With 385,000 employees and a revenue of around $97 billion in 2019, Siemens is one of the largest industrial manufacturing companies in the world. So how can a company this big successfully drive digital transformation?
Innovation has been the cornerstone of Siemens’ success throughout its 170-year-old history – and never more so than today, in the age of digitization and Industry 4.0.
To strengthen its position as a market leader, the company is dedicated to embracing new trends and technologies. They use the Celonis Execution Management System (EMS) to continuously improve their process execution – reducing complexity, increasing transparency, and accelerating their digital transformation.
With a virtually infinite number of business operations, processes in a corporation like Siemens are highly complex – and not very transparent. Reducing that complexity is one of Siemens’ biggest priorities – a superhuman task at this scale: “There is hardly any other topic which bothers and frustrates me as much as this,” CEO Joe Kaeser famously said.
Siemens recognized the EMS’s potential to help them solve the problem very early on. Their audit department trialed Celonis in 2011, the same year the start-up was founded. Back then, the aim was to find a solution capable of making Siemens’ audit process perfectly transparent and holistic.
The project was so successful that Siemens went on to spread Celonis’ Process Mining and intelligent automation capabilities across logistics, finance, procurement, and sales. They’ve since deployed Celonis to 6,000 users globally, processing 100,000 suppliers, over 200 manufacturing plants, and more than one million customers.
In Siemens’ sales department, 1,500 of these users leverage the EMS with Process Mining at its core to reduce rework and increase automation rates. Siemens’ customers order around 30 million items every year and, in some cases, there can be as many as 60 individual process steps between order entry and cash collection.
“Process Mining shows us all activities and variants we have,” says Dr. Lars Reinkemeyer, Global Process Mining Lead at Siemens. That transparency then allows teams at Siemens to optimize their processes according to their goals.
But with 300 million activities and 923,000 process variants in their Order-to-Cash process alone, how do you know when the process has actually been optimized?
“There’s no such thing as a single happy path. The people in charge have to evaluate optimization by looking into the transparency Process Mining has created. They have to say which activities they want to avoid, automate or substitute. Maybe we still have 500,000 process variants after that, but we have achieved a significant improvement,” Reinkemeyer explains.
There is no one-size-fits-all solution. The EMS enables teams to make the right decisions to achieve the outcomes they’re after – which will naturally differ across teams, departments, and processes.
Within Order-to-Cash, Siemens’ goal was to leverage Celonis on a global scale to benchmark metrics across different variables – including countries, divisions, customers, materials, and products. To do so, they launched Order Management 4 Tomorrow (OM4T).
The project focused on three KPIs: Automation Rate, Rework Rate, and Digital Fit Rate. Digital Fit Rate is a custom metric, invented by Franziska Biersack, Project Manager at Siemens Digital Industries. It follows a simple, but powerful equation – the number of manual activities divided by the number of sales order items.
“If you have ten orders and five manual touches, the Digital Fit Rate is 0.5. If you have ten orders and fifty manual touches, it’s 5,” Reinkemeyer says. In other words, the lower the better.
Calculating your Digital Fit Rate is easy when you have full transparency over your Order-to-Cash process. Siemens teams from all over the world can compare their individual performance, collaborate with each other, apply best practices, increase automation and eliminate unnecessary rework. Anyone with a good idea can contribute.
These efforts have led to tangible outcomes. Within Order-to-Cash, Siemens has increased its automation rate by 24% and reduced rework by 11%, resulting in 10 million fewer manual touches per year.
This is just one example of Siemens’ achievements with Celonis. In their Operations & Manufacturing department for example, Celonis’ EMS also ensures the on-time delivery of 1.5 million additional items every year. What’s more, the optimization of Siemens’ digital inventory management brought in an additional $8.7 million in economic value added (EVA).
In their Purchase-to-Pay process, Celonis helps to reduce manual changes in price or quantity, and to immediately act on payment term deviations and late deliveries, with the ability to target specific suppliers.
Over the years, Dr. Lars Reinkemeyer has become one of the foremost experts in leveraging Process Mining on a global scale.
Getting people on board is key to driving adoption. “Provide an open platform and build a strong community,” he notes. Every Siemens employee is free to use the Celonis EMS. Regular info sessions, an annual event on Process Mining, and social media communications make sure that Siemens is all set for a digital future.
But above all, “you should go for sprints, but prepare for a marathon.”
Early results are always welcome to show your team that you’re moving in the right direction, but maximizing execution capacity requires long-term commitment to truly unleash its potential across the organization.
Siemens have gone from strength to strength since 2011, developing their process improvement capabilities and applying them across the business worldwide – and they have the results to show for it.
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