Using ADKAR® in IT projects

Inventory system

By: Mansour Mansouri Farhad Saadati

August 2007

We have sent this document and contents only to Prosci just for establishing a new idea. Reproduction and distribution without permission are not fair.

Preface..............................................................................................................................6

A-Awareness of the need for change .......................................................................9

A_1- General training and messages which declare the need of ERP ................................... 9

A_1-1 Main concepts about ERP................................................................................................ 9

A_1-2 how dose ERP conformance with enterprise's business and strategy?............... 10

A_1-3 why ERP is required, it is important and should be done at this time?.............. 13

A_1-4 what are the risks of NOT implementing this system? .......................................... 16

A_1-5 how do the changing market environment and customer needs force enterprise to implement ERP? ............................................................................................................... 16

A_1-6 what is the timetable to implement ERP?.................................................................. 16

A_1-7 how should balance sheet be affected by this project? ........................................... 17

A_2- Training and messages to managers, supervisors and project team.......................... 21

A_3- Customers and Suppliers .................................................................................................... 21

A_4- ERP inventory trainings and messages ............................................................................ 25

A_4-1 Who are the end users of inventory system? ............................................................ 25

A_4-2 What are the messages required for each group of inventory end users? ......... 26

A_4-3 What are the benefits of ERP implementation for the users involved in inventory system and ultimately for organization?..................................................................... 31

A_4-4 What is the best time, data package and communication channel for each group of users to disseminate the messages?.............................................................................. 33

A_4-5 how should balance sheet be affected by inventory?.............................................. 33

D_Desire to participate in the change ...................................................................34

D_1- What are the benefits, advantages and objective of an integrated inventory system?............................................................................................................................................................... 34

D_2- What kind of reports could be extracted from inventory system after implementation?............................................................................................................................................................... 37

D_3- What are the roles of project team and business managers during inventory system implementation?................................................................................................................................ 37

D_4- What are the users’ (organizations') worries and concerns’ about implementing this system? ................................................................................................................................................ 40

D_5- What are the probable barriers and constraints for this implementation?............... 40

D_6- Is there any success story is this area? If yes, who are they and what did they gain from that?...................................................................................................................................................... 41

D_7- What are the risks before and after implementation? ................................................... 41

D_8- What are the future business processes?.......................................................................... 42

K_Knowledge about how to change ......................................................................47

K_1- What are the training requirements for each group of users regarding to new processes, systems and tools? ............................................................................................................................ 47

K_2- What is the level of computer science needed for users? ............................................. 47

K_3- Computer facilities for reporting and analyzing............................................................ 47

K_4- How will processes be done after change? ...................................................................... 47

K_5- What are the job descriptions and roles after inventory system implementation?. 47

K_6- What is the position of people in the chain of processes? ............................................ 47

Procedures & Instructions to run the new processes. ............................................................. 47

A) Procedures of Inventory Area................................................................................................. 48

B) Procedures and instructions to execute functions of mapped process flows. .............. 49

C) Procedure for Item Definition................................................................................................. 50

D) Procedure of Inventory Structure Definition ...................................................................... 53

E) Procedure of initial Receipt...................................................................................................... 54

F) Procedure of received goods inspection related to function two flow2......................... 55

G) Procedure of transfer to main stores ..................................................................................... 57

H) Procedure of request for material from warehouse........................................................... 57

I) procedure of purchase requisition generation from warehouse....................................... 59

J) Procedure of item delivery to manufacturing plant............................................................ 59

K) Procedure of spare part delivery to maintenance requester fulfilling spar part requests............................................................................................................................................................... 60

L) Procedure of delivery of consumables requested to the requesting department or user or fulfilling requests for consumables. .............................................................................................. 60

M) Procedure of delivery general goods of fixed Asset type to the requesting department or full filing the requests for Asset type of general goods ............................................................ 62

N) Procedure of accounting entries generation for all inventory transactions. ................ 62

O) Procedure Of finished goods (FG) delivery from production plant to warehouse .... 63

P) Procedure of Available To Promise (ATP) for finished products.................................... 64

Q) Procedure of getting pick release request from sales ........................................................ 65

R) Procedure of evaluation of availability of requested product ......................................... 65

S) Procedure of product reservation to pick release request (sales) .................................... 66

K_7- Do users have any check list for checking daily, weekly or monthly tasks? What are the steps for each task? ........................................................................................................................... 67

K_8- What are the main principles for training?...................................................................... 69

AB_Ability to implement the change ....................................................................69

AB_1- What are the check points to identify users’ progresses? .......................................... 69

R_Reinforcement to sustain the change................................................................70

R_1- Is there any time that can be used as awarding and admiring users? ....................... 70

R_2 what are the measures to check users' usage of the system and their progresses? .. 70

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Preface This document is prepared for those companies, which need to improve or implement any

integrated system such as ERP, MIS, etc and want to manage the project from the people side point of view.

If you see change management books, all of them say good guidelines how to communicate, to build awareness, to foster desire, to make knowledge and so on. These principles are essential and should be followed by change management team and they should be aware of change management skills, supervising skills and so forth.

We can divide guidelines in these books to two main tasks, which should be done and followed by change management team and change stakeholders:

• Behavioral tasks

• Practical tasks

Behavioral tasks are those tasks that project team members, functional mangers and supervisors should follow them in connecting with people, in meetings, speaking etc. That means managerial and supervisory skills are absolutely required for these people and they have to use these skills when they want to communicate with their employees, pairs and colleagues.

