ERP Project Activities Skorkovský, ESF MU, KPH Warning : if some of the slide is marked by Not Study Zone icon, you are not oblige to study !!!!! Purchase Sales Processes ERP Quotes->Net change calculation-> ->Order->Vendor batch tracking e-> ->Input Quality check->Receive, Put-away-> ->Invoicing Orders->Sub-Load and Load-> ->Batch tracking ->Output Quality check->Picking ->Shipment -> Invoicing -> Applying payments 3 File:Old factory.jpg Margin goes down , Costs up, … Questions Data 1 ERP, Excel,… Data 2 The main goal DELTA = |Data1-Data2| !!!!!! Strategy Map-The Simple Model of Value Creation To achieve our vision, how must our organization learn and improve ? To satisfy our customer, which processes must we excel at ? To achieve our vision, how must we look to our customers? If we succeed, how will we look to our shareholders ? Resource : Strategy Maps, Kaplan and Norton Learning and growth perspective Internal perspective Customer perspective Financial perspective Strategy Strategic map (BSC)- very simplified Need of unique knowledge Resource hunting Costs expected Parameters for resources IQ creativity flexibility School knowledge <-> Required Knowledge Resource Training Tests Trained resource Low level of success rate Delivery of services Satisfied customer Competitive advantage Higher market share Profit Satisfied owners Resource profile TOC CONWIP Workflow Increase of effectiveness by cancellation of coffee breaks 6/11 7 Increase of effectiveness by allowing games at work…. Simplified diagram of ERP usage ERP Transaction = Entries DB ERP Partners Reports Forms sample2002-Graphs Information Information (trends) Knowledge of methods for process management and used metrics Decision Enterprise keys Key knowledge keys Key decision Main problem (one of many) momentus 33e68905-3e3e-4556-bc5b-c5e41f6527fa_Pakistan_Musharraf We have a huge data quantity 33e68905-3e3e-4556-bc5b-c5e41f6527fa_Pakistan_Musharraf ..and at the same time a minimum information which could be used for making decision Main problem II (need of reliable data) Wee need finite capacity scheduling (APS) Op1 Op2 Op3 Zobrazit obrázek v plné velikosti press Zobrazit obrázek v plné velikosti T1 T2 T1+T2=X Opt=Min(X) Op1 Op2 Op3 T1 = 0 T2 = 0 Why we cannot manage it ? Unclear priorities, bad = SOP ,… (SOP = Standard Operation Procedures) Level production Level production strategy Period Sales Forecast (kg) Production plan (kg) Inventory (kg) Spring 80 000,00 100 000,00 20 000,00 Summer 50 000,00 100 000,00 70 000,00 Fall 120 000,00 100 000,00 50 000,00 Winter 150 000,00 100 000,00 0,00 400 000,00 140 000,00 Hiring cost/worker 100,00 Firing cost/worker 500,00 Production cost/kg 2,00 Inventory carrying cost /kg 0,50 Production cost/kg/worker/quarter 1000,00 Beginning work force (workers) 100,00 Chase demand Chase demand strategy Period Sales Forecast (kg) Workers needed Workers hired Workers fired Spring 80 000,00 80,00 0,00 20 Summer 50 000,00 50,00 0,00 30 Fall 120 000,00 120,00 70,00 0 Winter 150 000,00 150,00 30,00 100,00 50,00 Aggregate planning Planning involves decision hierarchy… A simple business case….(example) nPrinting Company in Upper Lower Corner village somewhere in backwoods has a small problem : nThey use for managing printing procedures : na very basic economic system Sunshine written by Six grade student (a son of the owner) – written in Pascal nanother different systems for quotes calculation, logistics, production planning and control written in : n v obsolete FOX PRO n n n by 3 different programmers from 3 different companies n MS Office n Visual%2520FOXPRO%2520c1 Solution fully integrated to standard ERP package ERP MS Dynamics NAV PrintVis Application Accounting Controlling Logistic Purchase Sales One database only Actual situation (example) Accounting foxbase_mac_21 Business leftmenu progresssoftware Production negro-caricature china_worker2 enlarge_nofagr 60070-Stanley,%2520wheelbarrow iowaCityArticle1 Supplier John Brown Software Supplier Chinese SW Kings ESKIMO Virtual Manufacturing causes what ???? Effects ndifficult upgrades of applications ndifficult communication between different applications nreduplicated data (redundant) nnon actual data->bad decisions netc. n n A simple business case (printing industry)….example n Competitive market could requires for instance : nfast reaction to quotes nvariable quotes and their immediate costing (calculation) nshortening of delivery times nshortening lead times and flow times nreduction of inventory values (paper, colors)->higher liquidity nquality improvement ->8D reports should be used nprocesses driven by flexible workflow nexact evaluation of finished jobs (production orders) in order to know real costs nfeed backs to external and internal signals such as : nreasons of quotes dismissals (why ???????) nreason of unexpected costs A simple business case…. nCompetitive market also requires : nModern and efficient