GETTINGRIGHT (PART TWO)

In his concluding article, John Sellers, senior managing consultant withNolan, Norton & Co., explains how his fictitious company, Process

Manufacturing, went down the IT path with a description of how PMLapproached the planning and implementation of the new DRP/MRP system.

In the first article (June issue), we learned howthe £40M turnover Process ManufacturingLimited (PML) organisation linked InformationTechnology (IT) investments to its business

vision and then established an IT strategy. Theagreed IT strategy was to implement newManufacturing Resource Planning (MRP) andDistribution Resource Planning (DRP) packages onnew hardware to support the company's twomanufacturing operations and ten sales distributionpoints. The process by which the new MRP and DRPsystems were selected and implemented is nowdescribed.

The process involved four steps:

• the establishment of a core PML project team torun this part of the project and the preparation of adetailed statement of requirements

• preparation of a request to tender document• selecting a short list of six suppliers• evaluating supplier responses and selecting the

preferred supplier

The Steering Committee was in fact the PMLBoard, the Project Director was the ManagingDirector and the project coordinator was the FinanceDirector. The commercial managers from thesouthern and northern manufacturing plants wereresponsible for coordinating activities both withintheir plants and between all the PML operationalunits.

The statement of requirements is a user-orientateddescription of the required IT systems. It concen-trates on what is required rather than how it is to bedone. It should be prepared without any preconceivedbias towards any particular hardware or softwaresolution. It is intended to represent what PML ideallyneeds - possible solutions will be compared laterwith this target.

In the case of PML, the same senior managers(the project sponsors) who were involved in theearlier vision and business modelling workshops andwho had contributed to establishing the benefits offuture investment in new IT systems were involved in

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Figure 1: The implementation project structure provides the framework

preparing a detailed statement of PML's systemsrequirements. In addition, their departmental staffmade significant contributions. The work took severalweeks to complete and, at the end of the exercise, acomprehensive statement of requirements for each ofthe main application areas in MRP/DRP systems wasprepared covering:• inputs to and interfaces between each application• processing rules• reports/enquiry screens• data to be maintained• integration requirements• processing timescales• hardware and communication considerations• data volumes• performance criteria

The use of manufacturing consultants from PeatMarwick McLintock helped each project sponsor inpreparing the statement of requirements and indiscussing alternative procedures, particularly theopportunities arising from using IT to reorganiseexisting functions. The final document was formallypresented to the senior managers and their staff ateach manufacturing location. This was important fortwo reasons: first, the new integrated systems wouldchallenge the existing functional organisation ofPML. Therefore the senior managers had to be awareof the new opportunities available to PML from suchpotential reorganisation. Second, because eachapplication was looked at separately, an overview ofhow all areas would fit together was necessary. Thedocument was also agreed by the PML Board.

Awareness of the new organisational forms thatPML would need to adopt to get the best fromadvanced IT was beginning to dawn on the seniormanagers. This had been raised in the earlier ITstrategy work. Exposure to consultants familiar withsuch organisational changes was also assisting themanagers in thinking through the implications in theirown functional areas. (This change of organisationalfunctions that IT can enable is a fundamental issue andwill be addressed later in this article).

The request to tender (RTT) document wasprepared using Peat Marwick McLintock's standardtender document suitably modified for PML'srequirements. Although this was relatively straightforward, it was important to involve the seniormanagers in this step by presenting the mainsections in the RTT and principles behind the tenderdocument to them. The short list of six suppliers was

MANUFACTURING ENGINEER 39 JULY/AUGUST 1989

chosen from a long list of about 20 potential

suppliers known to PML and the consultants. Again

there was strong user participation in this process.

The RTT document was issued to the six potential

suppliers. After discussions with each supplier about

PML's requirements, the tenders were received

several weeks later, evaluated, and a short list of two

was established by the project team. The next

activities included visits to reference sites to see as

much of the proposed systems in action by other

users, further meetings with each supplier to clarify

certain issues, running some test data through the

suppliers' MRP/DRP systems, phone calls to

reference sites and eventually a formal presentation

to PML by each of the two suppliers. The formal

presentation was to the PML Board and the PML

senior managers involved throughout the project -

about 20 people in total. After this event a preferred

supplier was chosen.

