Session 22 - Change Management

8/8/2019 Session 22 - Change Management

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Transition ManagementTransition Management

Managing the associated organisationalManaging the associated organisationalchangeschanges

Day 3 Session 22


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

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Objectives of this sessionObjectives of this session

NOTNOT

A generic education on Change ManagementA generic education on Change Management

ISIS

Attempt to highlight what changes (outside of theAttempt to highlight what changes (outside of thetechnology) willtechnology) will take place andtake place and have to be managedhave to be managed


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The biggest hurdle is not just implementing new

technology, but adopting business practices,organisational structures, and culture that encouragescoordination and collaboration

However, APS is an enablerof changeWhat are the 3 biggest obstacles?

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

Cultural resistance of staffand management

Poor state of current systems

Complexity of new supplychain technology

High cost and resourceconstraints

Coordination with supplychain partners

68%

54%

38%

32%

26%

0 10 20 30 40 50 60 70 80

APS is not a Panacea...APS is not a Panacea...


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Most ERP applications failed to deliverMost ERP applications failed to delivertheir full promise...their full promise...

How successful are ERPHow successful are ERP

initiatives?initiatives?Very successfulVery successful 6.7%6.7%SuccessfulSuccessful 25.4%25.4%Somewhat successfulSomewhat successful 44.7%44.7%Not very successfulNot very successful 20.7%20.7%UnsuccessfulUnsuccessful 2.5%2.5%

Barriers to ERP successBarriers to ERP successChange ManagementChange Management

CommunicationCommunicationOtherOtherDefining objectivesDefining objectivesExisting thinkingExisting thinking ImplementationImplementationRealising benefitsRealising benefitsTime managementTime management

FinancingFinancingPrioritisationPrioritisationCo-ordinating multiple unitsCo-ordinating multiple unitsMethodologyMethodology

The Corporate world is littered with the wreckageof technically sound programmes that have been

crushed by employee resistance to change- Tom Terez, Modern Management,

Inc.

The Corporate world is littered with the wreckageof technically sound programmes that have been

crushed by employee resistance to change- Tom Terez, Modern Management,

Inc.

}}67.9%67.9% }}52%52%

ce: 1996 research stud of fortune 500 executives, conducted b CSC indexce: 1996 research study of fortune 500 executives, conducted by CSC index


5/20Day 1 Session 1 - Introductions and feedback from pre-work.ppt

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Lessons LearnedLessons Learned

Is there a burning platform for change?Is there a burning platform for change?

If not, expect high level of resistance and focus on on-valueIf not, expect high level of resistance and focus on on-valueadded issuesadded issues

If so, senior management must reinforce the messageIf so, senior management must reinforce the message



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Non technical issues required for goodNon technical issues required for goodplanning...planning...

One forecastOne forecast

OrganisationOrganisation

IT OrganisationIT Organisation

Plant / MetricsPlant / Metrics

DisciplineDiscipline

SC RationalisationSC Rationalisation


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Plant / MetricsPlant / Metrics

TraditionallyTraditionally Focus on costFocus on cost

Long production runsLong production runs

No awareness of total deliveredNo awareness of total delivered

costcost

Suboptimal production scheduleSuboptimal production schedulechangeschanges

Control of only the local part ofControl of only the local part of

Supply ChainSupply Chain

Must align KPIs to overall Supply Chain effectiveness, including: Through put,

Inventory, CostsChanges 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 dont really have an integrated supply chainplanning process

Best in ClassBest in Class Focus on plan/schedule executioFocus on plan/schedule execution

Shorter production runsShorter production runs

Production schedule changes toProduction schedule changes to

meet planmeet plan

Global and centralised SupplyGlobal and centralised SupplyChain planning and visibilityChain planning and visibility



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DisciplineDiscipline

TraditionallyTraditionally

Production schedules notProduction schedules notmaintainedmaintained

Hidden inventoryHidden inventory

Obsolete dataObsolete data

Many forecasts and plansMany forecasts and plans

Common Issues FoundCommon Issues Found Plants Fail to Produce What

Planning Org Wants 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 havebeen changed)