SW tools to control these processes : nprepress: desktop publishing, computer to plate, … npurchase of material (paper, colors,..) nimposition (how to put locate texts on the paper ) nprinting using different technologies (sheets, rotary press,..) nproduction planning and shop floor control nfinishing operations such as ncutting ngathering nstitching n flexible invoicing n on-line accounting and so on and so on special printing operations Printing machine pantone_colours A simple business case…. n Bottlenecks (TOC) – Threats (SWOT) : nobsolete information system, which requires all time some changes, patches,… nall parts of information system form an heterogeneous is IT tools heterogeneous hydra :finance management, costing, production, inventory, HR,… ,which never provides user with real picture of the business ninaccurate data from one application is inherited by another one, so the picture of the business always late nCosting depends on human failing factors none author of every single subsystem nthese authors never meet each other to coordinate their efforts… A simple business case…. n Bottlenecks (TOC) – Threats (SWOT) : ninternet auctions favour competitors which are cheaper and faster n nthe size of paper and colour purchase orders are based on inexact assessment of purchasers (if we have a lot of orders, types of papers, various machines and so on, the optimum assignment of the purchase batches sizes is beyond ability of n human being with paper and pencil) checkpoint%2520bottleneck Gaza gate A simple business case…. n Messiah arrives and says : “ I have for you this :“ nmodern and flexible and standard ERP system nbackground of IT company with tradition and experience nbackground of global IT vendor n On the other hand an arriving messiah did not offer: nthe knowledge of printing industry nprinting application fully integrated with standard ERP n Arriving applicant must : nunderstand processes in printing industry (or any other base on chosen branch) nbe able to write printing application using development tools (languages) of standard ERP system nimplement the solution nOR instead of these three blue marked points to find already existing vertical solution for printing industry, which is used all over the globe n ivanov-messiah-det A simple business case…. n Finding a vertical is right ! nLet say, that we have found a foreign company with Print SOLUTION ,which was implemented 100-times and in different languages Print ERP Accounting Logistics Purchase and Payables Sales and Receivables Standard production CRM One database only Other standard ERP modules : Service Management Human Resources Business Analytics.. A simple business case….project management – intro nLive Meeting: napplication setup nbasic functions and a „sweet points“ nbusiness case workflow (all the stages) nCustomer is happy and awaits consequential actions nVendor signs a contract about localisation and selling in pre-determined geographical area ceskoslovensko-4 A simple main form of printing application PRINT integrated to ERP Navision (only a small demonstration of application window) Another form of printing application PRINT integrated to ERP Navision (imposition and colours) A simple business case…. nSome reasons which persuaded ERP vendor to sign a contract with vendor of vertical solution PRINT: n nlocal market analysis (SWOT, GAP Analysis,BPM,BSC, Pareto, Ishikawa Fish Bone diagram, TOC, CC....) nexpectation of repetitive sales – promising market segment ->CRM application (pains and benefits) nanalysis of the competitors-> CRM npossible co-operation with other PRINT n experts abroad (sales of services) ar115895040883871 Project entries.. nActivities nacquire necessary printing industry knowledge nintroduction training provided by supplier of PRINT application (vertical solution) nteam building nbudget (costs „business plan“- revenues) nlanguage localization ENG->CZE nmodification ERP and a Print for Czech conditions (market specifications and legislation) ncope with inner application n n Project entries.. nActivities ntranslation of marketing material (fact sheet) and its printing in compliance with predefined templates ncreation of PWP presentation for selling nprospect prediction – segments of market nnaming of benefits „selling against“ npresentation to chosen prospects and reaction to questions- use of feedbacks to improve knowledge of printing industry nPrint price list generation n Project entries.. nActivities n „Kick-Off“ meeting nwhen, who, what and why (Kick-Off) nPWP presentation ninvitation, graphic design nselling invitation and follow-up nKick-Off nmapping of interests, business strategy modification and resource planning 2005-mess-kick-off-1--10 Project entries…(will be part of Critical Chain theory, which will be show to students later) nGantt n gantt_chart_thumb Project entries… nActivities n contract signature with pilot customer