Typical responses to process variation are often unnecessarily complex, costly, and inconsistent. The seven steps outlined here will help organizations avoid those problems while effectively controlling variations. Companies are increasingly embracing business process management (BPM) as a way to make their supply chains more agile and efficient. After all, BPM involves taking a disciplined approach to identifying, standardizing, managing, and streamlining workflows and processes that span organizational boundaries. A BPM tool can, for example, provide a visual representation of the processes that run throughout the supply chain. This representation can significantly improve communication with all of the trading partners by helping to clarify roles and responsibilities, identify handover points, and reveal areas of inefficiency and waste. Standardized supply chain processes reduce wastage by identifying inefficiencies in both the products used and the processes that employ them.

In industries like healthcare, where supplies are second only to staff costs in an organization, those savings can be significant. While BPM provides many benefits, one challenge that many organizations continue to struggle with is managing and standardizing process variations. In fact, Steve Stanton—managing director of the consulting company FCB Partners and a pioneer of business process modeling—believes that the vast majority of the organizations he knows have failed at process standardization because managing variations is so difficult. There are several common reasons for supply chain process variations.

For example, a company may need to customize the customer's experience based on attributes such as profile, size, location, and behavior. Or it may need to slightly alter its receiving process to accommodate the unique nuances of each of its suppliers. For example, an organization which has multiple suppliers for the same raw material or product may apply a variation category (like 'supplier') to their standard sourcing processes. This variation category will allow them to capture the nuances related to managing each individual supplier, while still governing the process variances from the company's standard process. Another source of process variation is the fact that individual countries—and even some regions within countries—often have different tax or customs regulations and policies that require the company to customize certain processes such as shipping.

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In fact, globalization is making it increasingly difficult for many organizations to manage process variations. This is certainly the case for multinationals that have numerous locations and offer multiple core products or services.

Even relatively small companies are now regularly selling into different countries and operating in multiple regulatory environments, increasing their process variation challenge. If not managed effectively, developing and managing separate processes for different types of customers or suppliers or for different geographic regions can require a major investment in time and energy and lead to cost overruns. In addition, each new process variation can introduce process inconsistencies and additional complexity. To get the full benefits of business process management and process standardization without incurring significant extra cost or complexity, companies need to develop an effective way to manage process variations.

Ineffective responses to process variations Typically, one finds three common responses to the problem of process variation along the supply chain. While they may offer some benefits, in general they are ineffective and can create additional problems for organizations that adopt them.

The first response is to create standardized processes at a high level only. This approach is most commonly found in companies just beginning to use business process management or smaller organizations.

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The problem with this approach is that it provides information at the 10,000-foot level—in other words, it provides basic information that is so summarized that it's of no use to anyone for day-to-day process guidance or as a platform from which to make future changes. A second response is to create 'mega-processes' that cover every conceivable variation. This approach is typically preferred by highly technical teams or large transformation projects and is characterized by detailed, technically correct process documents that apply approved process-notation standards. Unfortunately, teams often find the documented processes difficult to comprehend and engage with, so they ultimately ignore them. Additionally, because the process owners are reluctant to make any changes or implement improvements, process documentation quickly becomes out-of-date and of little use. The complex documentation can also stall agility and future opportunities for improvement. The third fairly typical approach finds organizations at each point along the supply chain allowing owners to create their own, separate process variations.