Best in ClassBest in Class

Production schedules maintained up toProduction schedules maintained up todatedate

Obsolete data cleaned Out of SystemsObsolete data cleaned Out of Systems

Inventory is geared to customer serviceInventory is geared to customer service

levelslevels

SCP organisation determines whatSCP organisation determines what

Plants producePlants produce

Plant/warehouses shipPlant/warehouses ship

Measure conformance to plan rather thanMeasure conformance to plan rather thanto volume attainmentto volume attainment

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IT OrganisationIT Organisation

TraditionallyTraditionally Standard technical systemsStandard technical systems

supportsupport

React to problemsReact to problems

Impeding Organisational Ability To ChangeExisting IT skill set

Tendency to try to function as before (now need to become shareholders in thebusiness)

Best in ClassBest in Class Coordinates with business onCoordinates with business on

system improvementssystem improvements

Co-located and dedicated ITCo-located and dedicated IT

personnel to user groupspersonnel to user groups

Understand functional andUnderstand functional and

technical issues and how theytechnical issues and how they

are interrelatedare interrelated

Are flexible with the numberAre flexible with the number

of system change requestsof system change requests

that are catered forthat are catered for


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Supply Chain RationalizationSupply Chain Rationalization


Little to no effectiveLittle to no effective

item/customer differentiationitem/customer differentiation

Forward coverage safety stockForward coverage safety stock

strategiesstrategies

Outdated, invalid minimumOutdated, invalid minimumproduction quantitiesproduction quantities

Outdated, invalidOutdated, invalid

replenishment quantitiesreplenishment quantities

Impeding Organizational Ability To Change

Typically Gets Pushed Out of Project Scope

Client: Well Take Care of This

Reality: Does Require Additional Resources


Item and customerItem and customer

differentiation /rationalizationdifferentiation /rationalization

including the elimination of lowincluding the elimination of lowperforming itemsperforming items

Rationalised economicRationalised economic

production quantitiesproduction quantities

Rationalised economicRationalised economic

replenishment quantitiesreplenishment quantities

Rationalised safety stockRationalised safety stock

levelslevels

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l h i i i


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Supply Chain Management OrganisationSupply Chain Management Organisationskillsskills


Mainly routine, transactional tasksMainly routine, transactional tasks

Generating reportsGenerating reports

Order chasingOrder chasing

Second guessing forecastsSecond guessing forecasts

An understanding of MRP (perhaps not even MRP II)An understanding of MRP (perhaps not even MRP II)

Functional experienceFunctional experience

Typically rise through manufacturing or warehousing ranksTypically rise through manufacturing or warehousing ranks

Narrow view on information, e.g. only look at management informationNarrow view on information, e.g. only look at management information

Lack of cross-functional empathyLack of cross-functional empathy

Knowledge baseKnowledge base

Lack of total Supply Chain process understandingLack of total Supply Chain process understanding

Administrative proceduresAdministrative procedures

An understanding of MRP (perhaps MRP II)An understanding of MRP (perhaps MRP II)

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l h i i i lS l Ch i M O i i l


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Supply Chain Management OrganisationalSupply Chain Management OrganisationalSkillsSkills


Process drivenProcess driven Decision making (how to best match demand with supply)Decision making (how to best match demand with supply)

Problem solving, with both manufacturing/distributions and sales/marketingProblem solving, with both manufacturing/distributions and sales/marketing

Collaborative forecastingCollaborative forecasting

Cross supply chain knowledge of processes and toolsCross supply chain knowledge of processes and tools

Integrated Supply Chain experienceIntegrated Supply Chain experience

Cross-functional experienceCross-functional experience

Holistic view of how information is used throughout Supply ChainHolistic view of how information is used throughout Supply Chain

Lived through a variety of jobs, including manufacturing/distributions andLived through a variety of jobs, including manufacturing/distributions and

sales/marketingsales/marketing

Knowledge baseKnowledge base

Understand the supply chain trade offsUnderstand the supply chain trade offs

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S l Ch i M t O i ti lS l Ch i M t O i ti l


