Executive Summary / Abstract
Cerrejon is the largest open-pit coal mine in the world, with 30 years in the market, and an integrated operation which involves a thermal coalmine, a railroad of 150 kilometers and a seaport able to receive ships of up to 180 thousand tons of capacity. Cerrejon was looking to improve the coordination and orchestration between several areas – the commercialization offices (Dublin and Atlanta), Foreign Trade and Logistics, Financial Accounting, Accounts Payable and Treasury (Colombia) – from the moment a client placed an order until the coal was received.
For this, Cerrejon required a collaborative solution that besides bringing agility to the business, offered flexibility and would allow satisfying the requirements of local regulations. Cerrejon selected Bizagi BPM Suite to automate the coal sales process, which integrated to its ERP, would enable the management of all the transactions derived from the commercialization of the coal, consolidating a robust platform for the conciliation of payments and collections.
Cerrejon is the largest open-pit coal mine in the world with an income of US$ 2,300 million, 10 thousand employees, and an annual production of 32 million tons exported through its own port. With a huge tradition and expertise in the market, Cerrejon found it imperative to improve the coordination and orchestration between all the areas involved in the coal sales process. Cerrejon relies on two commercialization offices located in Dublin (Ireland) and Atlanta (United States) for their coal sale process. Cerrejon´s integrated operation also involves a thermal coalmine, a railroad of 150 kilometers and a seaport able to receive ships of up to 180 thousand tons of capacity. Whenever a customer places a purchase order, several activities and tasks are activated around the different departments and divisions involved, such as the commercialization offices (Dublin and Atlanta), Foreign Trade and Logistics, Financial Accounting, Accounts Payable and Treasury (Colombia).
Interaction between the areas involved in the coal sales process were manual and took too long to be executed; therefore, the necessity to make the business more agile and gather more control of the business operation was evident. Cerrejon decided to undergo a BPM project to automate the complete coal sales process. This was the first project at Cerrejon based on the BPM principle and aligned with the process management corporate strategy implemented in the company.
Cerrejon has an ERP system in place used to manage all the transactions derived from the commercialization of the coal. Cerrejon needed to select a flexible and collaborative BPM tool capable of transparently integrate to this ERP in order to build a solid and robust platform to support orders, payments and conciliation processes. After an extensive evaluation of tools and an open bidding process, Bizagi was selected as the BPM solution for process automation. Bizagi was chosen for its vast experience in the implementation of BPM projects, the support levels offered and its international presence. Cerrejon also needed to guarantee that the chosen BPM tool would allow satisfying the requirements of local regulations in an efficient manner.
After the implementation of the BPM project, Cerrejon was able to increase business process agility, improve integration and visibility, reduce the invoicing cycle time and consolidate information and processes. As customer orders are now processed faster, time to market has also improved satisfying both internal and external customers.
The major challenge faced was dealing with the complexity of the coal sales process, due to the geographical location of the different stakeholders and the sensibility of the information handled. In a technical perspective the BPM system had to integrate the information from diverse sources, such as the ERP Ellipse, Minetrak (a system used in Puerto Bolívar, Colombia, to control the information of loading and boarding), and Aramis (an invoicing control system used in the commercialization offices).
The coal sales process at Cerrejon is complex due to the geographical location of the different stakeholders and the sensibility of the information that it handles. Tasks and activities to cover the coal sales process were done manually and there wasn´t a central repository for documents and information. This affected the integration between the involved departments and divisions making it harder to gain control and visibility over their operations. This also had an impact on process and invoicing cycle times.
Cerrejon found that there was a huge opportunity to improve their business agility by automating the coal sales process with a BPM tool that would also allow seamlessly integration to their existing ERP system and other legacy applications. The key motivation for Cerrejon is their mission itself: “Make the maximum possible, not the minimum required”. Driven by this statement, Cerrejon decided to implement a business process management system to increase the agility, control and visibility of the coal sales process, as well as to integrate the different areas involved to reach a proper consolidation of information and processes.