A letter of intent was then sent to the preferred

supplier as certain areas where bespoke programming

was required needed to be defined in detail and

hardware sizings needed to be more thoroughly

evaluated. A small payment was made to the preferred

supplier to undertake this work. This work, referred to

usually as a 'Package Fit Study', involved a lot of hard

work, again involving the key senior managers of PML.

For example real data from PML was put through the

system over a four day off-site workshop.

The outcome of this work was successful,

contracts were signed, and implementation started.

Strong user involvement in all the project steps to

gain user commitment and consensus had been the

main feature of PML's approach to the project so far.

This involvement now intensified for the key senior

managers who are the chosen project sponsors for

particular application areas.

In essence, these project sponsors were now

charged with re-organising PML to use the

DRP/MRP IT systems in an effective manner.

Awareness of this important task had been growing

within all of PML ever since the project started -

fostered and encouraged by the external consultants,

self education, visits to reference sites, discussions

with the chosen systems supplier and by putting

some live PML data through the suppliers' packages.

To undertake this work, and to provide PML

management frameworks to control it, the implemen-

tation project structure shown in Figure 1 was set up.

The project structure is similar to the one described

for the selection part of the project, but has been

expanded to include a project manager and the IT

manager on the project team. The project manager was a

user who was well respected throughout PML and who

was previously in charge of the largest PML regional

warehouse/sales operation. He would be 100%

dedicated to the project - the other key people on the

project team would spend 50% of their time on the

project. External consultants were also used to

supplement the project team to provide coordination and

expertise in encouraging and promoting the new

procedural opportunities made possible by the new

generation of IT systems. While this was going on, the

computer and the applications packages were installed.

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Planning!

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Figure 2: Don't let the software hold you back—the time saved by working from a well-thought outbusiness plan can be significant

PML had decided to approach implementation as a

total business driven concept rather than implemen-

ting each software application area one at a time (see

Figure 2). The disadvantages of implementing one

application area at a time is that opportunities for

changing the way business is done are missed in the

sheer pressure of implementation. And it is very

difficult to backtrack change, especially after the

trauma of implementing new systems. Other

advantages for the total business driven concept

approach versus the traditional software driven

approach include:

• a shorter overall project cycle

• less project expense

• enhanced probability of total success

• business benefits delivered faster

• a business driven approach rather than an

applications software driven approach

• problem areas are highlighted before full

implementation

In order to simulate the new organisational

environment, PML decided first to model and then to

agree at all management levels what the changed

organisation was to be. Implementation of systems

was then going to move towards this goal. This

approach involved the following sequence steps:

• generic education on DRP/MRP concepts

• training in the use of the new software packages

• building up a small set of real PML data for each

application area

• modelling, in a business design sense, the total

PML operation with the new DRP/MRP packaged

systems

• establishing the new organisational forms required

to derive full benefit from the new systems

• agreeing the organisational changes with the

PML Board

• defining and documenting the new operational

procedures

• agreeing a detailed implementation plan

Each project sponsor and his team went through

the education and training programme and then built

up their own comprehensive application area data.

Then the project team modelled the whole PML

business operation closely involving the project

sponsors. These people then together defined the

new organisational forms of PML and agreed these

with the PML Board. The process involved in

determining how IT could assist in new organisatio-

nal forms included:

• removing work activities

• simplifying work processes and

• integrating activities

Such work directly challenged the existing

organisational forms and so it was essential to have

all Board members and the project sponsors involved

in the project from the start. The involvement of all

PML Company staff in the above approach was also

important and PML estimated afterwards that about

80% of all its employees had some sort of

involvement in the project.

In order to proceed quickly, PML set up special

facilities to enable the teams of people to work on the

systems. They divided their existing training room

into two separate areas so that two project sponsor

application teams could be trained and work on

computer systems at the same time.

The whole business driven planning activities

described above took about four months to complete,

the detailed implementation planning about three

months, although there was some overlap with the

earlier business modelling stage. The actual detailed

implementation of the systems took about a year.

Overall, the total project from the initial business

vision creation to the final review of the total

implementation took about three years.

And the final outcome? All the business benefits

defined at the start of the project were realised. The

finance director who was project co-ordinator said:

'As a result of all this our profits to turnover ratio will

double in 18 months. Overall, our use of IT has

fundamentally changed the company to one with a

much larger company outlook. We are now looking

for substantial growth over the next few years.' iili

MANUFACTURING ENGINEER 40 JULY/AUGUST 1989