Posts Tagged ‘Business Process Management’

Ten Tips on how to sell Compliance in the Organisation

October 28, 2013

It probably seems to you like every time you want to talk about Compliance, everyone runs away and hides, they ignore you and hope you go away, or they fuss and moan. Compliance is a fact of business life, however, Your company must comply with:

Your Customers requirements (quality, safety, performance specifications, quantity, price, prompt delivery, etc.); Industry or other standards and guidelines (ISO 9001, IRFS, etc.); and/or
Regulations (e.g., 8th EU Directive, Food Safety Modernization Act) in order to get or to keep business. Therein lies the problem: compliance is like healthy eating or exercise. We know we have to, but well, it’s so hard to either make the time or get enthusiastic about it! Why is it that “have to” and “want to” always seem to be inversely proportional to one another?

How do you sell yourself and your employees on the notion that compliance is something you want, not something you merely put up with? How do you turn “got to” into “want to”?

First, you have to…

Sell yourself on the idea. You’ll find in life, that is, if you haven’t already that if you don’t have a deep and firmly held belief in your company, your product, or your people, you won’t sell your product or your service. If you lack enthusiasm, conviction, self-discipline, vision, perspective, and some of the other characteristics that define leadership, you won’t have many followers.

Your customers are your ultimate critics. If you don’t meet their requirements, you’re out of business. It won’t matter what other requirements you fail to meet if you fail to meet your customer’s. Have your priorities in order, listen to your customers first.

Include your staff in the development of Policies and Procedures that will ensure your company’s compliance, because: (a) you can’t do it all by yourself; (b) they know more of the day-to-day tasks, operations, and processes than you; and (c) you need to show that you value and trust their judgement if they’re to grow (i.e., micromanagers never win).

Give everyone in your firm the resources they need to do their jobs effectively.

Ensure that your employees are more than adequately trained and experienced.

Make sure they know what they’re doing and more importantly why they’re doing it.

Keep the lines of communication open all the time. Communicate effectively and continually with all levels of your organization.

Get out of your office! Regularly address your employees first hand, directly and openly.

Listen, and then turn what you’re hearing into something your employees — and your customers want to act upon.

Make a habit of meeting with suppliers, subcontractors, and everyone who has a hand in getting your product or service into the hands of your customers. You might not be able to do this often but you shouldn’t let a year go by without visiting with your valuable partners. Communication is key!

Look at failures as opportunities for improvement. Don’t go looking for the guilty party every time something doesn’t go according to plan! You want to keep failure to a minimum, yes, but keep things in perspective. Not every mistake requires Draconian countermeasures!

Share success. Compliance goes beyond merely observing standards or laws, compliance can help you win business! When it does, spread the wealth. Acknowledge the part everyone played in making your company a success, especially those who had a direct hand in your victory.

Sell yourself, then sell everyone else on the importance and value of compliance.

Make them want it! Your customers do.

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Business Process Re Engineering

January 8, 2013

Business process reengineering (often referred to by the acronym BPR) is the main way in which organizations become more efficient and modernize. Business process reengineering transforms an organization in ways that directly affect performance.

The Impact Of BPR On Organizational Performance
The two cornerstones of any organization are the people and the processes. If individuals are motivated and working hard, yet the business processes are cumbersome and non-essential activities remain, organizational performance will be poor. Business Process Reengineering is the key to transforming how people work. What appear to be minor changes in processes can have dramatic effects on cash flow, service delivery and customer satisfaction. Even the act of documenting business processes alone will typically improve organizational efficiency by 10%.

How To Implement A BPR Project
The best way to map and improve the organization’s procedures is to take a top down approach, and not undertake a project in isolation. That means:
• Starting with mission statements that define the purpose of the organization and describe what sets it apart from others in its sector or industry.
• Producing vision statements which define where the organization is going, to provide a clear picture of the desired future position.
• Build these into a clear business strategy thereby deriving the project objectives.
• Defining behaviors that will enable the organization to achieve its’ aims.
• Producing key performance measures to track progress.
• Relating efficiency improvements to the culture of the organization
• Identifying initiatives that will improve performance.
Once these building blocks are in place, the BPR exercise can begin.

Tools To Support BPR
When a BPR project is undertaken across the organization, it can require managing a massive amount of information about the processes, data and systems. If you don’t have an excellent tool to support BPR, the management of this information can become an impossible task. The use of a good BPR/documentation tool is vital in any BPR project.
The types of attributes you should look for in BPR software are:
• Graphical interface for fast documentation
• “Object oriented” technology, so that changes to data (eg: job titles) only need to be made in one place, and the change automatically appears throughout all the organization’s procedures and documentation.
• Drag and drop facility so you can easily relate organizational and data objects to each step in the process
• Customizable meta data fields, so that you can include information relating to your industry, business sector or organization in your documentation
• Analysis, such as swim-lanes to show visually how responsibilities in a process are transferred between different roles, or where data items or computer applications are used.
• Support for Value Stream mapping.
• CRUD or RACI reports, to provide evidence for process improvement.
• The ability to assess the processes against agreed international standards
• Simulation software to support ‘what-if’ analyses during the design phase of the project to develop LEAN processes
• The production of word documents or web site versions of the procedures at the touch of a single button, so that the information can be easily maintained and updated.

