COMET EMEA Daily Hypercare Leadership Meeting 7Mar2011

Report
Using Technology to Create Value
Health and Personal Care Logistics Conference
April 12th 2011
Agenda
 Level Set
1. Overview of Supply Chain Technology
2. Business Reengineering
 Pendulum - Enterprise Resource/ Business Reengineering
and People
1. Key Questions
2. Case Study
 My Experience
1. Project Structure
2. Processes
3. Lessons Learned
 Questions…..answers?
1
Stages of Supply Chain Development
Stage/Capability
1. Multiple
Dysfunction
2. SemiFunctional
Enterprise
3. Integrated
Enterprise
4. Extended
Enterprise
Internet
Mail
Catalogs
Intranets across
all functions
E-commerce
Integration
None; no
teamwork
Batch
Internal process
integration;
teams
SC Networks;
process
integration
SCP
Little
Information
Exchange
Informal; no
initiative
coordination
Formal/global;
enhanced
logistics
Integrated
global planning;
SC vs SC
competition
Production
Basic MRP
MRP II
MRP-ERP
•Integrate with
Externally
Integrated ERP
Fax/phone
EDT;low pricing
EDI with all
large suppliers
VMI;CRO On
line RFQ
Research
Local Inventory
ATP
CTP
Suppliers
Customer
delivery
APICS
2
Features of ERP
Some of the major features of ERP and what ERP can do for the
business are:
 ERP facilitates company-wide Integrated Information System
covering all functional areas like Manufacturing, Selling and
distribution, Payables, Receivables, Inventory, Accounts,
Human resources, Purchases etc.
 ERP performs core corporate activities and increases
customer service and thereby augmenting the Corporate
Image.
 ERP bridges the information gap across the organization.
 ERP provides for complete integration of Systems not only
across the departments in a company but also across
affiliated companies.
 ERP is a solution for better Project Management.
3
Features of ERP (cont’d)
Some of the major features of ERP and what ERP can do for the
business are:
 ERP allows automatic and one time introduction of latest
technologies like Electronic Fund Transfer (EFT), Electronic
Data Interchange (EDI), Internet, Intranet, Video
conferencing, E-Commerce, etc.
 ERP eliminates the most of the business problems like
Material shortages, Productivity enhancements, Customer
service, Cash Management, Inventory problems, Quality
problems, Prompt delivery etc.
 ERP not only addresses the current requirements of the
company but also provides the opportunity of continually
improving and refining business processes.
 ERP provides business intelligence tools like Decision Support
Systems (DSS), Executive Information System (EIS),
Reporting, Data Mining and Early Warning Systems (Robots)
for enabling people to make better decisions and thus
improve their business process.
4
ERP Implementation Barriers
 Low Tolerance for Risk
 Lack of Time
 Funding
 No Consequence Management
 Fit to Future state or as is
 Lack of Synergy
 Poor Follow Through
 Lack of Clear Communications
 Deficient of Planning for and Management of Resistance
5
Leveraging ERP Systems; ERP Manufacturing
Modules/Interfaces
Stage 1
Multiple Dysfunction
2.
Semi-Functional Enterprise
3.
Integrated Enterprise
4.
Extended Enterprise
MRP no clear definition or goals;
transactional links only
MRP II; quality (etc.) initiative in
nucleus firm; little cross functional
decision making
ERP; silo walls broken down;
S&OP;ERP platform to advance to
stage 4
Integrated networks from firm to
suppliers; first linked partnership
points the way to networked enterprise
6
Role of IT in Supply Chain
 Augment data accuracy
 Gathering, storing, analysis , sharing large amounts of data
 Increasing velocity
 Supporting simulation activities
 Replace inventory with information to facilitate from push to
pull system
 Nexus with suppliers/customers
 Create trust through information sharing
 Align with company strategies
7
Business Process Modeling Rationale
 Understanding the Business – increase knowledge of business
activity and to facilitate communication
 Creating Suitable Information Systems – basis for
engineering requirements
 Improve the Current Process Structure and Operation –
identifies clear picture of the current state used to identify
changes required for improvement
 Data for experiments – can be used to experiment with new
business concepts and to study implications
 Acts as baseline for outsourcing opportunities – core parts
can be examined and those deemed less important can be
delegated to external suppliers
Erriksson & Penker, Extensions 2000
8
Business Process Reengineering
Business Process Re-engineering is the:
 fundamental rethinking and radical redesign of business
processes to
 achieve dramatic improvements in critical, contemporary
measures of performance, such as cost, quality, service &
speed.
