Sem 11: SAP Implementation

This lesson was about ERP implementation and specifically SAP implementation. We read a few cases about ERP implementation of which some were failures and others successes. One of my group mate, Wei Jie, asked the group an interesting question. He wondered why there was more cases on failures then successes. I thought about it for a while and came up with a possible explanation. Firstly, most companies wouldn’t want to copy another company’s success. They would want to have their “own way” of doing things and attaining success so that others can read about their strategy. For example, if XYZ company were implementing SAP, they wouldn’t want to use ABC company’s strategy as any success attained by them would be attributed to ABC company. Secondly, although everyone wants to have their own strategy, they will also want to avoid all the mistakes the others have made while formulation their own. Therefore, I believe this is why there are more cases on failures then successes. There will be many other possible explanations but this is just one that I came up with.

There were a few key takeaways from this lesson. Firstly change management. Its importance cannot be emphasised enough especially since this “topic” has appeared in three different modules; Organizational Behaviour, Analysis & Management of IT Projects and Enterprise Computing. It also means that almost every semester I have studied this particular topic. Going forward, it will be important to me especially during internship where I will be heavily involved in business process reengineering. If there were sufficient cases and data available, I believe there will be a correlation between the amount of resources dedicated to change management and the success of implementation. Human beings are essentially creatures of habits and we do not want to change the way we do things unless there is an absolute necessity to. Thus, it is paramount that reasons and impacts of the change are communicated not only to the internal personnel but also the external parties. For example, upon implementing a new system, internal processes will be slow and customers may either not get the same level or service or efficiency as before. Thus, it would be appropriate to inform the customer. This will not only help to adjust the customers’ expectations but also build a long term relationship with them.

Second takeaway is integration. ERP or any IT system for that matter involves various departments in the company. Thus, a cross functional team is always important to give valuable input from the eyes of the various stakeholders. Furthermore, these projects also involve consultants who bring with them a wealth of knowledge about business processes and implementation. It is important to note that even projects will all these resources do fail. Thus, I feel integration is very critical in ensuring the success of ERP implementation. Integration of the current business process knowledge with the best practices, the various business requirements with the software capabilities and many more. These integration will not only ensure successful implementations but also eventually ensure that the system delivers the value it was sough to deliver. This integration can be done by getting users to contribute, discuss and even comment on some of the project details. This will also increase buy in from the users and help with change management.

Here is a short video on Hitler implementing SAP. Although its just for fun, I must say that some of the points there are pretty valid.

 

Sem 9: Supply Chain Management

Supply chain management (SCM) is another topic that is close to me especially since my father and brother both studied SCM and work in that field. From the lesson conducted by the group, SCM can be said to be the oversight of materials, information, and finances as they move in a process from supplier to manufacturer to wholesaler to retailer to consumer. SCM involves coordinating and integrating these flows both within and among companies

Supply chain management flows can be divided into three main flows:

• Product flow: Movement of goods from supplier to customer as well as returns
• Information flow: Transmitting orders and updating the status of deliveries
• Finances flow: Credit terms, payment schedules and consignment

In my opinion, Walmart would be the best case study for the topic of supply chain management. Walmart began with the goal to provide customers with the goods they wanted when and where they wanted them. They then focused on developing cost structures that allowed it to offer low pricing. The key to this goal was to make the way the company replenishes inventory the centerpiece of its strategy, which relied on a logistics technique known as cross docking. Using cross docking, products are routed from suppliers to Walmart’s warehouses, where they are then shipped to stores without sitting for long periods of time in inventory. This strategy reduced Walmart’s costs significantly and they passed those savings on to their customers with low pricing. Walmart has been able to assume market leadership position primarily due to its efficient integration of suppliers, manufacturing, warehousing, and distribution to stores. Its supply chain strategy has four key components: vendor partnerships, cross docking and distribution management, technology, and integration.

[Watch the video if you don’t want to read the rest of the text]

Walmart’s supply chain begins with strategic sourcing to find products at the best price from suppliers who can meet Walmart’s demand. It then establishes strategic partnerships with most of their vendors by offering them long-term and high volume purchases in exchange for the lowest possible prices. Products are shipped to Walmart’s distribution centers where the product is cross docked and then delivered to Walmart stores. Cross docking, distribution management, and transportation management help keep inventory and transportation costs down.

Technology plays a key role in Walmart’s supply chain. Walmart has the largest information technology infrastructure of any private company in the world. Its state-of-the-art technology and network design allow Walmart to accurately forecast demand, track and predict inventory levels, create highly efficient transportation routes, and manage customer relationships and service response logistics.