Conclusion
To be successful, business process reengineering projects need to be top down, taking in the complete organization, and the full end to end processes. It needs to be supported by tools that make processes easy to track and analyze. If you would like help with your BPR project, please Manage to Supply
• Business process reengineering is a huge step for any company, though one that can bring equally significant rewards when properly implemented. Be sure to think your decision through thoroughly and proceed only after you’ve done sufficient research.
• Should you decide to act as your own business process engineer, realize that you’ll need adequate BPR training and excellent business process engineering software to successfully pull it off. You’ll need to develop the skills necessary for creating a business process map redesign that not only meets your company’s unique needs, but also adequately addresses your prior business process problems.

Best Practices for performance metrics improvement

January 5, 2013

The Supply Chain in many organisations has become longer over time and contains more partners than ever before.
These longer supply chains are the result of vertical integration strategies yielding to first outsourcing and then off-shoring. In addition, organisations continue to add more products, more suppliers and more plants or distribution centres. They have also evolved their customer and product mixes, implemented new postponement or replenishment strategies, or simply scaled in volume, leading to a significant change in the structure of their supply chains.
As the assumptions used in the initial supply chain model change over time, its model and processes are not likely to keep pace with the changes. What was once a smooth and efficient supply chain can begin to show weak performance metrics! As organisations seek to improve their supply chain metrics, the key question is what best practices they should adopt?
Based upon experience from a number of different industries, here is a list of ten best practices that an organisation could or should implement as it seeks to improve its performance metrics.
1. Create a consensus demand plan: An organisation can get consensus on market requirements and business assumptions by incorporating new product introductions, product retirement, upcoming promotions, financial projections, investor commitments and sales forecasts into the demand planning process, and creating a consensus plan around it. Without building consensus, everyone has a different perspective of customer demand and it becomes difficult to Synchronise Demand and Supply.
2. Ensure supply demand synchronisation: By using techniques such as Sales & Operations Planning (S&OP), as well as creating a supply plan that maps to demand while also incorporating key constraints, a company can ensure that it will be able to meet its delivery commitments without incurring expediting costs or higher inventory. Such capability not only reduces costs, but increases customer loyalty.
3. Streamline supplier interactions: By providing suppliers ongoing visibility into their forecast and consumption plans, as well as current inventory status and planned receipts, manufacturers can get their suppliers to improve replenishment lead time and become more responsive to their changing needs. It also allows them to implement programs such as Vendor-Managed Inventory (VMI), cut costs through reduction in inventory and safety stock, reduction in overtimes or expediting costs.
4. Get visibility into supply chain events: Traditional supply chains are evolving into a worldwide network of suppliers and manufacturing or distribution facilities. Such an environment requires stakeholders to share any shipment or material information such as plans, current status or exceptions with each other in a timely manner in order to improve overall supply chain performance. Without the ability to provide such levels of visibility to each other, each stakeholder ends up continuously reacting to unplanned surprises with limited time to act, not to mention carrying extra inventory to compensate for such surprises. Visibility into shipments and material-related information promotes faster decision-making within the supply chain and enables each stakeholder to proactively respond to issues. Supply Chain Event Management (SCEM) addresses these requirements.
5. Automate trade compliance: As organisations grow in scale through new products and expanded geographical markets, or setting up plants in other countries, or turning to offshore suppliers, manual methods of managing the export and import compliance process become exponentially more complex and time-consuming. Even significant increases in headcount may not resolve the issues. Streamlining the export and import management process brings benefits such as significant cost savings, improved productivity, fewer shipment delays and reduced risk of penalties and fines due to non-compliance.
6. Rationalise the supply base: By reducing the number of suppliers, procurement managers can take spending on a category that is currently scattered among multiple suppliers and award that volume of spending to a smaller number of suppliers to gain volume discounts. Rationalising the supply base also reduces complexity associated with new part introduction and simplifies supply collaboration.
7. Integrate engineering and sourcing into supply chain management: New product introduction (NPI) and sourcing are key elements of effective supply chain management. Without expertly incorporating NPI into the supply chain planning process, a manufacturer runs the risk of inventory write-offs or shortages of critical components. Similarly, the sourcing process should incorporate requirements such as ability to deliver in the right replenishment model, responsiveness and flexibility to react to sudden changes in business needs.
8. Continuously measure key performance metrics: One best practice is getting visibility into key supply chain performance metrics on an ongoing basis and using that information to continuously improve the supply chain. SAP’s supply chain performance management solution can assist in closing the loop for its customers.
9. Focus on time and inventory: While one can focus on improving multiple aspects of the supply chain, the greatest impact can be had by focusing on continuously improving on two fronts: increasing the velocity of process and information flow and focusing on activities and actions that can reduce inventory within the system.
10. Deploy an integrated solution: When the supply chain capabilities of ERP systems were not as mature as they are today, best-of-breed solutions were the preferred approach. However using such systems created information integration issues. Today, It is recommended that companies evaluate supply chain systems from their ERP vendors before looking at other options.

