OPS 405 Week 5 ERP Implementation Example

Go-Live After Harvest Season: An ERP Implementation Plan for a Michigan Hydraulic Cylinder Maker

[Student Name]

University of Phoenix

OPS/405: Enterprise Resource Management

Week 5 Assignment

[Instructor Name]

[Date]

Saginaw Valley Fluid Power, its project, budget and dates are composites written for a model paper.

Over four weeks, this course traced Saginaw Valley Fluid Power's processes, designed its sales and operations planning, built a master schedule and worked through material and capacity planning. The composite Saginaw, Michigan, cylinder maker has selected an ERP system from a vendor serving mid-size discrete manufacturers, with a budget of about $1.6 million over 18 months for licenses, implementation services, data work, training and internal staff time. This paper sets out the implementation plan.

Phased, Not Big Bang

A big-bang cutover switches every function at once: faster and without temporary interfaces, but with all risk concentrated on one weekend. A phased approach spreads risk but runs longer and needs temporary links to old systems. Markus et al. (2000) studied companies that had adopted ERP and found that problems were common in every phase, from configuration through shakedown and onward, and that many companies experienced business disruption after going live. For a plant whose customers' assembly lines depend on its deliveries, disruption is costly. The committee chose three phases:

Phase 1, months 1 to 7: finance, purchasing and inventory, going live in month 7, after the spring peak.

Phase 2, months 6 to 13: planning, master scheduling, MRP and the shop floor, going live in month 13, in the autumn lull.

Phase 3, months 12 to 18: sales, available-to-promise, electronic data interchange with customers and a customer portal.

Project Organization

The executive sponsor is the president, who chairs a monthly steering committee. The project manager, the operations controller, works on the project full time. Each process has a business owner: the sales director for order-to-cash, the purchasing manager for procure-to-pay, the plant manager for plan-to-produce and the controller for record-to-report. Twelve super-users, one or two from each department, are released for 40 percent of their time to configure, test and train. The vendor provides a solution architect and functional consultants. Holland and Light (1999) proposed a model of critical success factors for ERP implementation that separates strategic factors, such as a clear vision, top management support and project schedules and plans, from tactical factors, such as client consultation, personnel, configuration, testing and monitoring. The organization above addresses both levels.

Configuration and Customization

The team will adopt the system's standard processes wherever possible. A customization will be approved only if a gap affects customers or regulatory compliance and the steering committee agrees. Two gaps qualify: the electronic data interchange formats required by two large equipment builders and the test-certificate printout customers require with each cylinder. Engineering's request to replicate its drawing database inside the ERP was declined; the systems will be linked instead.

Every customization is a promise to rebuild it at every upgrade.

Data Migration

Data work starts in month 1 because it is the longest task. Item records, about 4,800, will be reviewed by owners named in Week 1; obsolete items, about 900, will not migrate. Bills of materials for 1,900 models will be validated by building ten sample cylinders on paper against each bill. Routings and standard times will be checked against shop records. Open orders, inventory balances and supplier and customer records migrate at each phase's cutover weekend, with reconciliations signed by the process owner.

Testing

Testing builds in three rounds. Unit tests check each configured function. Two conference room pilots run realistic scenarios end to end, such as a tractor builder's release loaded through electronic data interchange, confirmed with available-to-promise, planned through MRP, built, tested, shipped and invoiced. A final integration test runs a full simulated week of transactions with super-users at their desks. Any defect rated critical must be fixed and retested before go-live.

Training

Training is by role, not by module. Robey et al. (2002) studied enterprise system implementations and found that firms had to overcome knowledge barriers, both learning the system's configuration and learning new ways of working, and that how they addressed these barriers shaped outcomes. Super-users train their colleagues in short sessions using the company's own data, followed by practice in a training environment. Shop floor workers learn to report labor and material on terminals in one-hour sessions at their work centers.

Cutover and Hypercare

Each go-live happens over a weekend, with a checklist of about 150 steps, a final data load, reconciliation and a decision point on Sunday afternoon: proceed or roll back to the old system. For four weeks after go-live, hypercare provides vendor consultants on site, super-users on every shift and a daily issue meeting.

Change Management Beyond Training

Training teaches people which screens to use; change management helps them accept why the work is changing. Customer service staff, for example, lose the freedom to promise dates from experience and must quote from available-to-promise. The sales director will explain the reason at a team meeting, show how quoted dates compared with actual deliveries last year and invite the staff to watch the measure improve. Shop leads who helped write test scenarios will introduce the terminals to their crews. A short pulse survey after each go-live asks users whether they feel ready, and low scores trigger extra coaching.

Budget Breakdown

Of the $1.6 million budget, about $420,000 covers subscription and license fees for the first two years, about $560,000 the vendor's implementation services, about $180,000 data cleansing and migration support, about $90,000 training materials and sessions, about $250,000 backfill for super-users and the project manager and about $100,000 contingency.

Measures and Risks

The steering committee tracks schedule, budget and open critical issues during the project, and after each go-live: order confirmation time, on-time delivery, inventory accuracy, invoice errors and the number of manual workarounds. Main risks are key users pulled back into daily work, data cleansing running late and resistance on the shop floor; responses include protected time for super-users, early data work and involving shop leads in testing.

Conclusion

Saginaw Valley's ERP implementation is phased around its seasonal business, owned by process leaders rather than the IT function, configured with minimal customization, supported by early data cleansing, three rounds of testing and role-based training and protected by cutover checklists, a rollback option and hypercare. The measures that defined the case for integration in Week 1 will show whether the implementation delivered it.

References

Holland, C. P., & Light, B. (1999). A critical success factors model for ERP implementation. IEEE Software, 16(3), 30-36. https://doi.org/10.1109/52.765784

Markus, M. L., Axline, S., Petrie, D., & Tanis, C. (2000). Learning from adopters' experiences with ERP: Problems encountered and success achieved. Journal of Information Technology, 15(4), 245-265. https://doi.org/10.1080/02683960010008944

Robey, D., Ross, J. W., & Boudreau, M.-C. (2002). Learning to implement enterprise systems: An exploratory study of the dialectics of change. Journal of Management Information Systems, 19(1), 17-46. https://doi.org/10.1080/07421222.2002.11045713