The Company & Project
An aerospace company was deploying a templated SAP solution to each of the divisions. A templated solution uses an existing design and challenges the business to adopt it with as few technical changes as possible. Instead, the business is asked to re-engineer their internal processes to the solution being provided. The benefits of this approach include expedited, lower cost implementations and consistent processes across an organization, allowing for centralized support. It is an industry standard way of implementing an ERP solution for global organizations.
The division was both a manufacturing and distribution facility in Ohio. All supporting business processes were in the same facility as well, including customer service, finance, production planning, quality management, product development, etc. The business team was actively engaged in the project and super users were defined for each process area. The implementation in the scheme of the overall program was somewhat minor, but the facility was not small by any stretch. The implementation team was based in California.
The project itself had been completed for 3 weeks and the implementation team had moved on to the next facility, leaving first line support to the super users. Escalations to 2nd level support were to go directly to California. First shift at this manufacturing facility began at 7am eastern time and there was no support from the west coast until the day was more than half over. By the time the local team connected with a project resource, the damage to productivity was already catastrophic. In short, the project team left before the business was confident in the new system and the super users were left scrambling with little support. P2A was brought in as local resources to support the business team in a time of crisis.
The fallout of the project was pretty dramatic. Scores of temp workers were doing daily inventory cycle counts, so labor costs were at an all-time high. The returns department was buried in shipments being sent back, and customer satisfaction was lower than it had ever been. The division executives were searching for new leadership in the warehouse as key performance metrics were not even able to be tracked, let alone be met. The reasons for the chaos were several – no silver bullet solution was waiting in the wings to get the business back on track. Data issues, training problems, lack of reporting all contributed to the conundrum.
“AOG” stands for “Airplane on Ground.” It is an acronym that is synonymous with angry passengers sitting in an airport terminal as airline representatives frantically rebook missed connections as customers wait for a part to be replaced or a plane to be swapped out for another one. For the wheels and brakes division, key parts and repair kits were always kept in inventory to support AOG calls – response time to AOG calls was a metric calculated in minutes. After implementation, AOG inventory could not even be found by the warehouse team, so other facilities had to compensate as much as possible.
The division had very strong leadership and an incredible culture steeped in a commitment to LEAN and Six Sigma. Every day at the beginning of the shift the entire facility conducted stand up meetings for 10 minutes. KPIs were reviewed and targets set. Staffing plans were communicated and action plans to address key issues were articulated. Each department became a focused team during those meetings. But without metrics, the department leaders had no data with which to formulate the action plan. Everyone knew things were bad, but they didn’t know where to focus first.
The leadership team appointed accountable people in each area to document the problems. Serving as local SAP experts, we helped the departments prioritize the work based on the downstream impact of the identified issues. Production planning problems and incorrectly configured RF Scanners were affecting warehouse inventory levels. Inventory accuracy and shipping discrepancies were driving returns. Lack of training created a backlog of returns to process.
Step 1 was to capture operational KPIs to get a baseline of where we were and enable the established practices to be the vehicle for resolution.
Step 2 was to re-train the employees on the new processes. Lack of effective training was a clearly one of the overarching root causes. Process issues were identified and STOP/START/CONTINUE communications became part of the daily standup. Training documentation was made available on the department dashboards alongside the KPI targets.
Step 3 was to work with the implementation team to resolve identified system issues and fix bad master data.
Step 4 was to identify core areas for improvement and created a series of LEAN events scheduled to address them. This ensured department buy-in for the solutions presented and leveraged a well established process to integrate change.
In this engagement the focus was not to change the configuration of the system, though some changes were certainly required and implemented. The work required was actually to help the business adopt the system that was provided. That initially focused on triaging the incidents and measuring the baseline performance. One example was on-time delivery of parts – which post go-live had plummeted to 60%. Within 9 months we were able to bring the metric back to the target KPI of 97+%. But the goal of an SAP implementation is ultimately to reduce cost in order to drive the anticipated ROI. Optimization efforts through Lean initiatives were implemented as the system adoption gained momentum – the business did not stop when the KPIs were achieved. When the economy took a turn and layoffs were required, the organization was able to respond with efficient systems and processes. As the market demand picked back up, those efforts resulted in a streamlined labor force that was able to increase capacity with the existing capital.
The lessons learned from this project were numerous. A leadership team leveraged their unique culture to address a crisis in their business, and brought in local expert resources to help the operational team. Accountability was paramount and authority over process decisions was given to key team members that were in the trenches of the issues.
Key failures of the go-live were not understood until after the implementation team had already left. Business readiness was crucial and under prioritized within the project success criteria. Business stability was not achieved before the implementation team was deployed to the next assignment. In the end the organization was stronger for the experience, but with a pretty substantial short term impact to the bottom line.