Adoption of sourcing technology – ease of use.

January 3, 2013

Organisations spend millions of dollars on technology implementations. It has been seen that many projects fail within one year of implementation. In a recently issued study report from the World Economic Forum 2010-2011, Sweden and Singapore continue to dominate the rankings, whereas Malaysia ranks 28th and Oman stands only 41st in terms of technological savvy nations. One of the reasons for this could be lack of adoption of new technologies within the organisation.

Employees using a new software system exhibit steep learning curves and resistance to change which is evident from the large percentage of organisations feeling their ability to deal with change being poor. Most of the time this failure can be attributed to a lack of communication between the decision maker (which in our case, would be the CPO or the VP procurement) and the end user(buying manager, buyers etc.). The point being, that such an environment is not conducive for effective software implementation.

Procurement technology solutions have also not been immune to adoption failure. Let’s take a look at a case study.

An $11 billion organisation had in place an existing eSourcing solution from a major solution provider. The investment for the same was close to $ 100,000 and there were 100 user licences which had been purchased. After a Post implementation review it was observed that there existed only 5 active users of the application whilst 95% remained inactive indicating lack of adoption amongst the users. More importantly, what was not considered was the comfort level of the suppliers who would be an important end user of the sourcing solution. Suppliers would not respond to RFIs created within the tool citing it to be too complex and would send in quotes through excel documents making evaluation almost impossible and tedious.

This post will explore the major challenges involved in adoption and how an organisation can use four strategies to overcome the adoption challenges and ensure acceptance of the eSourcing solution by the end users.

Challenges Faced!

Before I discuss the ways to increase procurement technology adoption within organisations, let us look into what are the major challenges that organisations face with respect to procurement technology adoption.

The first and foremost challenge is to deal with the resistance to change. Even when organisational members recognise that a specific change would be beneficial, they often fall prey to the gap between knowing something and actually doing it.

The second reason can be attributed to the complexity of technology which detracts the end user since it requires acquiring new technological knowledge and skills. Complex features may sound great in product demonstrations and data sheets but become a bane to adoption at the ground level.

The third reason could be a lack of visibility into benefits of the software post implementation. It’s important to note here that a benefit needs to be expressed in the parlance of the end user. The end user needs to see how the technology will benefit him in his job. In short what is the take away for him?

So how does one overcome these challenges? Here I would like to draw your attention to what I want to call the “For Ease Strategies” of efficient user adoption. These are – Ease of Use, ease of user Involvement during evaluation, ease of Training and Adoption and finally ease of Metrics & Incentives. Let us look into each of these “ease strategies” and the role they play in overcoming the challenges.

Overcoming challenges to procurement technology adoption is the key to ensure that an organisation reaps the benefits from their implementation. In this section I will discuss the importance of having the right strategy to overcome the adoption challenges.

Strategy 1. Ease of Use

As discussed earlier, complexity of technology was one of the major reasons for lack of adoption. This is where having a technology which is easy to use goes a long way in fostering acceptance among the end users. Let’s consider a very simple example here.
Consider an i-Phone or i-Pad as an innovation which although loaded with several sophisticated features is extremely easy to use for the end users leading to quick and higher adoption levels. Ease of use of course should not be at the cost of functionality.

Organisations should work on achieving a balance between satisfying all key core requirements and enhancing the user experience. While talking of ease of use, it is of utmost importance to speak from the perspective of the end users. Technology vendors and decision makers often confuse what is naturally easy for them as ease of use when discussing software.

Organisations must ensure that the new technology that they are planning to implement shall be easy to use not just for the stakeholders but the eventual users of the solution who will use it day in and day out. Technology must make things simpler for the end user.

Features need to be mapped with the needs within the organisation rather than looking at solutions which have the maximum number of features which don’t really satisfy the inherent needs in the process.

Strategy 2. User involvement

User involvement goes a long way in overcoming adoption challenges. User involvement can be accomplished by involving the end user in the initial stages of the software selection process. Users can be involved in the product demonstration process, which would help in conveying the benefits of the product to the end user for e.g. Using the ‘drag & drop’ feature within e-sourcing can be used to set up complex events in just minutes ensuring 100% category coverage. Demonstrating this to an end user will help convince him/her to create all events within the solution.