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Supply Chain Management OrganisationalSupply Chain Management OrganisationalSkillsSkills

Expert User GroupExpert User Group

Will need to create an expert user group to manage theWill need to create an expert user group to manage therequests for system changes / modifications and enhancementsrequests for system changes / modifications and enhancements

Manage software upgradesManage software upgrades

Ensure the system remains uniform across functions andEnsure the system remains uniform across functions and

geographiesgeographies

Organisation Database AdministrationOrganisation Database Administration Will need to create a role toWill need to create a role to

check base datacheck base data

check static datacheck static data

maintain integrity and performance of systemmaintain integrity and performance of system

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How Do We Address These Issues?How Do We Address These Issues?

Top of the list of critical success factorsTop of the list of critical success factorsRisk/reward agreements -- future of SCP implementationsRisk/reward agreements -- future of SCP implementations

People will do what they have incentive to doPeople will do what they have incentive to do

Target clients who are willing to tackle these issuesTarget clients who are willing to tackle these issues

Walk away if necessaryWalk away if necessaryRetraining of Client PersonnelRetraining of Client Personnel

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KPI Ch M t i dKPIs a Change Management iss e and


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KPIs - a Change Management issue andKPIs - a Change Management issue andenablerenabler

One issue that has to be faced when in Supply Chain planningOne issue that has to be faced when in Supply Chain planningwork is the existing measurement systemwork is the existing measurement system

Traditional measures tend to optimise each separate part ofTraditional measures tend to optimise each separate part of

the supply chain, resulting in a sub-optimal wholethe supply chain, resulting in a sub-optimal whole

eg, traditional factory measures of, plant costs andeg, traditional factory measures of, plant costs and

capacity utilisation can drive up inventory levelscapacity utilisation can drive up inventory levelsdownstreamdownstream

If we seek to integrate and optimise the supply chain, weneed a set of measures that drives behaviours to do so ...

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What Makes A Good KPIWhat Makes A Good KPI

Some of the success criteria for a good performance indicatorSome of the success criteria for a good performance indicator

are that it must:are that it must:

Be consistentBe consistent -- each measure must support the other measureseach measure must support the other measures

in thein the specific actions identifiedspecific actions identified

Be meaningfulBe meaningful -- changes to the measure must be easilychanges to the measure must be easily

attributable to a cause;attributable to a cause;

Be relevantBe relevant

--

reflect the performance of a parameter that isreflect the performance of a parameter that is

fundamental to the business;fundamental to the business;

Be all encompassingBe all encompassing -- as a package the KPIs must cover all importantas a package the KPIs must cover all important

aspects of the business operation;aspects of the business operation;

Be well definedBe well defined -- everyone has the same understanding of theeveryone has the same understanding of the

measure, how it is created and what it means;measure, how it is created and what it means;

Have a defined targetHave a defined target -- the normal operational level of the indicator isthe normal operational level of the indicator isunderstood , as are the out of specification levels; andunderstood , as are the out of specification levels; and

Be available in timeBe available in time -- presentation and analysis of the data mustpresentation and analysis of the data must

reflect thereflect the speed at which resolution actions are requiredspeed at which resolution actions are required

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Total Supply Chain Performance MeasuresTotal Supply Chain Performance Measures

Perfect orderPerfect order

fulfillmentfulfillment

Customer satisfactionCustomer satisfaction

Product qualityProduct quality

Order fulfillment leadOrder fulfillment lead

timetime

Total supply chain costTotal supply chain cost

Inventory days ofInventory days of

supplysupply

High levels of customerHigh levels of customer

satisfaction withsatisfaction with

productsproducts

and service levelsand service levels

Responsive to marketResponsive to market

Cost efficient operationsCost efficient operations

STRATEGY

CRITICAL SUCCESSFACTORS

KEY PERFORMANCEMEASURES

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KPI MeasurementKPI Measurement

Run PlanRun Plan

Procure productProcure product Make productMake product Ship productShip product

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OrdersOrders

CustomerCustomer

Do not shy away from measuring performance versus a constantlychanging plan. If there is discrepancy (ie,

Session 22 - Change Management

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