northeast supply chain conference bridging the great divide – supply chain management and...
TRANSCRIPT
Northeast Supply Chain Conference
Bridging the Great Divide – Supply Chain Management and
Information Technology
Ken Hartman, C.P.M.
SAP Procurement Business Process Manager
Boston Scientific Corporation
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Brief Background 19 Years of systems implementation experience
11 Years implementing SAP at PwC / IBM Business Consulting Services
Processes:• Purchasing and Strategic Sourcing• Inventory• Accounts Payable• Warehouse Management• Planning
Industries:• High technology• Publishing• Consumer Products• Investment Banking• Aerospace and Defense• Public Utilities• Media
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Boston Scientific (NYSE: BSX) is a worldwide developer, manufacturer and marketer of medical devices with revenue of $5.6 billion in 2004.
For more than 25 years, Boston Scientific has advanced the practice of less-invasive medicine by providing a broad and deep portfolio of innovative products, technologies and services.
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The Boston Scientific Mission
To improve the quality of patient care and the productivity of health care delivery through the development and advocacy of less-invasive medical procedures.
This is accomplished through the continuing refinement of existing products and procedures and the investigation and development of new technologies which can reduce risk, trauma, cost, procedure time and the need for aftercare.
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Boston Scientific Businesses
Vascular SurgeryOncology
EndoscopyInterventional CardiologyPeripheral Interventions
ElectrophysiologyNeurovascular
UrologyGynecology
Business GroupsCardiovascularEndosurgery
Business GroupsCardiovascularEndosurgery Neuromodulation (Advanced Bionics)
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BSC Worldwide Locations
Worldwide headquarters Natick, MA, 16,000 employees (approx.) 22 manufacturing facilities
January 2004
Direct Sales
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SAP Procurement Business Process Manager
Vice President of Operations
Director ofIndirect
Procurement
SAP Procurement Business Process
Manager
Sourcing Technology
Manager
Vice President of Information Technology
Plant MaterialsDirectors
Plant Purchasing Managers
Plant BPL’s
1. Build a high functioning BPL organization2. Implement best in class business processes3. Advance the use of supporting technology
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Today’s Agenda
I. What’s the problem?
II. Three organizational methodologies• Special Project• Business as Usual• Cross Functional
III. Five techniques for implementing and maintaining a Cross Functional organization• Business Process Leadership Role• Knowledge Management• Shared long-range vision and integrated planning• Project management• Metrics
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SCM and IT Challenges
SCM initiatives fail to achieve anticipated benefits Company isn’t in “upper right” quadrant Implement SCM best practices or enabling technologies Limited budget for IT projects in support of SCM IT and SCM see the company’s needs differently Initiatives take “forever” to get off the ground
“To achieve results in Supply Chain improvement projects, and to maintain these results, companies must craft a collaborative Supply Chain/IT culture”
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Observations
Consultants
Supply ChainInformationTechnology
Functional “tribes” Objectives, expertise, management Perspectives Differing definitions of “success” Different languages Companies hire professional translators:
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Special Project Organization
Large project team Big $ budget High visibility Program/Project manager Focus on user requirements Design optimal IT solution New technologies/systems Well -trained users Manage org. change Track and report benefits Top management cross functional commitment
However: these are exceptional events!