This process can now be followed up by a pilot process involving the end user. This would further convince the end user regarding the benefits by understanding how a particular feature directly benefits him in his work process.

Once the user receives a hands-on demonstration of the tool’s capabilities, make sure to have a feedback about the experience. Such an activity would ensure greater buy-in from the end user and also considerably reduce the objections arising post implementation.

Strategy 3. Training

Training should be arranged both pre and post implementation.. The training can be conducted by a variety of means . Combining periodic on-site training with regular feature level training provided online in the form of user sessions, webinars etc. is the most effective way of achieving user adoption goals. It is recommended to have the vendors / Suppliers involved at every stage of training to ensure a constant communication between the end user and the trainer.

Ideally there should be a training council formed comprising of members from both the vendor / Supplier and organisation. Once the training is conducted organisations can also look at conducting product knowledge tests and quizzes. This has dual benefits;

1. Makes the end user more responsible
2. Helps in judging the effectiveness of the training sessions

Strategy 4.

Once the technology has been implemented, top management needs to sit with the end user and decide on how to measure the performance of the end user. Including the end user in setting performance goals inculcates a lot of responsibility and accountability among the end users. Organisations must ensure setting fair, consistent and rigid goals which are transparent in every sense. I offer an example of how this could be accomplished.

Example 1. Consider an organisation who has just implemented an eSourcing solution. Suppose the organisation has 50 sourcing events scheduled to take place in the year. One of the check points could be to see how many of these sourcing events were channeled through the eSourcing platform. With deliberation organisations can set a goal of 80% of the sourcing events to be conducted through the e-sourcing platform.

Or another example

Example 2. If an organisation enters into say 100 contracts in a year, one of the objectives would be to have say 90% of contracts under the contract management system.

Once the objectives have been set by deliberation with the end user, the next logical step could be to link the incentives of the users with the objectives set. A simple incentive can be percentage sharing of the savings achieved from implementation of the solution. These can be benchmarked with similar numbers before the software was implemented to derive the results or direct benefits from the solution implementation.

Managing Change.

A learning orientation is critical during implementation stages. This brings us to the next point which is concerned with managing change. In order to successfully manage the change process, I recommend the following four steps:-

Inform

Brief the end user about the new technology and involve the end user in the evaluation stages.

Educate

Educate the end user about the product in the form of product training, workshops (video, onsite etc), webinars etc.

Monitor

Devise mutually accepted metrics for measuring the performance of the end user post implementation.

Reward

Linking the objectives with incentives, with disbursement of incentives related to the objective met.

Conclusion

Companies must do away with persuasion and edict as part of technology implementation and adoption processes since both involve little or no user input in decisions regarding implementation and adoption. Also, change management is the key to ensure buy-ins from the various related stakeholders thus ensuring benefits from the technology implementations.

The butterfly effect on enterprise data within SCM

January 2, 2013

After doing a couple of projects where master data was a critical element but unfortunately nothing was done to correct it, I thought that I would reintroduce the post on the Butterfly effect in Master Data. All to often the master data is completely forgotten in projects and in the end costs money to rectify and could lead the software to fail after go live. So to learn more about the butterfly effect and it’s impact on master data read on!

The term “butterfly effect” refers to the way a minor event – like the movement of a butterfly’s wing – can have a major impact on a complex system – like the weather. The movement of the butterfly wing represents a small change in the initial condition of the system, but it starts a chain of events: moving pollen through the air, which causes a gazelle to sneeze, which triggers a stampede of gazelles, which raises a cloud of dust, which partially blocks the sun, which alters the atmospheric temperature, which ultimately alters the path of a tornado on the other side of the world.

Enterprise data is equally susceptible to the butterfly effect. When poor quality data enters the complex system of enterprise data, even a small error – the transposed letters in a street address or part number – can lead to revenue loss, process inefficiency and failure to comply with industry and government regulations. Organisations depend on the movement and sharing of data throughout the organisation, so the impact of data quality errors are costly and far reaching. Data issues often begin with a tiny mistake in one part of the organisation, but the butterfly effect can produce disastrous results.

An ERP or supply chain system focuses on parts, descriptions and inventory data. Since government agencies don’t control the way supply chain and ERP data is defined, you may not have an idea about how the data should look in an ideal state, but it should provide an accurate depiction of the physical warehouse or just-in-time supply chain system. You need to know what is in stock, when it can be supplied and how much it costs.
Holding just the right amount of inventory is crucial to optimising costs. After all, inventory costs are incurred every hour of every day in areas including warehouse storage, heat and electricity, staffing, product decay and obsolescence. With this in mind, consider the impact of a transposed letter in an ERP system. Someone enters part number XL- 56YJM instead of LX-56YJM. Until the error is discovered and corrected, you may hold duplicate parts in inventory or not be aware of parts carrying the slightly different SKU because of the transposed letter.