Walmart’s supply chain management strategy has provided the company with several sustainable competitive advantages, including lower product costs, reduced inventory carrying costs, improved in-store variety and selection, and highly competitive pricing for the consumer. This strategy has helped Walmart become a dominant force in a competitive global market. As technology evolves, Walmart continues to focus on innovative processes and systems to improve its supply chain and achieve greater efficiency.

It is important to note that Walmart did not achieve all this succuess just because it used IT or it has the largest IT infrastructure. Walmart fundamentally changed its SCM strategy such as going directly to manufaturers and cross-docking. IT was the enabler and the infrastrucutre to allow Walmart to better predict demand, increase efficiency and integrate its global operations. As we apporach the end of the module, I believe its good to raise the point that IT can only do so much, the rest still depends on strategy, operations and proesses of the company.

I found a interesting video about what a 21st century successful supply chain looks like. In my opinion, the person in the video touches a very important element of SCM in the last minute of the video; sustainable SCM.

 

Sem 8: Inventory/Warehouse Management

The topic of inventory and warehouse management can be said be a topic of special interest to me especially since most of my part time jobs have been in this area. For example, my last job was as an operation assistant at a third party logistics company. I also managed to get some experience with SAP as a user during this period.

The team that presented on this topic did a good job in trying to recreate the constraints and situations in a real life environment. It was a simple but very effective class activity organized around an A4 piece of paper and lego bricks.

The first key takeaway the team managed to establish very well is that if you don’t pay sufficient attention to inventory and warehouse management, it will end up in a mess. The first round was to have all the lego bricks on a piece of paper with no proper form of separation and management. This meant all the bricks were spread out and finding one to prepare the product as per specifications was a chore.

The second key takeaway would be that there is not standardized way to manage the inventory or warehouse, in this case the lego. My team decided to group the legos by colours and also create blocks of ten. We went with this system as the products usually have specifications like 47 bricks with at least 1 red and 1 blue. We could then easily grab 2 blocks of each colour and just make the product with smaller blocks lying around. It was our belief that it would be the best system. However, other teams managed to be faster than us probably because we were too slow filling up the forms.

During my job as operations assistant, the company used a mobile barcode scanner for picking. The picker had to scan the barcode of the picking list; he/she would then be directed to the specific racks to pick the products according to the picking list. This is a relatively efficient system and is done with the help of ERP as the system stores all the information about the inventory and orders centrally in one database. When the barcode of the picking list is scanned, the list of products that need to be picked are retrieved and subsequently the locations of these products are also retrieved and displayed to the user who then picks the items for packing. Sounds like a very efficient and seamless process which increase productivity, reduce cost and everything that IT is supposed to do to an organization.

[The device in the video is a little more high tech but the “concept” is similar just that the one I used was a handheld scanner]

However, many times when the picker goes to the specified location, either the specific item is not there or another item is present. This is because someone has either changed the physical location and did not update it on the system or accidently moved it to another location while picking. Another common problem encountered is the location does not have the required quantity. The question will then be “You mean the system is not smart enough to know that there is insufficient quantity?” Most of the times, it is either due to inventory loss or some error in the data keyed in earlier causing a sufficient quantity in the system but not physically. The key takeaway is that in the context of inventory and warehouse management, IT or the ERP system helps a great deal but it is not sufficient to focus on them. The physical and manual processes are as important. Otherwise, instead of the ERP system being the enabler, it will become something which does not provide much value.

 

Sem 7: Manufacturing Execution

Finally this week was synERPgy’s (my team) turn for class discussion. Therefore, I thought it would be more appropriate to reflect on the experience of “conducting” the lesson instead of the lesson itself.

I must first say that it wasn’t an easy task at all. Furthermore, our topic was manufacturing execution and none of us in the team had any manufacturing experience. Manufacturing related accounting classes were one year ago making it even more difficult. The following were some of the challenges my team faced while preparing for the class:

1. Content

Although James referred us to the specific chapter in the textbook, there is so much more information in it as well as on the internet. We had to understand the information presented, digest it and then decide what was most important for the class to know. In the end, I think we successful imparted the required knowledge to the class.

2. Class Activity

It is not sufficient to just present the content to the class. It was boring to us and definitely would have been boring to the class. Thus, we had to have a class activity to help us make some points and develop key points deeper. Due to the previous topics, most of the class activities involved filling up a lot of forms (which is what happens without ERP). Thus, we wanted to include some hands on activity especially since our topic was manufacturing execution. We eventually printed pokemon origami for the class to “manufacture” and the entire class activity was centred around it.

 

The entire lessons was indeed a enriching experience and the key takeaways were as follows:

1. Preparation

It is not easy to “teach” a class and takes lots of time and preparation to do it successfully and to present it in a interesting manner. Finally I can understand all the effort and time the professors put into preparing the lessons for us.

