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Bringing an Acquisition onto SAP: A Supply Chain Perspective
Session: 2809
Background – NIBCO INC.
• Founded in Elkhart, IN in 1904
• Family-owned company
• Annual sales ~ $420M
• SAP users ~ 800
• 12 manufacturing plants throughout U.S., Mexico, Poland
• 5 distribution centers: (4) in U.S., (1) in Poland
Background – NIBCO INC.
• Employs 2900+ associates world-wide.
• Websites:
www.nibco.com
www.nibco.com.pl
www.tolco.com
www.nibcopartner.com
Background – NIBCO INC.
• Manufacturer of:
SAP Implementation History
• 1996: SAP selected as the sole provider of business systems for NIBCO
• October 1996: Formation of SAP implementation team
• Dec. 31, 1997: Big-bang implementation
• Release 3.0F
• 19 Locations (plants)
• Modules: FI/CO/SD/MM/PP/WM
• Upgrades performed:
• March 1999: Release 4.0B
• March 2001: Release 4.6C
SAP Implementation History
• Additional plants:
• May 2000: International Distribution Center
• May 2002: Manufacturing/Distribution Center in Lodz, Poland
• (2) In-bond inventories in Lodz, Poland
• (2) In-bond inventories in Budapest, Hungary
• (2) In-bond inventories in Ytomierz, Ukraine
SAP Implementation History
• Additional functionality:
• March 2000: Human Resource Management - U.S.
• May 2002: Polish localization
• In process: Human Resource Management – Reynosa, Mexico
• In process: Time & attendance, Reynosa, Mexico
• In process: Business Warehouse implementation
SAP Implementation History
• Company acquisition – Live on SAP November 2002
• Corona, CA
• Sacramento, CA
• Houston, TX
SAP Implementation History
Acquisition background
Why did NIBCO acquire another company?
• Growth
• Expand product offering
• Meet customer needs
• Foster a progressive attitude within the company
Acquisition background
Product segmentation
• Standard inventory products that are shipped in box quantities and are managed using the “demand pull” process
• Specialty fabricated products that are made / designed to order - requires special ordering and manufacturing procedures to manage.
Acquisition background
Implementation timeline
J anuary - MarchDue diligence
AprilAcquisitionannounced
toassociates
J une 3, 2002NIBCO
takes possession
June 3, 2002SAP
Human ResourcesLive
JuneImplementation
andanalysis
J uly - AugustSAP system
andprocess
preparation
September -OctoberTesting
andtraining
LIVE
November
1
2002
Project Management Methodology
Project Initiation
Analysis
Design
Development
Testing / Training
Implementation
Project Initiation
Getting
started
Initiation – Project Goal
Successfully acquire TOLCO Inc, integrate business operations into NIBCO INC to support a positive long-term financial return on the investment.
Understand the project goal
Initiation - Scope
Define the scope . . .
Completely integrate all TOLCO business processes and systems into core NIBCO business systems.
Re-alignment of TOLCO organization to support NIBCO business management structure and processes – change management is critical.
Project Initiation
Keys to successful integration:
• Support core business during integration
• Address change management issues
Business processes
Organizational transition
• Define and populate master data to support business systems processes in SAP
• Develop TOLCO specific functionality where required
• Commit necessary resources!
Initiation – Assemble the Team
• Project sponsor
• Steering committee
• Core project team
• Change management team
• Extended / training team
Initiation – Assemble the Team
Project sponsor (NIBCO)
• Visible, executive support
• Project vision
• Retain focus
• Provides resources
• Overcomes resistance to change
Initiation – Assemble the Team
Steering committee (NIBCO & TOLCO)
• Comprised of IT and business leaders
• Empowered to make quick-hit decisions to keep project moving forward.
• Provide guidance.
• Ensure success!