You also want to take advantage of volume discounts. If the data is unstructured, making it difficult to understand global buy patterns, the company may miss out when negotiating with the vendor.

Because there is no standard format for ERP data, few of the steps for fixing the data are done for you ahead of time. It is critical to establish a methodology for data profiling in order to understand issues and challenges. Since there are few governing bodies for ERP and supply chain data, the corporation and its partners must often come up with an agreed-upon standard, with input from users of the data to understand context, how it’s used, and the most desired representation.

If you have clean data in your supply chain, you can achieve some tangible benefits. First, the company will have a clear picture about delivery times on orders because of a completely transparent supply chain. Next, you will avoid unnecessary warehouse costs by holding the right amount of inventory in stock. Finally, you will be able to see all the buying patterns and use that information when negotiating supply contracts.

The Sardine Strategy….to move as one!

December 31, 2012

For the last post of 2012 I have resurrected an older post which I believe is still extremely relevant. Before you embark upon any business improvement in 2013, make sure that you know where you want to go and understand the implications of your actions. Without moving as one, you will surely fail. Don’t lose direction!

What is the latest buzz in the supply chain world I was asked at a recent SAP Conference, I replied there is plenty of buzz in the SCM world but all this hype needs to be underpinned by a good solid supply chain strategy.

Have you heard of the “Sardine Strategy” ? the questioner looked perplexed at my question! I will elaborate for schooling fish, staying together is a way of life. Fish in a school move together as one, for schooling fish the “move as one” trait is innate. Separation means likely death!

For Global Supply Chain, misalignment – failure to move as one – means poor service, high inventory, unexpected cost, constrained growth and profits, finally resulting in loss or market share and possibly reputation. Once market share and reputation have been damaged they are difficult to repair.

So what are the common causes of misalignment – failure in supply chains to “move as one”?

I offer a list of some 15 common causes that have plagued companies for many years and still do today, I am sure that the list is non exhaustive, but I am doubly sure that the readers can equate to one or more of these businesses today.
1). Lack of Technology investment plan.
2).Little or no return on investment (ROI)
3).Isolated supply chain strategies.
4). Competing supply chain business improvement projects.
5).Faulty sales and operations planning.
6).Failure to meet Financial Commitments.
7).Lack of support and specialized expertise.
8).Mismatch between Corporate Culture and ERP.
9). Under utilization of existing technology.
10).Vaguely defined goals.
11).Impact of mergers and acquisitions.
12).Mismanagement and poor standardization of business processes.
13). Extension from supply chain to the value chain.
14).Running out of ideas for new improvement projects.
15).An organisation that defies effective and efficient supply chain.

We could discuss each of these in great depth, but space and time is limited, however if you want to discuss any of these causes you have identified just drop me a line

Planning and Scheduling in the Supply Chain

December 28, 2012

Before relying on an ERP system to manage planning and scheduling activities, all companies should first make sure that the right processes are in place, standardized and uniformly used across the enterprise. Robust processes and policies will allow the company to generate accurate and timely data. Only then will a company be in a position to use an ERP system to improve planning and scheduling activities.

Major companies have invested heavily in ERP implementations and have suffered business disruptions whilst implementations have taken place. Despite good intentions, most companies haven’t come close to realizing the value achieved by those featured in various ERP case studies across the globe. Revenues have not increased by 20%. Operating costs have not fallen by 15%. Finally, on-time deliveries have never reached record highs of 95%.

So what is stopping companies achieving ROI? In my mind it is very clear that companies lack understanding and commitment! Firstly, the understanding that business value is inherently linked to business change, not systems change. From the commitment side it’s all about executing a good plan. However, this is another story! What we are confronted with now is that we have an ERP that is implemented which may or may not have achieved its ROI. Now we have got to get down to the operational level and try and recover what may have been lost or disrupted during the implementation however long ago it was.

The opportunity we are now presented with covers the whole enterprise and should allow the company to gain post implementation value, this area I am referring to is the whole Supply Chain, starting at the front end with Planning and Forecasting all the way through to settlements (including cash flow management). The area that we will concentrate upon here of course is replenishment planning, which by its very nature covers nearly all aspects within Supply Chain Management. This is where a company’s supply meets its demand!

Companies that plan well are more likely to:

·         Anticipate demand and respond nimbly to unforeseen market shifts

·         Have higher customer satisfaction rates

·         Have less cash tied up in obsolescing inventory

It’s where forecasts are converted into purchase and/or production orders. Planning activities influence inventory levels and, by extension, cash flow. The sad truth is that most companies’ ERP systems issue poor planning recommendations – ones that, if acted upon, would lead to a huge mismatch between supply and demand. Because those system-generated recommendations don’t reflect true operating realities; planners, purchasers, materials managers, production managers and others often ignore system-generated planning signals and advice.

