Company-Wide Implementation

In Chapter 2 we talked about the two different implementation approaches
contained within the Proven Path methodology: Company
Wide and Quick Slice. We’ll get into the details of Quick Slice in
Chapters 12 and 13. For now, let’s look at how to implement ERP on
a company-wide basis. To get started, consider the following:
It’s possible to swallow an elephant . . . one chunk at a time.
Be aggressive. Make deliberate haste. Implement in about 18 months
or less.
Those two concepts may sound contradictory, but they’re not.
There’s a way to “swallow the elephant one chunk at a time” and still
get there in a reasonable time frame. Here’s the strategy:
1. Divide the total ERP implementation project into several major
phases to be done serially—one after another.
2. Within each phase, accomplish a variety of individual tasks simultaneously.
For almost any company, implementing all of ERP is simply too
much to handle at one time. The sum of the chunks is too much to
digest all together. That’s one reason for the multiphase approach.
Further, in many cases, activities in the subsequent phase are dependent
on the prior phase being completed.
The use of simultaneous tasks within each phase is based on the
need for an aggressive implementation cycle of typically one year to
18 months for a business unit of average size. Doing each of the many
tasks involved serially would simply take too long.
For the time being, let’s assume a three-phase project. Let’s examine
what’s to be done in each of the three phases:
Phase I—Basic ERP:
This includes Sales & Operations Planning, demand management,
Rough-Cut Capacity Planning, master scheduling, Material Requirements
Planning, plant scheduling where practical, and necessary
applications for finance and accounting. Also included here are
the support functions of inventory accuracy, bill of material accuracy
and structure, plus activating the feedback loops from the plant
floor and purchasing.
Basic ERP is not all of Enterprise Resource Planning. Of and by
itself, it will produce substantial results; however, key elements remain
to be implemented. This phase normally takes about nine to
twelve months to complete.
Phase II—Supply Chain Integration:
Included here are the processes that extend ERP both backward
and forward into the supply chain: backward to the suppliers via
techniques such as supplier scheduling and Internet-based businessto-
business e-commerce; forward toward the customers via distribution
requirements planning and vendor managed inventories
(VMI).1 This phase usually requires three to six months, possibly
more depending on the scope and intensity of the applications.
Company-Wide Implementation—Overview 45
1 Many people use the term VMI to refer to linking with their suppliers and refer
to customer linking as Continuous Replenishment (CR). With either term, the processes
are the same.
Phase III—Extensions and Enhancements to Support Corporate
Strategy:
This phase covers the extension of ERP software capabilities further
throughout the total organization. It can include completion of
any finance and accounting elements not yet implemented, linkages
to other business units within the global organization, HR applications,
maintenance, product development, and so on.
Also included here may be enhancements that were identified earlier
as desirable but not absolutely necessary for phases I or II to become
operational. This could include full simulation capabilities,
advanced planning systems (APS), manufacturing execution systems
(MES), enhanced customer order entry processes, development
of a supplier rating system, and so forth.
Time required for phase III could range from several months to
more than a year, reflecting the fact that this phase is less defined and
more “free form” than the prior two phases. In fact, there’s a progression
here: phase I is somewhat more structured than phase II,
and phase II more so than phase III.
Let’s consider elapsed time for a moment. From the above, we
can see that phase I (Basic ERP) begins at time zero and continues
through months 9 to 12, phase II (Supply Chain Integration)
through months 12 to 18, and phase III (Extensions and Enhancements)
through about months 18 to 30.
This says that the total project’s time can range from a bit more
than a year up to between two and three years. Why the broad time
span? It’s mainly a function of several things; one factor is the size
and complexity of the organization, another of course, is the resources,
and perhaps the most important element is the scope of the
overall project, that is, how extensively the supply chain tools are to
be deployed and how far extensions and enhancements will be pursued.
Here’s the critical point regarding timing: Implementing Basic
ERP successfully (the phase I task) will generate enormous benefits
for the company. And, if you do it right, you can get it done in nine to
twelve months. Part of doing it right is to avoid “scope creep,” i.e.,
laying non-critical tasks into phase I. It’s necessary here to adopt a
hard-nosed attitude that says: “We’re not going to tackle anything in
phase I that’s not necessary for Basic ERP. When we come across
46 ERP: M I H
‘nice-to’s’ (opportunities that aren’t essential for Basic ERP), we’ll
slot them into phase II or III. All we’ll work on during phase I are the
‘have-to’s’—stuff that’s essential for Basic ERP.”
On occasion, people question the location of time zero—the day
the clock starts ticking. Should it follow the early and preliminary
steps, as shown on the phase I bar chart? Or should it be at the very
beginning of audit/assessment I?
We prefer it where it is, because that facilitates the consensus
building, which is so important. Some companies move through
these early steps quickly, so for them the precise location of time zero
is not terribly important. Other companies, however, find they need
more time for these early activities than the several months implied
by the chart. The principles to be considered are:
1. Take as much time as needed to learn about ERP, and build a
consensus among the management team. Set the vision statement
and the performance goals. Do the cost/benefit analysis.
Make sure this is the direction the company wants to go. Then
commit to the project.
2. Once the decision is made to go for it, pursue it aggressively.
Occasionally, people have questions on the functional content of
each of the three phases, such as: “Why isn’t supplier scheduling in
phase I? Can we move MRP to phase II and Sales & Operations
Planning to phase III?”
The timing of this implementation plan is structured to get the basic
ERP planning tools in place early. For example, companies that
implement advanced supplier scheduling—possibly via the Internet—
before material requirements planning, may save a few bucks
on reduced paperwork and get a better handle on order status, but
probably not much else.
This is because most companies, prior to successful ERP, can’t
give their suppliers good schedules. The reason is their current systems
can’t generate and maintain valid order due dates as conditions
change. (These companies schedule their suppliers via the shortage
list, which is almost always wrong, contradictory, and/or incomplete.)
The biggest benefit from effective supplier scheduling comes
from its ability to give the suppliers valid and complete schedules—
Company-Wide Implementation—Overview 47
statements of what’s really needed and when. It simply can’t do that
without valid order due dates, which come from Material Requirements
Planning (MRP).
Further, material requirements planning can’t do its job without a
valid master schedule, which must be in balance with the sales & operations
plan. That’s why these functions are in phase I, and certain
“downstream” functions are in phase II.