have the necessary
(time) margin to assure on time delivery in most cases (excluding extremes).
A decrease in occurrence of 80% in late shipments and on-time shipments with late delivery would
save WoodCorp 13,576,735.88 EUR. This would also be more than enough for them to meet their
80% on-time delivery target.
An additional area of note is volume conformance. The Analysis in Celonis shows that only in 49.35%
of cases, the delivered volume is within the tolerance window of the ordered volume, and to some
extent, this correlates with the time of delivery, as on-time, late, and very late deliveries are the only
type of deliveries to exceed 40% volume conformance, as shown below. The financial impact of this
could however not be calculated with the given dataset.
Finally, order size was explored as a variable, where small orders were defined as those weighing
less than 1000 Kg, medium orders were defined as weighing less than 4000 Kg, and larger orders
were defined as those weighing less than 8000 Kg, with the rest being deemed to be very large
orders. Upon analysis, no matter the size of the order, the On-time rate would fluctuate in the 60-
70% range, though there proved to be a relation with volume conformance, as larger volume orders
showed lower volume conformance.
UPS is the main carrier for Woodcorp Inc. with 90% of total
deliveries and 84% of the total volume. These deliveries are
mainly focused on the European market, but also include
shipments worldwide, for example to the US, China, Japan
and New-Zealand. UPS is also responsible for 90% of late
deliveries or 6,394 cases as shown in figure 3. Being able to
improve the timeliness of the deliveries done with UPS, will
be a big win.
If we can assume that DHL can take over the shipments of UPS with the same on time delivery rate
of 75.46% this would mean that 11.07% of the nearly 18,000 deliveries currently done by UPS will be
on time instead of delayed. Currently UPS delivers 35,61% late, when DHL will take over these
shipments from UPS, we can assume that 24.54% will be late. Resulting in a decrease of late delivery
fees of 31.09% or €4,502,842.20.
Additionally, better coordination between carriers and factories on delivery times will significantly
reduce late delivery fees as discussed in the previous chapter.
At the process level, root causes include a lack of standardized processes, resulting in many process
variants and undesired activities, a lack of internal controls, resulting in low volume conformance
and a lacking on-time delivery rate, and an overly complicated production strategy that makes it
hard to keep track of the process and thus the progress towards the promised delivery day.
At the factory level, the root cause is the shipment time extended to the carriers. At times, the goods
are shipped from the factory after the promised delivery date, and at other times, when the goods
are shipped before the delivery date, the carrier is not given enough time to complete the shipment
by the promised date. On average, they are given 0.5 days too few to make the delivery on-time.
At the carrier level, the root cause can be deemed as the chosen carrier. Both UPS and DHL ship
worldwide, yet, DHL takes on average 50 less hours to complete a delivery, barring any other
variables, it would make sense to choose DHL over UPS.