Almost always, however, poor planning advice has little to do with the software itself. Software is made up of a bunch of 0s and 1s, and simply generates outputs from formulae and rules. In all likelihood, the formulae and rules were programmed just fine. Rather, poor recommendations are usually the result of inaccurate and untimely base data.

The good news is that any company can significantly improve its planning and scheduling activities. And, if it does, it’ll go a long way to generating that seemingly elusive ERP-related business value. From a high level, there are three key success factor to planning. They are:

·         Accurate Item and Movement Data – The system needs accurate data to simulate a company’s operating reality. Key data requirements include item-level order modifiers), bill of materials and routings.

·         Accurate Inventory Data – If inventory counts and movements are not accurately reflected in the system, the planning engine will either make recommendations that cause the company to 1) prematurely order inventory or 2) deliver items beyond the due date. The former case constrains cash flow and unnecessarily increases the value of a depreciating asset class. The latter case leads to higher rates of customer dissatisfaction and turnover. In our experience, a planning engine will only be capable of issuing meaningful planning recommendations when a company:

o    Has accuracy rates of 95% for its on-hand inventory

o    Maintains accurate demand and supply forecasts

o    Knows its minimum inventory level requirements (safety stock)

·         Timely Recording of Material Movements – The status of purchase orders and production orders varies over time, as materials flow through supply chains and production. To ensure that planning signals and recommendations are meaningful, the company needs to update the system promptly. Businesses can choose to do this a couple of ways – through manual input or in an automated fashion.

Supply Chain Performance

December 27, 2012

In recent months I have been asked to define Supply Chain Management for people that still do not really understand what it is and what I do as a supply chain management consultant, so for your benefit here is a brief explanation and how it drives all businesses today. Without a good Supply Chain Management Strategy in place there is a distinct risk of misalignment or failure of the overall business.

Supply Chain Management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It also includes all of the logistics management activities, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology.

Having looked at the Supply Chain management model, one has to ensure that it is performing as well as it can, therefore Performance Monitoring is an absolute must in businesses today! What do I need to look at to ensure my Supply Chain is performing?

There are predominately five Supply Chain performance attributes: Reliability, Responsiveness, Agility, Costs, and Asset Management. Consideration of these attributes makes it possible to compare an organization that strategically chooses to be the low-cost provider against an organization that chooses to compete on reliability and performance.

Reliability

The Reliability attribute addresses the ability to perform tasks as expected. Reliability focuses on the predictability of the outcome of a process. Typical metrics for the reliability attribute include: on-time, the right quantity, the right quality. Reliability is a customer-focused attribute.

Responsiveness

The Responsiveness attribute describes the speed at which tasks are performed. Examples include cycle-time metrics. Responsiveness is a customer-focused attribute.

Agility

The Agility attribute describes the ability to respond to external influence and the ability to change. External influence include: Non-forecasted increases or decreases in demand; suppliers or partners going out of business; natural disasters; acts of (cyber) terrorism; availability of financial tools (the economy); or labor issues.  Flexibility and Adaptability can be included as KPI’s. Agility is a customer-focused attribute.

Cost

The Cost attribute describes the cost of operating the process. It includes labor costs, material costs, and transportation costs. KPIs include Cost of Goods Sold and Supply Chain Management Cost. These two indicators cover all supply chain spend. Cost is an internally focused attribute.

Assets

The Asset Management Efficiency (“Assets”) attribute describes the ability to efficiently utilize assets. Asset management strategies in a supply chain include inventory reduction and in-sourcing vs. outsourcing. Metrics include: inventory days of supply and capacity utilization. KPIs include: Cash-to-Cash Cycle Time and Return on Fixed Assets. Asset Management Efficiency is an internally-focused attribute.

CSF’s for ERP Implementation, Survivors experience !

December 18, 2012

The process of implementing a new enterprise resource planning (ERP) solution is challenging and will send your organization down a long road of beneficial, although sometimes demanding, change. There is good news however, if it is done correctly, you will gain lasting benefits for your company’s operations and growth. The key question then is how to do it the right way? Because there are sometimes overwhelming volumes of minute detail to be addressed during the implementation process, it is all too easy to lose sight of the larger goals of a successful systems implementation and positive organizational change. The key to doing it “right” is to stay focused on the big picture and staying focused involves following six important Critical Success Factors.

Key steps for Success!

Your company must take some key steps to ensure your organization’s system implementation produces positive changes and long-term benefits.