Initiation – Assemble the Team
Core project team (NIBCO & TOLCO)
• Business / IT members
• Perform majority of the SAP integration work
• Define and implement business processes
• Define and prepare training needs
• Implementation support
Initiation – Assemble the Team
Extended / training team (NIBCO & TOLCO)
• Functional experts
• IT Developers
• Trainers
• Technical support
Initiation – Assemble the Team
Change management team (NIBCO & TOLCO)
• Effective transition
• Build & execute formal change programs
• Monitor progress
• Job Impact Analysis
Initiation – Team Considerations
• Select a team to deliver a quick hit, comprehensive implementation of SAP
• Team composition:
• Business leadership (parent and acquired company)
• SAP systems leadership (parent)
• Commitment of team to the project
• Release from other obligations
• Sequester physically to focus effort to project and away from interruptions
• Management authority – decision making without the red tape
• Communication is key!
Initiation – Team Ground Rules
Be candid.
Encourage healthy debate.
Active participation is expected.
Respect each other and their opinions.
Listen without interruption.
Keep confidentiality of discussions within the team.
Mistakes happen. We learn from them and move on.
Strive for consensus in decision making.
Honor our commitments.
Fully support decisions outside of the room.
Ask for help when needed.
Have fun.
FOCUS on RESULTS.
Initiation – Kick-off Meeting
• Communicate project goal.
• Communicate project scope.
• Communicate team structure / introduce members.
• Communicate project team responsibilities.
• Communicate project timeline and milestones.
• Reinforce management’s commitment to the project.
• Introduce acquisition associates to project management methodology.
Analysis
Determining
what needs
to be
done.
Analysis – “As Is” Process Mapping
• Map existing high-level business processes:
Examples:
• Sales order to cash process
• Purchase requirements to payables process
• Production requirements to inventory process
• Drill down on each high level process to define subtasks.
• Functional assessment of subtasks to determine:
• What is accomplished?
• How it is accomplished?
• Who does it?
• Why is it done?
Analysis – “As Is” Process Mapping
• Document minor processes as well.
Example: Physical inventory / cycle counting
• Use process mapping sessions to:
• Encourage communication between all associates.
• Collect thoughts about shortcomings of current practices.
• Confirm understanding by feedback to those who provided the information
• Begin to formulate thoughts of SAP solutions.
• Review output documents (production orders, shipping documents, . . .)
• Review existing master data.
• Review existing job roles and responsibilities.
• Assess associate process knowledge and computer literacy.
Analysis – Sample “As Is” Map
Quoting
Determinecustomer
Order entry Process orderManufacture
materials
Tolco Standard Order to Cash Process - 06/19/2002
Pick Shipment
Order Ack(internal)
Determine pricing
Call Back
Order processing
3rd party items
Verify accuracy
Fax Confirm
Credit Mgmt
Verify availability,accuracy
Edit order
Print Pick list,Ship ack
Pick list
Ship Ack
Marks / tag
Tracking status
QC
Assembly
Pick list
Packing slip(external)
Backorderprocessing
Change orderprocess
Update pick list
Palletizing
TransportationProcessing
Release for billing
Bill of lading
Drivers log
Receipt ofshipment ack
Billing
Invoice
Scan documentsinto Liberty
Accountsreceivable
Call 60 days out
Rep orders
Late shipmentprocess
Analysis – “As Is” Process Mapping
In a nutshell . . .
The purpose of the “as is” portion of analysis is to gain an understanding of the existing processes in order to identify the SAP functionality required to support the business in the ultimate “to be” environment.
Analysis – “To Be” Vision
Definition of SAP driven, integrated processes that support business operations.
• Performed primarily by NIBCO participants
• Define integrated business processes that:
• Effectively accomplish the business objectives
• Incorporate SAP systems functionality in the office and onto the shop floor.
• Eliminate unnecessary, non-value added work.
Analysis – “To Be” Vision
• Document “to be” vision as a series of business processes.
• Determine the master data required in SAP to support the “to be” business processes.
• Determine the delta: “as is” processes vs. “to be” processes.
• Compare master data needs to master data available to determine the deficit of data that has to be addressed.
Analysis – “To Be” Vision
• Document job roles that support the “to be” environment.
• Determine the delta between the existing organizational structure and the one required to support the “to be” environment.
Analysis – “To Be” Vision
In a nutshell . . .
