Bringing an Acquisition onto SAP: A Supply Chain Perspective Session: 2809

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


• Employs 2900+ associates world-wide.

• Websites:

www.nibco.com

www.nibco.com.pl

www.tolco.com

www.nibcopartner.com

http://www.nibco.com/

http://www.nibco.com.pl/

http://www.tolco.com/

http://www.nibcopartner.com/


• 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


• 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


• 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


• Company acquisition – Live on SAP November 2002

• Corona, CA

• Sacramento, CA

• Houston, TX


Acquisition background

Why did NIBCO acquire another company?

• Growth

• Expand product offering

• Meet customer needs

• Foster a progressive attitude within the company


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.


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


Project sponsor (NIBCO)

• Visible, executive support

• Project vision

• Retain focus

• Provides resources

• Overcomes resistance to change


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!


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


Extended / training team (NIBCO & TOLCO)

• Functional experts

• IT Developers

• Trainers

• Technical support


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?


• 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


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.


• 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.


• 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.


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



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



Mast, Breese, Newcomer,Platz

Platz, Breese, Newcomer,Mast

Platz, Breese, Newcomer,Mast

Breese, Healy, Platz, Mast

Breese, Reese, HealyBreese, Reese, Healy Breese, Reese, Healy Breese, Reese, Healy Breese, Healy, ReeseBreese, Reese, Healy

Mondy, Innuganti,Newcomer



Mondy, Innuganti,Newcomer Innuganti, Newcomer

Innuganti, Newcomer

Hall - CorFryling - Sac

Cooney - Hou

Mast, Newcomer,Breese


Cooney - Hou


Cooney - Hou

Hall - CorFryling - SacCooney - Hou

Reese, Hall, Breese,Healy, Mondy - Cor

Fryling - SacCooney - Hou

Reese, Hall, Breese, Healy,Mondy - CorFryling - Sac

Cooney - Hou

Reese, Hall, Breese, Healy,Mondy - CorFryling - Sac

Cooney - Hou

Reese, Hall, Breese,Healy, Mondy - Cor

Fryling - SacCooney - Hou

Fryling - Sacramento

Fryling, Cooney -Houston


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.


3. How well did the instructor’s transfer the subject knowledge to you?


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).


6. How well did the business processes address the project changes?


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.


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.


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.)


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.


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.


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.


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”.


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