1. Understanding the true significance of the implementation experience.

Since the company has decided to implement an enterprise-wide solution, this will probably the last time you will replace your mission-critical business systems. Any changes in the future will most certainly be upgrades or enhancements to the solution you have chosen. Investing in an ERP or another enterprise solution is a major commitment. One way to look at it is to think of it as the partial delegation of your IT strategy to a software vendor you ultimately select to be your solutions provider. You will be both restricted and enabled by the future direction that is defined by the product you select, which means you must choose the correct solution for your entire organization. Factors such as cost and functionality are important and are probably the easiest to quantify. However, do not neglect to consider other vital factors, such as the direction and viability of the software provider you ultimately select.
Implementing an ERP system is a business project, not an IT project. As such, it requires strong business sponsorship and ownership. Many ERP projects struggle because they are perceived and handled as IT initiatives and fail to gain the necessary business support that is required to guarantee success. Enterprise-wide application implementation projects are typically vast and complex. It is important not underestimate the scale of the project and the impact it will have across the entire organization. The project is likely to affect every aspect of your business and every person in the organization. Remember that in order to realize the greatest benefit from the system, everything within your organization needs be open to scrutiny. Many projects suffer because of conflicting initiatives within the organization. Prioritize and coordinate initiatives to ensure that the ERP project is not adversely impacted.

2. Ensure full commitment of the right resources to the project.

Many enterprise projects run into difficulty because the wrong people within an organization are assigned to the project or the right people are assigned, but on a part time basis. The project team members must have knowledge of the business as a whole, but must also be creative and capable of challenging the status quo when required. Project and team management members need to be respected members of the organization whose decisions can be trusted. They must be empowered to make key business decisions, and your steering committee must have enough faith in the team members to permit them to operate without tight supervision.

An ERP project is an excellent opportunity to reorganize and streamline your business. In order to ensure success, the best people within the organization need to be assigned to the project (full time). If their involvement in this undertaking doesn’t have some sort of capacity impact on your business, then you have in all likelihood chosen the wrong people to be part of the team.

The people you have selected should know upfront how important their role is and must be given a clear vision of their future importance to the organization. The selection of project team members should be conducted at the steering committee level, ensuring that the best and brightest people from within the organization are included. Resistance from management can be expected, but must be overcome in the interests of the project.

Involvement in this type of project typically expands the horizons and capabilities of each and every team member. Many develop a broad and deep understanding of a wide variety of business processes. Their value to the company and to other organizations will, therefore, be greatly enhanced due to their involvement with this project. Experience shows that appropriate, proactive strategies need to be considered in advance to motivate and retain these team members within the organization.

3. Manage the changes fully and effectively, be prepared!

Many organizations underestimate the impact their ERP project will have on their people, roles, skill requirements, and company structural organization. Successful change management is one of the most important factors in determining the success of the project. Experience shows us it is usually not carried out effectively. Perhaps it is because many organizations are uncomfortable with the nature of change management and therefore do not give it the support that is actually required.
In simple terms, effective change management ensures that your organization and personnel are ready, willing, and able to embrace the new business processes and systems that are called for in an ERP implementation. More often than not, employees will resist change unless you give them a good reason not to resist it. In order to avoid this type of situation, various strategies may need to be designed to positively influence potential resistors. It is important to note that blanket approaches to communication are quick fixes to the problem and are often ineffective. The tactics used need to be varied according to people’s level of influence, as well as their ability to impact internal situations. A network of project representatives (Key Business Users) spread throughout the organization supports the most successful communication strategies. These people serve as two-way conduits of information, helping to distribute project-related information and material, while also providing valuable honest feedback to the project team regarding potential hot spots. The members of your change management initiative need to be respected and trusted at all levels of your organization and should be connected with a healthy inter-company personal network. They, along with the Project Manager, will play a major role in your company’s change management effort.
Outside of traditional user training, the change management project team should strive to provide training in a wider sense. The desired business objectives related to your new solution need to be outlined, and a thorough explanation of new business processes, people’s new roles, and all aspects of the new system should be addressed. Formal training sessions provide an important forum in which to communicate these objectives and to influence personnel in regards to increased acceptance of the delivered solution, but in reality is too often forgotten or too little too late due to the projects timelines and budget constraints.

4. Plan to manage and measure the benefits.

Most enterprise solution projects are founded on a business case that are researched and reviewed. Many times these documents are all but forgotten once the capital expenditure is approved. Project managers report in great detail on the cost and time parameters of the project, but very few report on the benefits attained. The business case should be treated as a living document that is used as an effective project management tool.

Scope management needs to incorporate the effect on benefits, as well as the effect on cost and time. Keep in mind that changes within the organization or environmental factors may positively or negatively affect the attainment of promised benefits. At major milestones of the project, the business case should be reviewed and evaluated and, if needed, the expected costs and benefits should be restated. For each major category of benefit you expect to attain, both the ownership and key factors that may impact the delivery of that benefit need to be clearly defined. In other words, the business case needs to form the foundation for a detailed benefit delivery plan with ownership and time lines clearly defined. Tracking and managing in this way until the end of the project ensures that the benefits are, in fact, delivered and truly attained.

