When It Comes to Standardization, It Helps to Have Some Rules

Anyone in the auto industry knows all about globalization. Just take a quick look at what used to be known as the Big Three.

General Motors now is producing vehicles in 37 countries. Chrysler is the American subsidiary of an Italian-controlled manufacturer registered in the Netherlands with headquarters in London. And Ford? It has manufacturing operations in the U.K., Germany and Brazil, to name a few, plus joint ventures in China, Taiwan, Thailand, Turkey and Russia.

Globalization, coupled with rapid technological innovations, translates into the need for virtually every company in the automotive industry to be able to sell in different countries and operate in multiple regulatory environments.

This level of business complexity represents a particular challenge when it comes to successfully managing and standardizing business processes – and the process variations that inevitably occur – around the globe.

Despite their best efforts at standardization, many process owners know their “standard” processes often don’t meet the requirements of the various teams that are expected to apply them. If these processes can’t be applied, they may as well not exist. As Steve Stanton, an analyst with FCB Partners, says: “Ninety percent of the organizations I know have failed at standardization.”

Automotive companies have tended to respond to the challenge of process standardization in one of three ways: They create standardized processes only at a high level, which means they are not really useful to anyone; they develop mega-processes that include every possible variation, which fail to engage employees and stall agility; or they allow variant processes to be owned, managed and changed independently, which leads to administrative headaches and process-management chaos.

Despite the questionable track record, it is actually possible for companies throughout the automotive industry to achieve the benefits of standardized processes across their entire organizations, while simultaneously providing individual operations with the ability to control process variations where needed.

To be successful, an organization must begin by agreeing on the standard processes owned by global process owners, which in turn will form a platform against which to consider local variations. Local process variants should be established only off this standard process base, with any changes highlighted and visible against the core processes.

The organization must have the ability to compare and report on all variations that exist for each standard process. Doing so will allow visibility into the activities that have been added, removed, or changed, in comparison to the standard process.

To improve process relevancy and adherence, when navigating to processes, business teams should be able to select the variant they seek from a list or, even better, be routed automatically to their variant if they have a “default” location, product team or business unit.

Organizations also must establish a global reporting capability so process champions can see the list of processes that exist for each variant. Local variant owners should be notified of any changes applied to the standard processes by the global process owners, enabling them to merge those changes into each variant process or amend as necessary.

Finally, process variant-costing and timeframe tracking should be in place to calculate the difference in cost and time between variations and the standard processes. This will enable organizations to make informed decisions about whether to keep or eliminate process variations.

These capabilities will empower automotive organizations to understand the extent of the process variations they are managing, and to challenge, control and report on them.

This approach will empower teams to be more agile, more flexible and to customize (or eliminate) activities as they see fit, because the process variations will exist in an environment over which they actually have clarity and control.

Ivan Seselj is CEO of Promapp Solutions, a provider of cloud-based process management (BPM) software for creating and managing business processes online. You can contact him at [email protected] or follow him at @Ivanseselj.