The Key Innovations
This was the first project at Cerrejon based on the BPM principle and aligned with the process management corporate strategy implemented in the company. This new way of doing things certainly changed the business. Purchase orders are now placed, registered, processed and delivered much quicker than before, increasing the time to market while having more internal and external customers satisfied.
Tracking and visibility over the process has also allowed avoiding bottlenecks, complying with delivery times and satisfying local and industry regulations. This has made the business more agile while increasing efficiency and productivity.
With the flexibility and robustness of the BPM system that was implemented, Cerrejon is now sure that they count with a solid business structure to overcome future growth and potential changes in market and business conditions.
As mentioned before, the coal sales process is complex as it involves several departments located in different places around the world, and tasks and activities which need to be done in sequence or in parallel by people interacting with systems and applications. Tasks and activities were manual, giving space to an important opportunity to improve and increase efficiency.
The BPM solution implemented by Cerrejon includes all the sub-processes and the corresponding documentation of all the areas involved, from the commercial to the operative area. It is a system in its maximum expression, where the people, the technology and other aspects are integrated, such as: legislation, companies, legal vehicles, currencies, among others. The BPM coordinates and orchestrates all these players and concepts from when the client orders the coal until it is received.
The new BPM system also integrated information from diverse legacy applications and systems, such as the ERP Ellipse, Minetrak (a system used in Puerto Bolívar, Colombia, to control the information of loading and boarding), and Aramis (an invoicing control system used in the commercialization offices).
All the financial and process reports can be accessed via a very simple interface. Also, the system sends alerts to inform the actors in the process which of the activities they own are close to expire. This brings additional support to the user in order to satisfy the time control that the law dictates for the presentation of documents, reducing the risk of non compliance of the current norms.
After the implementation of the BPM system, Cerrejon is able to centralize and consolidate information to be visible and available for all process stakeholders. It is also possible to integrate the work done by several offices such as the commercialization offices at Dublin and Atlanta, the Foreign Trade and Logistics office in Colombia and the Financial Accounting, Accounts Payable and Treasury departments.
Bizagi delivered the consulting services to help Cerrejon and all the process stakeholders to build the process architecture according to roles and responsibilities. This was done through a planning and design phase where the process was initially mapped and defined while detecting opportunities for process improvement. Cerrejon used Bizagi Process Modeler to apply the general process design principles.
Although the implemented BPM system was developed specifically for Cerrejon´s complex coal sales process, it can certainly be used as a model for processes including several offices in different locations which need to interact and work together for a single purpose: a sale, an approval, etc.
For the organization it was a real innovation to start thinking about BPM and to value the benefits and positive impact that it could bring to the business. The principal stakeholders made all the organization believe in the project and were able to gain the necessary compromise from the people and senior management for the successful development and completion of the implementation.
Bizagi delivered training and support services for the implementation of Bizagi BPM Suite at Cerrejon. With the On Target methodology for project management, and with the support of the different areas involved, the work was done in Bogotá, Puerto Bolívar, Dublin and Atlanta.
The BPM system caused a positive impact on employees. Most manual activities were eliminated and replaced by automatic tasks which can be managed, processed and completed using the BPM system. This made the business more agile and efficient and employees more productive.
The solution was implemented in only 6 months, reaching the production stage with all areas integrated, achieving visibility of the whole process, and with a centralized parameterization of the business conditions through the Business Rules Engine (BRE). This is the system layer which contains the business rules and conditions that govern the process execution. The rapid and successful implementation also increased the motivation of everyone at the organization, especially those involved in the coal sales process.
The biggest challenge was to deal with the complexity of the coal sales process due to the geographical location of the actors and the sensitivity of the information it handles. However, with a careful and detailed process mapping, design and planning phase, with the help of Bizagi´s consultants, it was possible to overcome this challenge.
The second challenge was to integrate Bizagi BPM with the existing ERP and legacy applications. The flexibility and ease of use of Bizagi BPM Suite helped to overcome this challenge together with the consulting, training and support services offered by Bizagi.
More than cost savings, the project justification was based on reducing the risk of penalties due to errors in the registration and reporting of transactions to the government entities, to delays in such reporting, and to errors in the calculation of taxes and loyalties.