2. Learning by teaching

It is indeed an interesting way to learn. I wouldn’t want to do this for every single topic but 1 out of the 10 topics seem like the right balance. This method requires to know the content very well and also how it connects to the previous chapters and the next few ones. It gets you thinking with a much wider view.

 

Sem 6: Production Planning

EsSAPtion conducted the class today on production planning. As usual, I believe we should know why there is a need to learn something so as to better appreciate what we are learning.

The first question in my mind was does production planning exclusive to manufacturing companies? After some research I found that it is not necessarily the case. Production planning its actually a complex process covering materials, equipment and even human resource. Simply put, production planning is a roadmap to reach a particular place and I would say the place would be order fulfilment. From what I understand, production planning will tell you where you are going, how long it will take to get there and what you would need to get there.

My first key takeaway from this lesson was that production planning happens across the different levels and there probably isn’t anyway to run away from it. It starts from a strategic level to detailed planning and eventually execution level. This closely mimics what we learnt in Principles of Management; Strategic, Tactical and Operational.

My second takeaway would be the importance of data. Much of the planning and forecasting is done based on past and present data. For example, sales forecasting is based on sales history. Furthermore, a variety of data is need in the process such as inventory level, bill of material, capacity and more. I guess this is where SAP or ERP becomes vital; storing all this data centrally and make retrieving it a breeze.

 

Seminar 5: Procure to Pay Process

The procure-to-pay process is critical to every organisation. For a manufacturing company, this will directly impact the raw materials and their production. For a retailer, it would affect the inventory available for sale. Thus, it is paramount that the process be as efficient and effective as possible, and not a source of vulnerability.

I used to work in an organisation where the company departmentalise different stages of the procure-to-pay process. The typical scenario is as follows: An individual employee initiates a requisition specifying what product and vendor they want to purchase from, the requisition is approved by the reporting manager, and the approved requisition is sent to the purchasing department for processing.

However, if the purchasing department was centralized, chances are someone will forecast purchasing needs or consolidate requisitions from different departments, subsidiaries, or geographical locations to strategically select vendors, take advantage of volume pricing, and initiate competitive bids with various vendors. Thus, I always thought that the company should have centralised their purchasing department. However, this advantages are only through on the surface and I am not aware of the other business considerations and constrains.

When optimizing the procure-to-pay process, the focus is often on higher value-add activities like cultivating optimal payables strategies with suppliers and banking information exchange, centralized master data management, workflow-driven approvals management, and global, electronic payment capabilities. However, the other departments will want the optimized procure-to-pay process to be about centralising so that the respective departments will not have to do their own purchasing.

James also shared two important points(in my opinion at least) during the lesson. Firstly, the case of Ford. I will get to this on another post after collecting some information from last semester’s module. Secondly the Kraljic’s Portfolio Matrix which is used to help purchasers maximize supply security and reduce costs, by making the most of their purchasing power. In doing so, procurement moves from being a transactional activity to a strategic activity.

 

Seminar 4: Order To Cash

Candy Crush saga continued in the OTC lesson.

This process in my opinion is critical to any organization as it is the revenue generating process of the company. Thus, it will be vital to have a efficient and effective OTC process. Before dwelling into what makes an OTC process efficient, I decide to list some of the possible “symptoms” of an inefficient OTC process.

• High number of order-taking errors
• High number of errors in order fulfillment
• Inefficient and ineffective payment collection processes

In class, we discussed the benefits of switching from a manual OTC process to one that is supported by SAP. An organization can derive numerous benefits from improving the order-to-cash process.

An efficient order-to-cash process allows companies to:

• Decrease the administrative effort and cost required to manage the OTC process.
• Increase collections by decreasing DSO. Generally, older receivables are more difficult to collect, and the longer receivables remain unpaid, the higher the risk of a customer being unable to pay.

Having done an internship at Quantium Solutions as an operations intern, I was familiar with the distribution portion of the OTC process and it was a great opportunity to see the bigger picture and understand the other functions involved in the process. However, during my internship the company had built a system to automate the sales order process. The customers could go into a web portal and key in their orders. This would then create a sales order in the SAP system. The company I interned in would then manage this order, pick, pack and deliver the orders to the customers.

 

Seminar 3: Accouting

This week, the seminar was based on accounting. The presenting group described the accounting process and made us do some activities to better understand the process. At first, it seemed lame to ask us to do things, which we have previously learned. However, the take away from that session was way greater. At least for me, accounting lessons were all about ensuring I got the end figure correct. Balancing the balance sheet and ensuring the profit/loss was similar to the key answers given for the tutorial. I paid little attention to the process of getting there and was just solely focused on the end result. This student-led discussion and James’ brief history of ledgers made me realize the importance of the process and not just the end result.