A popular misperception about BPR is that:
 it is a means of streamlining the business processes. There
exists a fundamental difference between streamlining a
business process and re-inventing it.
 streamlining is an exercise, which result in making
incremental changes to the current process to increase
performance parameters like quality, etc. In the case of reinventing a process, the existing one is scrapped and a new
one is created from scratch with a fresh look. Concepts &
ideas from within and outside the industry should be
welcomed. Projects are often identified at points along the
change continuum - Streamlining to Re-inventing
Vivek Gaurav
9
The Supply Chain Value Creation Framework
Goal
The Objectives
Profitable Growth
Increased
Value for
Shareholders
and Investors
Margin Improvement
Capital Efficiency
The Actions
The Value Drivers
Capture new
markets/customers
SC strategy and excellence
Outperform
competitors
Product availability
Service innovation
Minimal operation expenses
Reduces costs of
goods sold
Optimal product flows
Improve speed and
productivity
Technology and productivity
Reduce working capital
Demand-Supply
management
Reduce fixed assets
Free cash flow
Inventory optimization
Thompkins Associates
10
ERP - Business Process Reengineering Questions
 Should the processes be reengineered first and then improved
processes be automated?
 Reengineer processes after implementing ERP?
 Totally avoid reengineering and go about implementing ERP?
 Does ERP act as a tool for achieving BPR?
 Does ERP support BPR?
 ……………………
11
Integrating Business and Other Key Area’s
Processes
People
Structures
Culture
Technology
Leavitt’s Diamond
12
Culture
 Recognize Industry Position
 Amenable to Initiatives
 Adhere to Corporate Direction
 Paced to Change
 Ready for Standardization
 Maintain Business Continuity
13
Processes
 Analyzed to Determine ?
1. Well Defined
2. Adequate
3. Scaleable
4. Ready for Implementation of new IT
5. Transferable
14
Technology
 State of the Need not State of the Art
 Technology Sophistication Level
 Affordability
 People Compatibility
 Flexibility
 History of Success
15
People
 Human Resources Strategy
 Hiring Practices
 Training
 In house/Outsource
 Hybrid
 Role of Consultants
 Change Management
◊ Acceptance
◊ Resistance
 Business Continuity
16
Structures
 Corporate AND Mid Level Commitment
 Establish Core Team
 Identity Business Process Experts/ Super Users
 Delivery Reliability
 Communication
 Training
 Methodology (Lean/6 Sigma)
 Business Continuity
17
Case Study – Crotia Pharmaceutical Company
 Business Dimensions
◊ 7,500 people in 33 countries/5 business divisions/44 legal
entities
◊ classic information systems – disparate/ much manual
activity
 Project Plan
◊ Initiate ERP solution in financial area – cost accounting and
forecasting
◊ Utilize consulting services for reengineering/ reorganization
of businesses
◊ Although two independent projects they were harmonized
at the steering committee level
◊ Phased approach over six year basis
◊ Initial launch system training – 700 employees average
training period of 7 days lasting 4 months in two months
18
Case Study – Crotia Pharmaceutical Company (cont’d)
 Project Outcomes – successful…but……
◊ Resistance to change {particularly warehouse personnel}
◊ Weak experience and quality of consultants
◊ Lack of time
◊ Specificity of pharmaceutical industry
◊ Alignment of validation team
 Lessons Learned
◊ Focus more on change in human behaviour
◊ Focus more on change in organizational regulations
◊ Adapt solutions to the intensive flow of information among
various functions and businesses
Vensa Bosilj-Vuksic and Mario Spremic
19
Where I’ve Been…..COMET - Merck’s ERP Initiative
 “institutionalize the processes you have created”
 Benchmark {with friends?}
 System training
 Implementation methodology procedures and tools
 Recruitment of subject matter experts
 Integration with other work streams
 Process development
20
Where I’ve Been…..COMET - Merck’s ERP Initiative
(cont’d)
 What is COMET? For starters, it’s an acronym for Collaborating as
One Merck to Enable Transformation. It’s also a vital element in
Merck’s Plan to Win strategy and one of the biggest, most farreaching initiatives in company history. Once implemented will allow
us streamline many types of business processes, linking the
Companys different divisions and groups into 'One Merck'.