The purpose of the “to be” portion of analysis is to determine the delta that has to be overcome to transition from the pre-SAP environment to the new SAP process driven model.
This provides the basis for the next step …
Design Phase
How are we going to get this
done
(in the time we have been given
to do it)?
Design Phase
• Design business processes that describe the flow of information and integration of SAP into the business activity.
• Design SAPscript form layouts for all output documents.
• Design reports required to support business activity.
• Design product labels
• Design warehouse bin labels.
Design Phase
• Design processes to convert master data from existing systems into SAP as possible.
• Design processes to create master data elements not available in old system but required to support SAP going forward.
• How is the master data to be generated?
• Who will do the work*?
• How will the master data be loaded into SAP?
* Note: It is likely that those who are knowledgeable to create the master data are also key resources in other aspects of the project.
Design – Business Process
Business process contains:
• Process description
• Business rules that apply to the process
• Name of process owner
• Step-by-step walk-through of the process
• Who performs each step
• Step description
• If SAP is used within the step, include the transaction code for that step.
Design Phase
• Design reports required to support business activity.
• Design product labels
• Design warehouse bin labels.
• Design building layout with placement of workstations and printers required to support SAP usage.
• Design required new job roles.
Design Phase
• Design a training plan tailored to the needs of the associates:
• Computer literacy training
• Microsoft Outlook / Scheduler
• Functional training
• Lay the foundation for ongoing training through the use of online training tools such as On Demand.
• Language specific training needs (classes, materials, trainers).
Design Phase
In a nutshell . . .
The purpose of the design phase is to develop the roadmap to be used to accomplish the SAP implementation.
Development Phase
Building the solution:
From plans and specifications to the
tangible.
Development Phase
Develop:
• SAPscripts / programs
• Reports
• Master data load programs
• Training materials
• Training schedules (w/ job role assignments)
• Cut-over plan (week before go-live date)
• Security activity groups and profiles.
Development Phase
• Create a schedule to load master data
• Begin to load master data
Development includes unit testing of each task.
Testing
Integration test concept:
• 3 integration tests each targeted to accomplish a different aspect of testing.
• Business involvement must increased throughout the test phase.
• Success factors must be defined for each stage of the testing process.
• Must have focused testing sessions to accomplish a thorough test.
Integration Test 1
Goal:
Verify that the major processes function as required.
Integration Test 1
• Performed performed by NIBCO associates at the world headquarters.
• Performed by NIBCO Core Team and Extended Team members.
• Test end-to-end integrated functionality of processes that run 75% of the business activity.
• Limited master data load.
• Test security.
• Validate training materials.
• Document issues – 2 weeks to fix before next test.
Integration Test 1
Results . . .
We know major processes function as required.
Integration Test 2
Goal:
Verify that the all processes function as required.
Integration Test 2
• Issues from Integration Test 1 have been addressed and resolved.
• Balance of processes have been prepared and are ready for integrated functionality test.
• Performed by NIBCO Core Team and Extended Team members at the Corona, CA facility.
• Used as a demonstration of SAP functionality for TOLCO associates.
• Test end-to-end integrated functionality of all business processes.
Integration Test 2
• Validate TOLCO associate security.
• Reinforce change management. TOLCO associates get their first look at the “new” world with SAP.
• Document issues – 2 weeks to resolve before final test.
Integration Test 2
Results . . .
We know all processes function as required.
We know security will allow the associate to perform their job.
Integration Test 3
Goal:
Verify system functionality.
Evaluate TOLCO associate readiness.
Integration Test 3
• Issues from Integration Test 2 have been addressed and resolved.
• Performed by TOLCO team at the Corona, CA facility (with support by NIBCO team members).
• Final test of assignment of security profiles to associates.
• Departmental managers and supervisors attended the testing sessions to evaluate associate readiness to use SAP to perform their job roles.
Integration Test 3
Associate readiness:
• Departmental managers did the evaluation.
• Was presented to the associates as an opportunity to determine if we needed to do more training.
