Transcript 2005 Northeast Supply Chain Conference

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
Brief Background
 19 Years of systems implementation experience
 11 Years implementing SAP at PwC / IBM Business
Consulting Services
Industries:
• High technology
• Publishing
• Consumer Products
• Investment Banking
• Aerospace and
Defense
• Public Utilities
• Media
Processes:
• Purchasing and Strategic
Sourcing
• Inventory
• Accounts Payable
• Warehouse Management
• Planning
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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
Business Groups
Cardiovascular
Endosurgery
Neurovascular
Endoscopy
Vascular Surgery
Oncology
Neuromodulation (Advanced Bionics)
Electrophysiology
Interventional Cardiology
Peripheral Interventions
Urology
Gynecology
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BSC Worldwide Locations
Direct Sales
January 2004
 Worldwide headquarters Natick, MA,
 16,000 employees (approx.)
 22 manufacturing facilities
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SAP Procurement Business
Process Manager
Vice President of
Information Technology
Vice President of
Operations
Plant Materials
Directors
Director of
Indirect
Procurement
Plant Purchasing
Managers
SAP Procurement
Business Process
Manager
Plant BPL’s
Sourcing
Technology
Manager
1. Build a high functioning BPL organization
2. Implement best in class business processes
3. Advance the use of supporting technology
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Today’s Agenda

I. What’s the problem?
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II. Three organizational methodologies
• Special Project
• Business as Usual
• Cross Functional
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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
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• Metrics
SCM and IT Challenges
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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
Supply Chain
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Information
Technology
Functional “tribes”
Objectives, expertise, management
Perspectives
Differing definitions of “success”
Different languages
Companies hire professional translators: Consultants
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Special Project Organization
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Large project team
Project Team
Big $ budget
High visibility
Procurement Materials
Program/Project manager
Internal Audit
Focus on user requirements
IT
Design optimal IT solution
Training
New technologies/systems
Change Management
Well -trained users
Manage org. change
Track and report benefits
Top management cross functional commitment
However: these are exceptional events!
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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’s Perspective
 Mostly a process – oriented
activity
 Generates some IT requests
 Easier than implementing new
technology
 IT solutions are last resort
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
IT’s Perspective
• End-user focus, self service
• Easy to set-up and maintain
• Simpler than ERP
• Technology solves all issues
• Focus on deployment
• 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
Resulting
In
 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
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Implementing a CrossFunctional Organization
“A business philosophy that recognizes that process
and IT cannot be completely successful in isolation”
Five activities necessary to sustaining a
cross-functional organization:
1. Business Process Leadership Role
2. Knowledge Management
3. Shared long-range vision and integrated planning
4. Project management
5. Measure Success - reinforce
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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 Program
Who 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 21
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
 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
Determine causes
and work with IT
to solve
Identify
enhancements,
within materials
organization
Ensure that
solution is
implemented
across all sites
Identify
enhancements,
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 Planning
 Short Term – within 6 months
 Medium Term - within 12 months
 Long Range – 12 months +
Business Information
Supplier
Data
Commodity
Data
Internal
Research
Market
Research
Transact
Supplier
Research
Req.
Bid/RFx
Negotiate
PO
Partner
Receive
Pay
Alerts/POs
Demand/
Constraints
Supply
Implement
Analyze
Classification
Business
Warehouse
Analytics
Supplier Portal
Source
Contract
Data
AVL
User
Interface
Must be joint IT Business Process!
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Integrated Planning (cont.)
Elements of Integrated Planning include:
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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 - Tactical
1. Within 12 months
2. Immediate resource requirements
3. Redirect current year budget $
4. Prioritize current projects?
Intermediate Term Planning - Semi Strategic
1. 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 - Strategic
1. Capital Funding
2. Infrastructure, other IT constraints
3. Technology upgrades
4. New product introductions
5. Business acquisitions/divestments
6. 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
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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
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“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
• SCM/IT
disconnect costs $
• Cross Functional Organization
• Business Process Leads
• Knowledge Management
Technology
• Integrated Planning
• Project Management
• Top management must believe
Business
Process
BPL’s
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 Place
Natick, MA 01760-1537
508-650-8316
[email protected]
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