 COMET is a global effort to standardize and link our core business
processes and systems using SAP software. That means everything
from the manufacture and shipment of products, to expense
reporting, purchasing, and updating our personal information. The
goal is to have Merck operating with greater speed, efficiency and
flexibility.
 COMET is a key enabler of integration for the new Merck.
 COMET's mission is to drive MSD to improved performance levels
with increased operational speed, flexibility and efficiency and help
Merck achieve common, global and leading-edge end-to-end
processes powered by common information and systems. COMET is
essential for running the Company of the future
 COMET will not only change how Merck operates, it will also
transform the work culture. COMET is a new way for a new era at
Merck.
21
COMET – Merck’s ERP Initiative (cont’d)
 COMET will support "real time" collaboration (i.e., as events unfold)
and speed decision-making across the Company. It will help MSD be
more lean and flexible and provide greater value to customers.
 COMET will streamline work processes, helping to reduce inventory
and days sales outstanding (DSO). COMET will also help reduce
manufacturing lead times as well as cycle times in month-end
closing and order processing, driving efficiencies and reducing costs.
 COMET will also provide a simplified environment for meeting
compliance and regulatory requirements. And, COMET will enable
MSD to present "one face" to customers and trade partners, making
it easier to conduct business with us.
 COMET will not only change how Merck operates, it will also
transform the work culture. COMET is a new way for a new era at
Merck.
22
Prepare
Change Management Blueprint
Decide
Define
Implement
Sustain
Voice of Customer
Customer Value Stream
Stream Design
Foundation Elements
Solution Blueprint
Solution Component
Transition Design
Installed Component
Installed Solution
Solution
Enhancement
Desired State
Internalized Change
Intent
Risk/Mitigation Plan
Sponsor alignment and
Commitment
Enrollment Package
Advocacy Package
Advocacy
Enrollment
Execution Risk
Assessment
& Mitigation Plan
Sponsorship Spine
Communications
Sponsor/ Constituency
& Transition
Risk Mitigation
Ongoing Execution
Risk Mitigation
Communications
Operational
Transition Risk
Mitigation
Celebration
People
Change
Change Components
Change Portfolio
Transformation Plan
Business Justification
Workstreams
Gap Inventory
Projects
Implementation Plan
ROC Business Case
Transition Plan
Plan for Full realization
Minimum Acceptable
Realization Achieved
Planning Lessons
Learned
Continuous
Improvement Plan
Conner Partners 2006 All Rights Reserved.
Delivery
Stakeholder Profiles
Value Stream Context
Case for Change
Desired State
Outcomes
Realization Indicators
23
COMET Organizational Structure
 Project team together/ “off the campus”
 Business and IT Management Leads
 Work steams comprise business and delivery leads
 Infrastructure part of core group
◊ Security – role mapping and violations
◊ Documentation Compliance
◊ Development {also off shore}
 Business process leads/Subject matter experts
 Super Users
 Process stewards
24
Business Process Overview:
Sales and Distribution Cycle
8
7
Payment
Inquiry
1
Billing
Invoice
Quote
Customer
B.O.L.
6
Post Goods Issue
Sales and
Distributio
n Cycle
Pack Slip or
Delivery
Note
2
Sales
Order
5 Picking/Packing
Quotation
Quote
Transfer
Order or
Pick Ticket
3
4
Sales Order
Delivery
25
Business Process Overview:
SAP ECC Modules
Sales &
Distribution
Materials
Management
Financial
Accounting
WM
PP
Customer
Service
AA
SAP
ECC
CS
QM
Quality
Management
Asset
Accounting
CO
MM
Production
Planning
Controlling
FI
SD
TR
PS
WF
PM
HR
Treasury /
Investment
Management
Project
Systems
IS
Workflow
Plant
Maintenance
Human Resources
Industry Solutions
GTS
26
Work Stream Intersections
 Supply Chain Management - data - materials/ warehouse
operations/ interfaces/ documents - labels/shipping papers/
radio frequency/ roles
 Source to Settle - purchasing - freight bill payment/ INCO
terms
 Financial Business Management - invoicing mechanics/
triangular trade , flash sales, LEI
 Quality Management - packaging, temperature conditions/
batch determination rules
 Global Logistics - model/ supply network/ reporting/
compliance - DG, trade zones, licensing, sanction party
 Corporate - adherence to SOX, documentation
27
What are business readiness/change impacts?