Procurement
IT
Change ManagementTraining
Internal Audit
Materials
Project Team
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Business As Usual Organization
After the Special Project … One tribe “drives” the initiative Other tribe may not be included Not all tribes contribute to defining objectives Differing options on critical success factors Little thought to post-implementation support Difficult to secure top management support Disconnect between IT and end-users Communication is strained
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Common SCM Initiatives and Tribal Perspectives
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Six σ/Lean
Supply’s Perspective
Visual measurements
Elimination of waste
Process analysis
IT solutions are last resort
IT’s Perspective Mostly a process – oriented activity Generates some IT requests Easier than implementing new technology
Common Ground
Implement automated methods of collecting performance metrics Involve IT expertise to automate manual activities Sequence process improvement to match IT initiatives
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e-Procurement
Supply’s Perspective
• End-user focus, self service• Easy to set-up and maintain• Simpler than ERP• Technology solves all issues• Focus on deployment
IT’s Perspective
• New systems, technologies• Vendor communication challenges• Very technology dependent• Not as easy as purchasing thinks• Benefits not well understood
Common Ground
• Equal technology and process requirements• Without both halves, e-procurement will not achieve promised ROI
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Strategic Sourcing
Supply’s Perspective Mission Critical Need 3rd party technology Process intensive Excellent ROI Relies on better reporting
IT’s Perspective Questionable new technology Painful interfaces to ERP systems Primarily a process activity? Reporting requirements must be defined
Common Ground
Need for intensive automated reporting Can be greatly facilitated by technology Must be supported by robust process re-design
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Implementing a Cross Functional Organization
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Objectives of Cross-Functional Organization
Integration of processes and technology Increased communication of value-added ideas Increased peer-to-peer communication Shared long-range planning Culture of collaboration
Reduced implementation costs Faster implementation of key supply chain initiatives Greatly improved ROI Reduced “back sliding” Recognizing follow-on savings opportunities Effective use of scarce available resources
ResultingIn
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Implementing a Cross-Functional Organization
1. Business Process Leadership Role2. Knowledge Management3. Shared long-range vision and integrated planning4. Project management5. Measure Success - reinforce
“A business philosophy that recognizes that process and IT cannot be completely successful in isolation”
Five activities necessary to sustaining a cross-functional organization:
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Business Process Leads Resident in each facility or business unit High credibility within the organization Trained and experienced in process and IT Viewed as a career path Adept at leading or participating on teams Will work in these 3 areas:
SCM Processes
•Kanban•Consignment•VMI•e-procurement•Spend datamart•Supplier collaboration•Pay on receipt (ERS)•Recurring payments•Supply normalization
Enablers
•Business Process redesign •Lean/6 Sigma•Change management•SOP documentation•Training•Project management•Supplier negotiation
Technologies
•ERP configuration•System implementation•Data clean-up and enhancement•Barcode/RFID•Supplier communication (XML, EDI)•Business Warehouse and data analytics
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Boston Scientifics' BPL ProgramWho are they?
Virtual team of 30 people 50/50 IT and process backgrounds 30% are dedicated BPL’s, 70% have line responsibilities Support purchasing, planning, and/or inventory 2 are new hires
Results to Date Implemented new SAP functionality Shared best practices resulting in significant efficiencies Prioritized IT projects - quarterly voting Increased visibility for initiatives Cross communication between materials functions
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Boston Scientifics' BPL Program (continued)
Characteristics of a Successful BPL Experienced in either IT or process Former “super user” Demonstrated aptitude in the other discipline Experienced managing or working on virtual teams Politically neutral – savvy Comfortable working with conflicting objectives Creative problem solver Good sense of humor!
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BPL Career Progression
Principle Responsibilities Associate Business Process Analyst
Business Process Analyst
Senior Business Process Analyst
Principle Business Process Analyst
1.Business Process Redesign and Implementation Responsibilities
Work with users to identify areas for business process improvements and define solutions using appropriate methods
Identify areas for improvement within their department
Identify areas for improvement multiple Materials functions.
Leads a team Provide direction
Implement lean business processes based on or independent from new technology projects
Contributes as part of a team to the the plant
Contributes individually within the plant.
Takes individual ownership within the plant
Leads among several plants
2. Information Technology Responsibilities
Using SAP as the primary information system, work with users to identify, diagnose and solve system issues
Recognize system issues
Determine cause and potential solutions
Determine causes and work with IT to solve
Ensure that solution is
implemented across all sites
Define, test and implement current and new business systems enhancements, modules and releases as well as non-systems tools requested by Materials functions
Work with functional users
Identify enhancements within department
Identify enhancements, within materials organization
Identifyenhancements, across plants
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Your BPL Program Action Items
Secure top SCM and IT management support Identify personnel in each location/function Identify strengths and development opportunities Work with HR to formalize role Build the virtual team Determine and agree on the team’s objectives Schedule face-to-face meetings Document value added by the program
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Knowledge Management
Information Technology System configuration decisions Rationale for scope of technology Potential new IT functionality not yet implemented Short, medium, and long range IT strategy
Business Process Process decisions for system configuration Clearly documented SOP’s Up to date system training documentation Accessible best practices Public metrics and results
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Knowledge Management
Access to Information E-mail newsletters “Gazette” SCM/IT Intranet site Discussion forums Tie in with help desk – disseminate answers to questions Reinforce BPL as the source for information “Learn @ Lunch” Appoint at department liaison
“Knowledge is only useful if you can quickly find it and put it into practice”
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Your Knowledge Management Action Items
Assess current state of knowledge – IT and process Assess accessibility and usability of knowledge Determine Knowledge Transfer status (consultants) Build KT into all professional services contracts Document Knowledge Management objectives Build KM value proposition and metrics Implement!
