

Transition Management
Managing the associated organisational
changes

Day 3 Session 22
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Objectives of this session

NOT

 A generic education on Change Management

IS

 Attempt to highlight what changes (outside of the

technology) will
– take place and
– have to be managed

Day 1 Session 1 - Introductions and feedback from pre-work.ppt

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APS is not a Panacea...

‘The biggest hurdle is not just implementing new
technology, but adopting business practices,
organisational structures, and culture that encourages
coordination and collaboration’
What are the 3 biggest obstacles?
However, APS is an enabler of change
68%
Cultural resistance of staff
and management
54%
Poor state of current systems
38%
Complexity of new supply
chain technology
32%
High cost and resource
constraints
26%
Coordination with supply
chain partners
0 10 20 30 40 50 60 70 80

Source: Forrester Research, 'The Supply Chain Voyage', 1997

Day 1 Session 1 - Introductions and feedback from pre-work.ppt

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Most ERP applications failed to deliver
their full promise...
“The Corporate world is littered with the wreckage
of technically sound programmes that have been
crushed by employee resistance to change”
- Tom Terez, Modern Management,
Inc.

How successful are ERP Barriers to ERP success

}
initiatives?  Change Management
 Very successful 6.7%  Communication
 Other
52%

}
 Successful 25.4%  Defining objectives
 Somewhat successful 67.9%
44.7%  Existing thinking
 Not very successful 20.7%  Implementation
 Unsuccessful 2.5%  Realising benefits
 Time management
 Financing
 Prioritisation
 Co-ordinating multiple units
 Methodology

ce: 1996 research study of fortune 500 executives, conducted by CSC index
rce: Day 1 Session 1 - Introductions and feedback from pre-work.ppt
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Lessons Learned

 Is there a “burning platform” for change?

– If not, expect high level of resistance and focus on on-value

added issues
– If so, senior management must reinforce the message

Day 1 Session 1 - Introductions and feedback from pre-work.ppt

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Non technical issues required for good
planning...

IT Organisation

Plant / Metrics

One forecast

Discipline

SC Rationalisation
Organisation

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Group exercise

 Split into 6 groups

 Each group to take one set of issues
 Develop a role play to illustrate the issues that need to be
managed in your area
 Role play to last no more than two minutes

Day 1 Session 1 - Introductions and feedback from pre-work.ppt

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Plant / Metrics

 Traditionally  Best in Class

– Focus on cost – Focus on plan/schedule execution

– Long production runs – Shorter production runs
– No awareness of total delivered – Production schedule changes to
cost meet plan
– Suboptimal production schedule – Global and centralised Supply
changes Chain planning and visibility
– Control of only the local part of
Supply Chain
Must align KPI’s to overall Supply Chain effectiveness, including: Through put,
Inventory, Costs
Changes to the plant will still occur but it should now be possible to synchronise
these with the rest of the supply chain
Failure to address this means you don’t really have an integrated supply chain
planning process
Day 1 Session 1 - Introductions and feedback from pre-work.ppt
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Discipline

Traditionally  Best in Class

– Production schedules not – Production schedules maintained up to
date
maintained
– Obsolete data cleaned Out of Systems
– Hidden inventory
– Inventory is geared to customer service
– Obsolete data levels
– Many forecasts and plans – SCP organisation determines what
– Common Issues Found – Plants produce
 Plants Fail to Produce What – Plant/warehouses ship
Planning Org Wants – Measure conformance to plan rather than
to volume attainment
 Plants/Warehouses Fail to
Ship What Is Needed
 Plants kept on producing,
regardless of demand

Impeding Organizational Ability To Change

Existing transaction systems (can be a smokescreen)
Just never had to do it before (all the overt and covert drivers of behaviours have
been changed)
Day 1 Session 1 - Introductions and feedback from pre-work.ppt
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IT Organisation

Traditionally Best in Class

– Standard technical systems – Coordinates with business on
support system improvements
– React to problems – Co-located and dedicated IT
personnel to user groups
– Understand functional and
technical issues and how they
are interrelated
– Are flexible with the number
of system change requests
that are catered for

Impeding Organisational Ability To Change

Existing IT skill set
Tendency to try to function as before (now need to become shareholders in the
business)

Day 1 Session 1 - Introductions and feedback from pre-work.ppt

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The One Number Forecast Concept

Traditionally Best in Clas
 Separate forecasts for: One forecast as basis for all business
– Inventory replenishment planning plans:
– Sales Inventory planning
– Marketing Sales
– Transportation Marketing
– Production planning Transportation
– Strategic purchasing Production planning
– Sales and operations planning
Strategic purchasing
Sales and operations planning
Forecast Jointly Owned
Updates to Forecast Drive Changes
to All Plans
•Impeding Organizational Ability To Change
“Got to Make the Finance Number”
Reality: making product that you can’t sell doesn’t help bottom line
Non-collaborative forecasting allows for
Excuses later on & “If they’d only used my forecast number”
Day 1 Session 1 - Introductions and feedback from pre-work.ppt
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Supply Chain Rationalization