nSystem implementation (only some important activities are mentioned here.. ) nfeasibility study, analysis, target solution draft …… nintroduction training nsystem customization ntests of introduced modifications ndata transfers and setup of technological „master data“ ngeneration and selling licences and HW tools such as servers, … nchange management Project entries… nActivities n System implementation (only some important activities are mentioned here.. ) n ntraining with real data in the ERP system nstock taking and transfer of balances on accounts nsharp start nsupport and surveillance n n Kevin%2520100m%2520Start_jpg Necessary knowledge for project management Project successful ? (from Snapshot 0 ->Snapshot 1) MAX – Maximum which could be attainable 100%-Planned value 80%-Threshold value CRM 20% INVENTORY 10% PRODUCTION 20% SALES 20% PURCHASE 15% FINANCE 15% Snapshot 0 Snapshot 1 Another possible project... nHotel chain Rocco Forte * * * * * nWhere? (Great Britain 2x, Scotland 1x, Germany 2x, Prague 1x, Rome, Florence, CH, Russia ….) nSW choice (chosen company for delivery standard accounting package of ERP and cooperation with author of hotel vertical solution : Serenissima Informatica, Padova) nChoice of local partner (CZ MS Dynamics NAV partner X : requirements -> stability, knowledge of international business, languages, references- testimonial abroad, ..) nMilano (server farm for all hotels ) nAll hotels using same chart of account (USoA=Uniform System of Accounts) – simple consolidation (IFRS) nChoice of hotel SW and accounting SW n Another possible project... Another possible project Basic Concept (survey) protel hotelsoftware Dataport 847 Czech strings VAT report Translation of text strings used for communication Protel<->Dynamics NAV to Czech language (necessary knowledge of terminology and language) 847 Czech strings Balance sheet (generation using accounting schemes –will be introduced to students ) Accounting scheme Balance Sheet/Income Statement) Uniform System of Accounts Accrued Revenues (revenues generated in the future periods) General Ledger Customer Income (still not created) Accrued and Deferrals…(one of many helping letters) Ciao amico, For Deferred Costs (In italian “Risconti”) it mean when You receive an Invoice for Service; Service provided partially in one Fiscal Year, and Partially for the following Fiscal Year. Es. : In November You receive an Invoice for IT Service provided from November 2007 until June 2008. You have to charge 2 Months for 2007 and 6 Months for 2008 Fiscal Year. In other words Deferred Costs happens when You receive in advance an Invoice for Services provided in the future. It’s possible to have the same also for Revenues The opposite is called Accrued (In Italian Ratei). Es. : In May 2008 You receive an invoice for Services provided from November 2007 until May 2008. Normally You have to charge in advance, Cost for Services for November and December 2007 without any Invoice, and You balance this Cost with special Accounts. This happens very often in Hotel management because, for management control, they have to produce every month Profit & loss report. It’s more or less like a Year close done on every Month. In other words Accrued Costs happens when You receive an Invoice for Services after the Service was provided. The same can happens also for revenues. I hope this explanation can be clear enough. Regards. Another possible project –Automotive, Appliances, packaging industry Stock Delivery Suppliers Slitting Levelling Shearing Combi Pressing Polishing Stock Dispatch Customer Packaging Receipts Subloads Loads Quarantine of the def. items Decision :Quality Management Input of the defective Items Batch generations : AAAAAA, AAAAAB, AAAAAC,…. Dispatch Management Allocations Packaging and batches Call-Offs Register of work spent in Production Moulds Reservations Bar Codes Reservations Bar Codes Planning Slitting and levelling of the steel n Knowledge of methods, which are necessary for project management and process management nTheory of Constraint (will be introduced-72 slides)-seminar work!!!! nCritical chain methodology nThinking tools nThroughput Accounting ->go to wikipedia nBalanced Scorecard (will be introduced) nSWOT a Gap Analysis nMS Office (Word, Power Point a Excel) nERP system and its logic (will be introduced- 28 hours) nLogistics nFinance Management and Controlling nProduction Management (MRP, MRP-II, JIT and DBR) nMarket Analysis n n Knowledge of methods, which are necessary for project management and process management nYield Management –YM (billing different rates for same service to different customers in order to reach maximum revenue) nKnowledge of the condition necessary pro use of YM tool : nrelatively high % of the fixed costs to complete company costs npredictable demand nephemeral product (passing, fleeting, nselling before service is provided n Some Yield management