• Associates were provided scripts that would be used for integration testing. (Business Process Documents)
• The NIBCO team committed to spend time with the TOLCO associates to help prepare for the integration test.
Integration Test 3
Results . . .
We know all processes function as required.
Integration Test 3
Results . . .
TOLCO associates spent many hours practicing and far exceeded our expectations! They were ready!
Testing Calendar
August 19-23 – First Integration Test
Resolve issues uncovered in Integration Test 1
September 16-20 – Second Integration Test
Resolve issues uncovered in Integration Test 1
Training begins – September 22
Training complete – October 7
October 13-17 – Final Integration Test
October 18 – Final assessment – Go/No-Go decision
Training
Training is a major key to success in delivering a “smooth” SAP integration on time.
Training
The execution of an effective training plan begins back in the development stage.
Training
Methods of delivery:
• CBT course from SAP to train basic SAP navigational skills. This was a requirement for every associate.
• Online training for SAP transactions (On Demand).
• Classroom, One-on-One, and OJT training for processes and transactions.
• Various templates to deliver concepts / processes:
• Quick references
• Business processes
Training Classes List
MM01 Introduction to Materials Management & Materials Management Master Data
MM02 Procurement – Purchase Requisitions
MM03 Procurement – Purchase Documents and Master Data
MM04 Inventory Management – Material Movements
MM05 Inventory Management – Outside Services
MM06 Inventory Management – Cycle Counting and Physical Inventory
PP01 Introduction to Production Planning and Production Planning Master Data
PP02 Logistics – Finished Goods Inventory Management and Planning
PP03 Production Scheduling – Standard Materials
PP04 Production Scheduling – Standard Item Modified (SIM)
PP05 Production Scheduling – Fabricate to Order (FTO)
PP06 Production Order Completion and Analysis – Month End Process
PP07 Production Planning & Materials Management Reporting
SD01 Shipping and Delivery
WM01 Warehouse Management
Sample Training Schedule
1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31
Monday Tuesday Wednesday Thursday Friday Saturday Sunday
October 2003
Transactional Master Data Load
Final Integration Test
Physical Inventory Process (All Locations)
Physical Inventory ProcessTraining Workshops (As Needed)
Go / No GoDecision
Training Workshops (As Needed)
SD01 - MorningMM01 - Afternoon
SD01 - Morning MM02 - Afternoon
SD01 - Morning MM02 - Afternoon
SD01 - Morning MM03 - Afternoon
WM01 - All DaySM06 - All Day
MM04 - MorningMM05 - Afternoon
WM01 - Morning PP06,PP07-Aftnoon
SM Training SM Training SM Training MM06 - MorningSupply Chain Workshop
BR01 - Morning BR01 - Afternoon
BR01 - Morning BR01 - Afternoon
Associate ReadinessAssessment
Associate ReadinessAssessment
Associate ReadinessAssessment
Mast, Breese, Newcomer,Platz
Platz, Breese, Newcomer,Mast
Platz, Breese, Newcomer,Mast
Breese, Healy, Platz, Mast
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Mondy, Innuganti,Newcomer
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Mondy, Innuganti,Newcomer
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Hall - CorFryling - Sac
Cooney - Hou
Mast, Newcomer,Breese
Hall - CorFryling - Sac
Cooney - Hou
Hall - CorFryling - Sac
Cooney - Hou
Hall - CorFryling - SacCooney - Hou
Reese, Hall, Breese,Healy, Mondy - Cor
Fryling - SacCooney - Hou
Reese, Hall, Breese, Healy,Mondy - CorFryling - Sac
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Reese, Hall, Breese, Healy,Mondy - CorFryling - Sac
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Reese, Hall, Breese,Healy, Mondy - Cor
Fryling - SacCooney - Hou
Fryling - Sacramento
Fryling, Cooney -Houston
SD01 - Morning MM01 - Afternoon
Sept 30
Mast, Newcomer,Breese
Training Delivery Assessment
Training Delivery Assessment
MM01 – Introduction to Materials Management and MM Master Data (Session – Sept 30, 2002) ________________________________________________________________ 1. Rate the overall effectiveness of the course in terms of meeting the stated
objectives.