Having understood the accounting process as well as going through the SAP Lab to understand how the accounting/ FICO (Financial Accounting & Controlling) module works, I wondered what accounting benefits can ERP bring to a company. The following are some that I could come with (feel free to comment and add more):

Efficiency (Speed). ERP gathers data and produces results more quickly and easily. Many users can add information to a ledger at once instead of having to go through one “bookkeeper”. Furthermore, less time is needed for closure of monthly, quarterly and annual accounts and reduction of time for issuing financial statements. This is so because all the information is centrally stored and there is no need to consolidate all the ledgers before making a report. With this readily available information, it also leads to improved decision making and internal audits.

Lastly, ERP reduces the number of personnel needed in the accounting department. Previously, one staff would be needed for a few accounts. Now, one staff can simultaneously handle multiple accounts and ledgers and still be more efficient in terms of reports and timely information.

All these benefits and “added features” lead to a change in the traditional accountant’s role in an organization is changing. Apart form having a solid understanding of business, they would also need to embrace the efficient technology available from ERP systems.

Accountants having knowledge about ERP and how it works will greatly assist companies in improving the management of their operations. Furthermore, as IT professionals to be, we would also need to be well versed in the accounting portion as well as features so that we can be of a helping hand to the accounting department to fully utilize the ERP system. For example, switching to continuous, real-time reporting using an ERP system instead of the traditional issuance of financial statements annually, quarterly or monthly.

I believe that as an IT professional to be, it is important to understand how the difference business functions operate and how various IT systems can benefit them (not just ERP). Therefore, this lesson is a start of my adventure into accounting information systems. Please feel free to express your views through comments.

 

Seminar 2: Introduction to Business Processes

Case Study

The assigned reading material for this seminar was the GBI Case Study. This case study has been used for quite a few modules now that I was wondering what more I could learn from it. Fortunately, there always is something new to learn from a case study. This time it was a lesson on Organisational Structure.

We were tasked to expand on this organisational structure.

Many of us are probably aware of the highest level of the hierarchy but as we go lower, we struggle to differentiate the roles and responsibilities. My group didn’t have much problem coming with the various functions in the organisation. However, much difficulties were encountered when assigning these functions to the various VPs. Since GBI operates in more than one country, location, centralisation/decentralisation became important factors. For example, the sales team. Do they reside in both countries are all the sales personnel centralised in America? If some sales personnel did exist in Germany/Europe, is there a need for another level of “regional manager”? These were just some of the questions going through our minds when expanding on the organisational structure shown above.  The discussion which followed the exercise was very useful in helping me understand how others decided to expand on the organisational structure and why they did that. At the end of the discussion, I have come to understand that the organisational structure are based on so many factors such as corporate culture, type of corporation (multinational/transnational/global/international), resources available and so many more. However, the organisational structure will eventually have some effects on the business processes as reporting channels and checks and balances can vary. The ultimate aim for the company will be deliver the exact same experience to the customer regardless of where they are in the world which then calls for standardisation and subsequently ERP.

Student-Led Discussion

The presentation group did well with a few hands on activity as well as delivering all the important information to the class. Since this post should be more reflective than a summary of the points mentioned in class, I decided to talk about what I think are the benefits of Business Process Modelling.

Align Operations with Business Strategy

Business process modeling helps to ensure that the business processes are aligned with and enable execution towards achieving the overall strategy of the organization. It ensures that the tasks performed by the employees actually help the organization implement its strategy. It is important that the processes and the strategy are aligned, as even if the operational tasks are performed correctly but not aligned, the overall organizational goals are not achieved.

Improve Process Communication

Process modeling offers a common language and methodology for communicating processes and information about processes and decision rules. It can also be used for training new staff and transfer knowledge at a much faster rate. It can also help managers communicate their ideas clearly and quickly especially when re-engineering or improving the process.

Improve Operational Efficiencies

In Singapore, productivity is the buzzword and every business wants to ensure that they are achieving the best possible results with the limited resources available to them. Hence, there is little or no room for inefficiencies. Modeling the business processes helps managers know if there is room for further optimization and efficiencies. It can also lead a mind-set of continually optimizing business critical processes to incrementally improve operational efficiencies and thus leading to better resource utilisation.

After the discussion I was wondering why would anyone involved in a broken process not want to improve/re-engineer it? I came up with some reasons and if you would like to share more, please leave comments.

1. High investments in current process (inertia)
2. Regulatory constraints (In banks maybe?)
3. BPR can be expensive and time consuming
4. Lack of management support (CEO/VP don’t believe it is important for the company to do so)
5. Employee resistance (Nobody wants to change the way they do things especially if they have been doing it for very long)
6. Lack of resources (Time, money and skills)