methods ne.g. Thres Hold method– see next slide Threshold curves (booking) Threshold curves (booking) Curve of the real booking No discounts Discounts granted Knowledge of methods, which are necessary for project management and process management n nLegal aspects of contracts nCost management nForeign languages nBasic knowledge of IT architecture will be introduced nMethods used for project management nBusiness Analytics nMethods supporting decision making nRisk management nBasics of marketing n n n Will be shown later nThe data is not all in the ERP nThe tools are rigid and hard to learn nThe tools don’t reflect how we work today nThey don’t span the continuum of needs Other ERP Business Analytics – some reason why to discuss Scorecards Slide decks Meetings Analytic applications Presentations Financial reports Dashboards Webcasts Charts and graphs Internet Project plans Documents Spreadsheets Intranet Blogs Portals RSS feeds Business books Television reports Magazines Newspapers IM/chat Email n n VP, Operations VP, Sales and Marketing CFO CEO “I need to have the right demographic information so I can better target my opportunity prospecting.” Sales Rep Customer Support Rep “I need better access to information to make better decisions on cross-sell and up-sell opportunities.” “I need to know that the people in my organization have the right goals in place to understand and execute on the strategic initiatives of the company.” “I need better visibility into our pipeline performance so I can focus on deals that help me grow business with my most profitable customers.” “I need better visibility into my cost of operations so I can target specific cost reduction opportunities that won’t have a negative impact.” “I need to improve our analytics capabilities so we can understand our current business performance and do a better job of planning for the future." Source: “Creating the Office of Strategy Management” by Robert Kaplan and David P. Norton, Harvard Business School, April 2005 Untitled-1 Managing Through the profit valley nInitially, most partners business are run by one or two founders, who manage every part of the business : sales and marketing, project management, service delivery management, accounting, sub-load and load, collection, HR and many many more…. IMG_0441 Those guys are responsible for performing all day-to-day functions of their business Machine%2520Shop,%2520via%2520Yamhill%2520County%2520Oregon%2520online inventory Managing Through the profit valley nAs their business grows over 10 employees, it is impossible to perform all their role properly. nCash flow becomes erratic (chaos) nProjects go offside, nFilling pipeline is a struggle nRevenue stays still strong but profitability drops nCompany is trapped in the „Profit Valley“ http://pixdaus.com/single.php?id=6720 Profit Employees 10 50 100 Managing Through the profit valley nHow to escape the profit valley? nHow to avoid it ? nFirst key nMaintain revenue velocity and the momentum of the new customer adds. You cannot afford to take the foot of the gas if you want to climb out of the valley nThe portfolio of the customers must be some smaller and some larger nSecond key nMaintain high level of service quality to avoid discounting and efficiency factor nSure Step methodology of project Management nHelp desk nRight tools and right people Zobrazit obrázek v plné velikosti Zobrazit obrázek v plné velikosti Managing Through the profit valley nThird key nFinancial management control and cash flow is the king nInvoice quickly and pay consistently (but not early !!! ) nTo maintaining Cash- to-Cash cycle as short as possible nFourth key nSoftware package handling all aspects of financial customer relationship and project management nCash-to-Cash Cycle will be shown during TOC and Critical chain chapters n n n Zobrazit obrázek v plné velikosti Zobrazit obrázek v plné velikosti Managing Through the profit valley Business control needs Driving Business Objectives Personnel required Processes required Systems required Financials General Management Project Max cash flow, Collecting early, paying not early Maintaining revenue velocity, good Marketing machine Reduce scope creep Efficiency factor Utilisation Full time CFO with excellent knowledge Key staff (no job hopping) Mixed team (juniors and seniors) Rigorous FM driven by Key business objective above Continuous Recruiting and training Application of the Good project Methodology (Sure Step) Dynamics NAV Dynamics CRM Project Management Software Problem definition Requirement definition Show of the suppliers Implementation Projectebenefits Strategy & Aims Verticals Processes & Tasks Metrics & Benefits Benefits for our business Do we know or we are only hoping? Thanks for Your Attention Will be placed on IS.MUNI.CZ in the study materials If everyone pulls at the different end of the rope, than your project results will be a mess… (see rule 99 %)