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Integrated PlanningS
up
plier P
ortal
Source Transact
Req. PO PayReceive
Partner
Demand/Supply
ConstraintsAlerts/POs
Analyze
Business Information
SupplierData
CommodityData
AVL ContractData
UserInterface
Classification BusinessWarehouse
Analytics
SupplierResearch
InternalResearch
ImplementBid/RFx
MarketResearch
Negotiate
Short Term – within 6 months Medium Term - within 12 months Long Range – 12 months +
Must be joint IT Business Process!
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Integrated Planning (cont.)
Elements of Integrated Planning include: SCM functional initiatives Technology initiatives What are the anticipated ROI – business benefits? Level of resources to implement and sustain Sequence and priorities Coordinated and reconciled plan Small, medium and large initiatives
Must be packaged for all to understand
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Integrated Planning (cont.)
Short Term Planning - Tactical1. Within 12 months2. Immediate resource requirements3. Redirect current year budget $4. Prioritize current projects?
Intermediate Term Planning - Semi Strategic1. Next calendar or fiscal year?2. Budget cycle?3. Prioritize initiatives according to ROI?4. Require RFP for software/services
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Integrated Planning (cont.)
Long Range Planning - Strategic1. Capital Funding2. Infrastructure, other IT constraints3. Technology upgrades4. New product introductions5. Business acquisitions/divestments6. Integration issues
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Your Integrated Planning Action Items
Locate departmental plans (if any) Engage SCM and IT management Research current and future best practices Create an overall vision Identify opportunities and constraints Document 3-year plan Communicate!
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Project Management
Develop PM skill set:• Budgeting• Planning• Resourcing• Issue Resolution• Stakeholder Management • Benefits realization• MS Project
Fundamentals are valid regardless of size of initiative Awareness of process, IT, change management etc.
considerations Must be part of job competencies for promotion
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Project Management
Focus on objectives and measurable benefits Rotate PM responsibility among PBL’s Methodology – Process, IT Project Templates - accelerators Consistent deliverables
• Project charter• RICE design documents• Issue resolution• Project status
Understand IT, process project interaction• Ex: system test and end user training
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Your Project Management Action Items
Identify successful projects Identify successful project managers Determine if accelerators and pro forma deliverables are available Work with HR to build PM competencies into job descriptions Create a PM curriculum for all team leads and team members Create a library of standard project metrics Begin compiling project “actuals”
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Measure Success Define “success”
• Reduced cycle time (8 days to 2 days)• Reduced transaction cost ($29 to $8 per
transaction)• 5% Unmatched invoices• Aim for industry benchmarks
How do you know if you are successful?• How will you collect raw data?• Who is responsible for data analysis
“Start with metrics and work backward to design processes and systems”
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Your Measurements Action Items
Identify areas where performance metrics are being used successfully Ensure that every proposal contains a section entitled “How I will know if I am successful” Ask senior management for their definitions of “success” Ensure that all initiatives are capable of capturing success metrics Include IT and process metrics
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Closing Thoughts
BusinessProcess
BPL’sTechnology
• SCM/IT disconnect costs $• Cross Functional Organization• Business Process Leads• Knowledge Management• Integrated Planning• Project Management• Top management must believe
This is a journey that has short term and long term benefits
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Questions - Comments
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Thank You!
Ken Hartman C.P.M.SAP Procurement Business Process Manager
Boston Scientific
One Boston Scientific PlaceNatick, MA 01760-1537
508-650-8316