 Understanding Change Impacts provides us with insight into:
 Local
business changes needed to get ready (i.e. basic
computer skills)
 Training requirements and SOPs on new processes and
ways of working
 Approaches to stakeholder management
 Design of change plans
 Communication on future ways of working
 Business case benefits by identifying operational
efficiencies
 Possible changes to organizational or team structures and
the re-alignment or re-design of jobs
28
Change Impact Categories - How ill the COMET
Business Processes impact…
Roles & Responsibilities
 Are changes to the
organizational structure
required to support the new
integrated processes?
 What new accountabilities will exist?
Culture
Roles &
Responsibilities
 How will our culture change in
the new environment?
r
ltu
Cu
e
 Is a shared services structure
anticipated?
 What roles and responsibilities need to change?
Or
g
St anis
ru at
ctu io
re n
Organisation Structure
 How do we need to behave in the
new environment?
Technology
 What changes to current
local systems will be
required?
 What interfaces will need to
be established to ensure
business continuity?
Technology
Skills &
Knowledge
Process
Performance
Metrics
Process
 What changes to current
process / ways of working
are required?
 How will policy / procedure /
SOPs be updated?
Skills & Knowledge
 What new skills are needed to perform
successfully in the new environment?
 What training is required to perform
successfully?
Performance Metrics
 What new measures are
needed to measure the
process or individual/group
performance?
29
Global Blueprint Process
Project Prep
Loc
aliza
tion
Rea
liza
tion
Workshop
Prep
Wor
ksh
op
Exe
cuti
on
Crea
te
Deli
vera
bles
1. Select SMEs
2. Prepare SMEs
3. Fact Finding
4. Session Prep
5. Sponsorship &
Communications
1. Conduct
Overview/General
Sessions
2. Conduct
Workshops
3. Communicate
Results
4. Execute Action
Items/Follow-Ups
5. Sponsorship &
Communications
Fin
al
Pre
p
Co
ndu
ct
Rea
dou
t
1. Create Process
1. Prepare and
Assets (PDD/PFL) Distribute Pre2. Create
Read
Requirements
2. Conduct
Documents
Sessions
(URS/FRS)
3. Sponsorship &
3. Create Gaps
Communications
4. Create Release
Notes
5. Create Change
Impacts
6. Sponsorship &
Communications
GoLiv
e
and
Hy
Prep
per
are
car
&
e
Sign
off
Fina
l
Rep
1. Prepare Next
Phase Work
ortPlan
2. Refresh Release
Plan
3. Prepare and
Distribute Final
Report
4. Sign-Off
5. Sponsorship &
Communications
30
Global Design Elements
 Standardization
◊ Shipment Processing
◊ Process Flows
◊ Roles
◊ Documents
◊ Messaging Formats
◊ Reporting
◊ Governance
◊ Metrics
◊ Process Definitions
◊ Foreign Trade Rules
31
Localization Workshop
PREWORK
WORKSHOP
NEXT STEPS
Review Future State
Business Process
Yes
NO
Review COMET
Solution
Review Potential
Comet Requirements
Discuss the results of
last year’s Blueprinting
efforts
Review,
Approve/Reject
Potential Comet
Requirements
Identify COMET
Requirements
Validate and
Identify EMEA
Change Impacts
Yes
Harmonize the SBS
Master Service
Benchmark processes
with COMET PFL/PDD’s
Perform gap analysis to
identify where COMET
process and solution do
not meet regulatory or
compliance requirements
Change
Change
Who When
us
us
Now
Now
Now
Validate Change
Impacts and identify
additional Change
Impacts
MMD Inv.
Management
What
Yes
NO
NA Hub
COMET- Transfer
knowledge of EMEA
Change Impacts
Barceloneta
Align SBS and COMET
Process Maps
Conduct Local Change
Impact Business
Readiness Workshops
NO
NA Hub
MMD Inv.
Management
Gather market feedback on COMET
solution from Business Subject
Matter Experts
Discuss Global future
state business
process design
Barceloneta
Complete COMET
Questionnaire
Barceloneta
COMET and SBS determine if
workshop is needed
NA Hub
MMD Inv.
Management
Barceloneta
NA Hub
MMD Inv.
Management
Determine if Localization
Workshop is required
Address Change
Impacts and execute
business readiness plan
(training and SOP
development, etc.