Traditionally Best in Class

– Little to no effective – Item and customer
item/customer differentiation differentiation /rationalization
 including
the elimination of low
– Forward coverage safety stock
performing items
strategies
– Rationalised economic
– Outdated, invalid minimum
production quantities
production quantities
– Rationalised economic
– Outdated, invalid
replenishment quantities
replenishment quantities
– Rationalised safety stock
Impeding Organizational Ability To Change
levels
Typically Gets Pushed Out of Project Scope
Client: “We’ll Take Care of This”
Reality: Does Require Additional Resources

Day 1 Session 1 - Introductions and feedback from pre-work.ppt

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Supply Chain Management Organisation
skills

Traditionally
 Mainly routine, ‘transactional tasks’
– Generating reports
– Order chasing
– Second guessing forecasts
– An understanding of MRP (perhaps not even MRP II)
 Functional experience
– Typically rise through manufacturing or warehousing ranks
– Narrow view on information, e.g. only look at management information
– Lack of cross-functional empathy
 Knowledge base
– Lack of total Supply Chain process understanding
– Administrative procedures
– An understanding of MRP (perhaps MRP II)

Day 1 Session 1 - Introductions and feedback from pre-work.ppt

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Supply Chain Management Organisational
Skills
Best in Class
 Process driven
– Decision making (how to best match demand with supply)
– Problem solving, with both manufacturing/distributions and sales/marketing
– Collaborative forecasting
– Cross supply chain knowledge of processes and tools
 Integrated Supply Chain experience
– Cross-functional experience
– Holistic view of how information is used throughout Supply Chain
– Lived through a variety of jobs, including manufacturing/distributions and
sales/marketing
 Knowledge base
– Understand the supply chain trade offs

Day 1 Session 1 - Introductions and feedback from pre-work.ppt

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Supply Chain Management Organisational
Skills
 Expert User Group
– Will need to create an expert user group to manage the
requests for system changes / modifications and enhancements
– Manage software upgrades
– Ensure the system remains uniform across functions and
geographies
 Organisation Database Administration
– Will need to create a role to
– check base data
– check static data
– maintain integrity and performance of system

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How Do We Address These Issues?

 Top of the list of critical success factors

 Risk/reward agreements -- future of SCP implementations

 People will do what they have incentive to do

 Target clients who are willing to tackle these issues

– Walk away if necessary

 Retraining of Client Personnel

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KPI’s - a Change Management issue and
enabler

 One issue that has to be faced when in Supply Chain planning

work is the existing measurement system
 Traditional measures tend to optimise each separate part of
the supply chain, resulting in a sub-optimal whole
– eg, traditional factory measures of, plant costs and
capacity utilisation can drive up inventory levels
downstream

If we seek to integrate and optimise the supply chain, we

need a set of measures that drives behaviours to do so ...

Day 1 Session 1 - Introductions and feedback from pre-work.ppt

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What Makes A Good KPI

Some of the success criteria for a good performance indicator
are that it must:

 Be consistent - each measure must support the other measures

in the specific actions identified
 Be meaningful - changes to the measure must be easily
attributable to a cause;
 Be relevant - reflect the performance of a parameter that is
fundamental to the business;
 Be all encompassing - as a package the KPI’s must cover all important
aspects of the business operation;
 Be well defined - everyone has the same understanding of the
measure, how it is created and what it means;
 Have a defined target - the normal operational level of the indicator is
understood , as are the ‘out of specification levels; and
 Be available in time - presentation and analysis of the data must
reflect the speed at which resolution actions are required

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Total Supply Chain Performance Measures

STRATE
GY

 High levels of customer

satisfaction with CRITICAL SUCCESS
products
FACTORS
and service levels
 Responsive to market
 Cost efficient operations

 Perfect order
fulfillment KEY PERFORMANCE
 Customer satisfaction MEASURES
 Product quality
 Order fulfillment lead
time
 Total supply chain cost
 Inventory days of
supply Day 1 Session 1 - Introductions and feedback from pre-work.ppt
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KPI Measurement
Under a constantly changing planning environment, measuring
performance against a moving target creates problems
Orders
Run Plan

instruction
instruction

instruction

Resell
Resell

Resell
Customer
Procure product Make product Ship product

 Do not shy away from measuring performance versus a constantly

changing plan. If there is discrepancy (ie, <100%) then investigate to
see whether the cause is inability to react, insufficiently flexible,
poor performance or unrealistic planning
 May have to change measures from weekly (old) to daily (when plan
runs)
 Also,might have to set a few measures that force people to use new
systems eg, number of exception messages per day
Day 1 Session 1 - Introductions and feedback from pre-work.ppt