Very Good____ Good _____ Do Not Know ____ Fair ____ Poor _____ Comments:
2. Rate the course content and structure.
Very Good____ Good _____ Do Not Know ____ Fair ____ Poor _____ Comments:
3. How well did the instructor’s transfer the subject knowledge to you?
Very Good____ Good _____ Do Not Know ____ Fair ____ Poor _____ Comments:
4. Rate the classroom facilities (layout, environmental factors, AV equipment).
Very Good____ Good _____ N / A _____ Fair ____ Poor _____ Comments:
5. Rate the training support processes (eg. announcements, registration,
confirmation).
Very Good____ Good _____ N / A _____ Fair ____ Poor _____ Comments:
6. How well did the business processes address the project changes?
Very Good____ Good _____ N / A _____ Fair ____ Poor _____ Comments:
7. How well did OnDemand help deliver and address the project changes?
Very Good____ Good _____ N / A _____ Fair ____ Poor _____
Training
The key to effective training is to deliver the same material / concepts in multiple formats, multiple times to allow associates to utilize what is effective for them.
Implementation
Go / No-Go Decision:
• Two weeks before the targeted go-live date
• NIBCO & TOLCO leadership meet to discuss readiness to go live.
• Identify any last-minute issues.
• Review the cut-over plan.
• Commit to a strong finish.
Implementation
November 1, 2002 – Successful Implementation
NIBCO support team on-site for the next two months to assure a smooth transition.
Lessons from the project . . .
1. Master data is king!
• It is never too early to work on master data.
• Include your master data guru in with you early analysis team.
• As much as we tried to attack master data as early in the project, we still struggled to get “acceptable” master data into SAP.
• Prioritize your master data.
• Define acceptable levels of data integrity.
Lessons from the project . . .
2. Start your SAPscript work early. It may take several iterations to get it right.
3. Listen closely. There is a big difference sometimes between what you think you heard and what was really said.
4. Feed back your thoughts to others (both NIBCO and TOLCO) to make sure you are on the right train of thought. With a tight implementation schedule, a misunderstanding can cost valuable time.
Lessons from the project . . .
5. Process is also king!
• SAP does not perform well in an environment where the user “shoots from the hip” when it comes to process.
• Spend a lot of time designing and clearly documenting all business processes.
• Spend a lot of time training the business process. People will learn to execute transactions quickly, but they must understand what they are doing within the integrated process. (How what they do affects others.)
Lessons from the project . . .
6. Management of critical people’s time is important.
• The same person who knows master data best is also the guru who can test the new process and answer questions about existing process.
• Identify these people early and attempt to off load duties and make time for them to participate in the project.
• Be sensitive to associate burn out when running a high stress, high expectation project such as this.
Lessons from the project . . .
7. Communication is also king!
• Develop a plan to inform all associates of the acquired company what is going on. It helps to relieve the stress and worry of the unknown.
• It was our experience that most of the TOLCO associates were eager to get started with the SAP training. They spent personal time to polish skills and practice competencies.
• “TOLCO Talks” were held monthly with all associates to review various aspects of the project and answer questions.
Lessons from the project . . .
8. Training is also king!
• Training plan is started in the design phase.
• Training must address the particular audience.
• If language is a factor, arrange for training materials and training sessions to be delivered in multiple languages.
• Plan to allow associates to have adequate classroom time and plenty of practice opportunity.
• Provide the same information in a myriad of ways to reinforce the learning.
Lessons from the project . . .
9. Use the project to develop a template that can be used again when the next acquisition comes along.
• Project management methodology can be reused.
• Process templates and training materials can be reused.
• Spreadsheets, etc. that are used to evaluate job roles, etc. can be reused.
• Review constructive comments in the training delivery evaluation to improve training skills for the “next time”.
Lessons from the project . . .
10. A smooth go-live period does not mean the work is done. Plan to staff a support team to insure continued success for at least two months after the go-live date.
Thank you for attending!Please remember to complete and return your evaluation form following this session.
Session Code: 2809