Provide insight into
previously identified
Change Impacts
32
Sample List of Items Addressed in Localization
 Languages to be used on Official Documents
 Maintenance of Documents
 Distribution Models
 Use of Local Currency
 Messaging
 Legal Entity Integration
 Importation/ exportation processes
 Legislative requirements relating to form and content of
invoices, credit notes, debit notes and statements
 Specific Reporting Requirements
 Carrier Partners
 Tax Impacts {VAT}
 Staffing Model
33
Sample List of Items Addressed in Localization
(cont’d)
 Synchronize temperature conditions
 Newness of GTS Functionality
 Country Specific Sanction party lists
 Export Trade Reporting
 Fundamentals for Controlled Substance
 Harmonized Code Integrity
 DG Processing
 Trade Zone’s
 Export/ Import licensing
 Returns Processing
 Master Data Configurations
 Batch Determination Strategy
34
What makes a Good requirement ?
 Requirements should all start with the same phrase:
 “The business shall………..”
 “The system shall…………….”
 Requirements should be categorized as:
 High – Mission Critical (i.e., Legal and Regulatory and significant
impact on targeted savings; critical to the daily operations of the
business, not to the person performing the requirement)
 Medium – Important (i.e., important to the business but could be
managed through a manual work around or other means)
 Low – Nice to have (i.e., not important but could make life easier)
 “Good” requirements clearly communicate what you want the
system to do, and are easily understood by business staff, IT staff,
and project team members
 Example: The system shall provide the ability to print Purchase
Order with standard text on purchase order in local languages
which include French, Spanish and Chinese.
 It is specific and simple
 It refers to only one function
 Do not overlook the obvious!
35
Post Requirement Disposition
 Bundle
◊ In/out scope
◊ Reconfirm
◊ Assessment [high/medium/low]
 Need vs Want
 Identify SAP fit
◊ Standard/Configuration/Custom
 Communicate Disposition
 Ascertain Direction
36
Custom Requirements Assessment Criteria
 Business Driver and Critically
 Development Magnitude
 Resource Requirements
 Alternatives Considered
 Business/Organization Impact
 Benefit Analysis
 System Performance Impact Assessment
 Special System Infrastructure Requirements
 Integration Points
37
Challenges and Barriers
 Lack of mapped processes
 Make improvements before automating
 Silo Continuum {in scenario development}
 Aggressive project timeline
 Project implementation teams worked away from the
business
 Nice to have vs Have to Have
 IT Lead
 Seamless transition
 Standard COMET solution misaligned with current practices
 Master data/ master data/master data
38
Metrics ….to Stay on Track…Post go live
 Tracked by “burn” rate re hours to implement on a daily basis
 Comprehensive project plan - march to go live via key dates
for: process review/gap reconciliation /FS authoring/
development/ testing (unit/integration/UAT); consistent
updates (weekly 90 day look - ahead's), daily “deep dive”
meetings, SAP SolMan to track requirements/gaps /
functional specs etc and HP Quality Center tool to track
testing phases/ TIR’s
 Post testing - dress rehearsal/ cutover/ regression/master
data reconciliation
 Business readiness activities - course development/ role
mapping & segregation/ training
 Post go live - reporting/ role tweaking/ change requests/
missed requirements
39
Key Learning's
 Incorporate 6 Sigma Team earlier
 Restructure Testing Methodology
 Streamline Process
 Business Sponsorship
 Advance Scouts in Region
 Knowledge of Scenarios
 Additional Communication Outside Project
 Extended Business Team to do Testing
40
Key’s to Success
 Ensure Business Processes Documented
 Quantifiable Results {drive KPI}
 Flexible Staffing
 Commitment
 Robust Testing of Scenarios/ Functionality
 Communication inside Project
 Extended Business team to do testing
41
Conclusion …….
 Thanks and questions
42
Add slides
 Process flow
 Close?
43
OtC D&L Canada Localization Workshop
Export Shipping Process Flow
44
Business Process Overview:
Key Changes
 Automatic notification of “rush,” premium shipping, and other
order-specific requirements
 Integration between both the order management systems
and the shipping systems automatic generation of shipping
documents such as a Bill of Lading (BOL/CMR)
 Exposure to regulation violations around the shipping of
hazardous materials, sanctioned parties,
 Single source for shipping data
 Interface with Freight Forwarding Agents
 Interface with Third Party Logistics Providers
 Licensing Blocks
 Automate control when Hold for Release (HFR) material
status can be shipped or restricted from shipment
 Interface with Government Agencies
45

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