Cerrejon was able to significantly reduce the cycle time of the coal sales process, making it possible to handle purchase order registration, processing and invoicing much faster than before.
As a result, Cerrejon also gained a reduction in time to market, being able to satisfy customer requirements regarding delivery times and to comply with local and industry regulations.
Not applicable for this project.
With the consolidation of information and processes the coal sales process is managed in a more efficient manner, reaching a better business productivity and agile performance. The reduction of manual activities also increases employee productivity. Improved control and visibility makes tracking easier and enhances process traceability.
Best Practices, Learning Points and Pitfalls
Best Practices and Learning Points
- Spend enough time in the planning, definition and design phase to minimize risks and errors in the implementation.
- Involve consulting, training and support services in the project to guarantee a higher level of success.
- Involve the correct and necessary stakeholders and actors to increase compromise and organizational adoption.
Based on Cerrejon’s experience in this and other similar projects developed, these are common pitfalls in the use of the BPM system technology:
- Not planning and allocating enough resources for the testing of the solution built.
- Handling process exceptions in the BPM system.
- Developing the BPM system based on the as-is process without analyzing non-technology related improvement opportunities first (using tools such as LEAN, Theory of Constrains, etc).
- Developing the BPM System with a ‘build-to-last’ concept instead of a ‘build-to-change’ concept.
- Not using the BPM system as a continuous process improvement tool.
Thanks to the implementation of Bizagi BPM, Cerrejon increased the integration between the people and the sub-processes which are part of the coal sales operation. In this way, the mine completes the sales cycle, from the mine to the client, with the security that the required information in each step is correct and opportune, and satisfies the current regulations. At the moment, the coal sales registration and control process managed through the BPM platform, tracks and controls the sale of 32 million tons of coal a year. Due to this volume of annual sales, the benefit of having a clean process and without errors constitutes a competitive advantage for Cerrejon.
Cerrejon is now able to make sure it has all the necessary certificates in each ship, according to the laws of the receiving countries and relating to specifications such as amount of coal, calorific power, humidity, ash, etc. The documentary handling of the characteristics of the coal is supported by the BPM system, grouping in this platform all the relevant documents for the process.
After an extensive evaluation of tools and an open bidding process, Cerrejon selected Bizagi for the automation of the coal sales process. Bizagi BPM Suite was chosen for its vast experience in the implementation of BPM projects, the support levels offered and its international presence. Bizagi is a complete BPM Suite which offers an enterprise-class platform for complex, mission critical and high availability business processes in any type of organization.
With Bizagi BPM Suite it is possible to model/diagram processes and then convert them into running applications (execution). Bizagi Process Modeler is an easy to use drag and drop application for process modeling and documentation. After processes are modeled, it is very easy to move to process execution, where Bizagi creates a web application used by end users to interact with the system.
The solution was implemented in only 6 months, confirming Bizagi´s compromise of achieving faster results.
The Technology and Service Providers
Cerrejon selected Bizagi BPM (http://www.bizagi.com) for the implementation of their first BPM initiative. Bizagi is a leading BPM solution capable of empowering businesses of all types and industries around the world, providing them with unprecedented adaptability to changing business and market conditions through optimal business process automation (execution) and continuous improvement.
Bizagi is a business productivity tool for faster process automation. Bizagi´s built-in functionalities, ease of use and flexibility makes it the ideal BPM solution to obtain faster results. In Bizagi, most of the common and reoccurring requirements in process automation have been pre-built. These refer to:
- Control and visibility
- Alarms and notifications
- Performance analysis and reporting
- Auditing and traceability
- Workload routing and balancing
- Corporate features (multi-tenancy, BPMN process engine, multiple language support, time-zones, long lasting process transactions, enterprise data model, among others)
Bizagi is available in multiple editions to support the varying needs of organizations. The corporate editions are appropriate for mission critical and core business processes, satisfying the most demanding needs in larger organizations. Corporate editions (Enterprise .NET and Enterprise JEE) are similar in functionality, the only difference is the platform where they execute.
Copyright: This case study was originally published in the Excellence in Practice series in the book entitled “Delivering Competitive Advantage” published by Future Strategies Inc. ©