5. Embrace integration as fully as possible.

Many organizations resist the level of integration that is delivered and encouraged by enterprise systems. They attempt to retain the existing organizational structure, including the role of management and the roles and responsibilities of functional departments (remaining silo’s or islands of information). Integration, however, is going to challenge the boundaries between traditional, functional departments. As just a couple of examples, firstly placing information directly at the fingertips of operational staff will greatly reduce the reliance on administrative support staff, secondly, automation of business processes such as the procure to pay process will significantly reduce the numbers of administrative support staff, but will offer significant cost savings as well as opportunities for other processes to be enhanced. Roles throughout the company may need to be redefined, giving key individuals responsibility for end-to-end business processes. This may greatly change the roles of functional managers and even entire departments. Integration is also going to challenge the existing power bases within the company and change the very nature of some management roles. Significant changes to the entire organizational structure may be called for in order to extract the maximum benefit from your new ERP systems environment.

6. Planning for the end of the implementation project before you start.

Many organizations fail to consider the long-term implications of introducing an ERP system until the end of the project. If these implications are recognized and planned for in advance, the effectiveness of your project team will be enhanced and the overall benefits obtained from the project will be maximized.
Organizations need to consider how they will support their new system in the long term, which aspects, if any, will be outsourced, and what capabilities will be required in-house to maximize the return on the original investment. Your internal support organizations can become a key strategic facilitator for the company. Building internal centers of expertise can help to optimize your consulting investment in the future. If this sort of support organization is part of the project vision at the beginning, then the project management can start to position individuals for these key roles as the project progresses.
Other project staff may return to their old, perhaps redefined roles or may be suitable for other challenges within the company. It will help the project greatly if there is a clear plan for your project t team members’ transition back into the business. If people’s futures are not clearly defined, it will then become an issue at a very crucial stage of your project. Above all, you and your organization need to realize that the original project plan you start with is simply a springboard into a much larger process. The longer the project runs, the more your organization needs to embrace a continuous improvement mindset. Transitioning from a “project mode” into this structured business improvement phase is a hurdle for a number of companies and requires time and planning to address it properly.

What Next?

When you consider the internal and external forces involved in an enterprise solutions implementation, the path followed and ultimate results are never the same for any two companies. Hopefully, the steps described above will help improve the chances for success when the time comes for your company to implement its new enterprise solution. If your company is actively looking for a new solution or is planning on undertaking a selection process, your business will be best served by a system that is chosen based upon your particular requirements, and that is a whole different area to discuss, namely a Requirements Study.

Have you heard of Business Process Management?

December 16, 2012

It’s a question I have to ask many times when embarking on a new project, where are your business processes so that we can map them to the new application and improve the business process. Many times however I am greeted with blank stares or a policy book that is used by many of the departments as their guide to business practice, but real business processes are few and far between. so what is it really all about, and why bother about it at all?

Business Process Management (BPM) was unheard of just a few years ago, but it has burst onto the global scene to become the hottest business and technology management trend of the decade. If you’re in any business or industry — public or private — you’ve probably heard of the movement toward process, or about things like process management or process improvement. You may know about process improvement methods like Lean and Six Sigma or about new technologies like Business Activity Monitoring (BAM) or Service- Oriented Architectures (SOA).

BPM represents a culmination of all the collective experience, thinking, and professional development in business management over the past several decades. It’s customer first. It’s business focused. It empowers people in all corners of a business to be more successful. It brings people and systems together. BPM is where all the lofty goals and best strategies are coming home to roost.

Business Process Management (BPM) is a set of methods, tools, and technologies used to design, enact, analyze, and control operational business processes. BPM is a process centric approach for improving performance that combines information technologies with process and governance methodologies. BPM is a collaboration between business people and information technologists to foster effective, agile, and transparent business processes. BPM spans people, systems, functions, businesses, customers, suppliers, and partners.

So why should we use it and who benefits?

Business managers can more directly measure, respond to, and control all the aspects and elements of their operational processes.

Information technology managers can apply their skills and resources more directly on business operations.

Staff and workers across the organization can better align their efforts and improve personal productivity and performance.

The enterprise as a whole can more quickly respond to changes and challenges to continuously meet its goals and objectives.

BPM brings all dimensions of a business together, and enables new levels of participation and collaboration among teams, especially between business staff and IT professionals. BPM promotes quick, incremental improvements while reaching levels of process stability and performance quickly.

BPM is the central discipline, including the tools and the techniques that connects enterprises and organizations by fostering operational process performance with effectiveness, transparency, and agility.

Without business processes businesses cannot improve or transform into agile bodies, it’s the lifeblood of the business and needs to be understood from the top to the bottom. If you have not already documented your business processes, then now is the time to do it. If you have take the opportunity to revisit them and improve them.