Until now, everything goes smoothly. However, there arises one question: "we know every thing about communications, techniques and approaches, we are skilled in managerial and supervisory aspects, and we know how to handle meetings but actually what should we say in our meetings? If we want to make the awareness of the need for change, what should we say? If we have to tell employees the benefits, risks, objectives of making that change, what are these topics actually?"

That means beside the behavioral tasks, we have to do some practical tasks too. In other word, we, as project team members and change stakeholders, should know the answers to the previous sample questions and after that announce them to others.

In these document sets, we have chosen ADKAR, Prosci registered model for change management framework activities, and extracted questions in different phases of this model. Then these questions are answered regarding to the system you are implementing or improving in your organization.

Phases of this model, as mentioned by Prosci, are:

• Awareness of the need for change

• Desire to participate in the change

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• Knowledge about how to change

• Ability to implement the change

• Reinforcement to sustain the change

Therefore, we have tried to prepare a document, which helps companies facilitate and expedite their change management activities. This document is about inventory system and we can deliver in other systems such as:

• Purchasing

• Sales

• Human Resource

• Manufacturing

• Maintenance etc

Important notes:

• Because in communications we have to send our purposes in short and meaningful messages, thus in this document messages are prepared in separate small ones.

• In some cases for more clarifications, some more details are given, especially for clarifying procedures and processes.

• Messages and detailed information should be first be understood by project team and then be scattered to the concerned people as mentioned in the text and be used in your communications.

• According to your company existing facilities, messages should be disseminated via office automation system capabilities, billboards etc.

• We have tried to put most important and common messages in each area, but it is clear you can add more messages to each group.

• Questions are extracted from the ADKAR model for each step and as mentioned previously answers are given in short messages. Thus if you need to know much more detail about the questions you should read ADKAR book.

• You may see some messages with the same meaning and concept but in different sentences. It is done so deliberately because different audiences need their own languages.

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Because each integrated system has its own strengths and weaknesses, and we wanted to cover all integrated systems, therefore we have focused on ERP systems as the target system. That means because ERP systems have a well-known principles and are on a pest practices approach, we can use ERP change management activities' for our non-ERP systems too. In other word, you can you this document almost for every integrated system. Of course, as we have mentioned in this document, you need a few manipulations regarding to your system capabilities.

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A-Awareness of the need for change

A_1- General training and messages which declare the need of ERP

A_1-1 Main concepts about ERP

• ERP systems use shared databases and control all related business data such as Manufacturing, Finance, Purchasing, Sales, Inventory, Human resources etc.

• ERP systems can be used as a solution for expediting and automating processes from order entry to order management, finance and manufacturing.

• ERP systems are as an information backbone for decision support systems.

• ERP systems not only integrate internal agents but also connect with external agents, customers, suppliers and co-workers. They can use the systems over internet which this reduces costs and increases external agents satisfactions.

• Those enterprises which have felt organizational changes, ERP systems can help them as facilitator. This is with integrating processes within the organization and changing functional-oriented to process-oriented approach in managing the enterprise.

• All companies and branches of an enterprise (Holding company) work coordinately using ERP.

• All processes within organization have to use Best Practices with using ERP. It's no matter it Build To Order or Build To Stock.

• Using ERP means applying and Best Practices from succeeded companies.

• ERP's Flexibility, scalability and supporting most of the business processes could be as a basis for progress and improvement in organization.

• ERP attributes deliver a proper atmosphere for customer servicing, profit improvement, increasing productivity and efficiency. It can cause cost reduction, revenue growth, control improvement, better managerial reports preparation and better information accessibility.

• Information optimization, better market forecasting, proper production scheduling and inventory reduction are ERP using consequences.

• Work flow management technology and e-commerce can reduce operational costs. ERP can help you in this area.

• Removing island systems with high maintaining costs and replacing with integrated world class systems can facilitate receiving WTO preconditions.

• ERP makes enterprise to talk with one common language across the departments.

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Disseminate following messages to different levels of organization:

• ERP means creating systematic intuition in organization

• ERP means speed and accuracy in operations

• ERP means emphasize on information within organization

• ERP means total integration between systems in the organization

• ERP means better service to customer

• ERP means restarting and one more opportunity for redesigning the processes

• ERP means radical thinking of processes for achieving better quality and servicing

• ERP means change in legacy processes

• ERP means deleting non active processes and maintaining and developing active ones

• ERP means new sight to organization and optimizing it

• ERP means deleting barriers to restructuring in organization

• ERP means transferring from traditional management to effective management

• ERP means availability to accurate, on time and related information to the concerned people

• ERP means using from global best practices

• ERP means planning on organization resources: Man, Machine, Money and Material

A_1-2 how dose ERP conformance with enterprise's business and strategy?

In the following, there are strategies and business objectives in different areas and benefits of integrated systems, which could help us in each area:

Strategic

Operationa

Technical

Financial

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Strategic benefits from integrated system

Strategic Perspective

• Improved customer responsiveness

• Improved decision-making capabilities

• Enhanced organizational flexibility

• Strengthened supply chain

• Supports future initiatives and building full fledged management information system

• Improve customer orientation and service

• Offer competitive products and services

• Service availability

• Agility in responding to changing business requirements (time to market)

• Cost optimization of service delivery

• Obtain reliable and useful information for strategic decision making

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Operational benefits from integrated system

Operational Perspective

• Up-to-date Financial and Operational Information

• Short-closing cycle for Books of Accounts

• Reduction in inventories

• Effective utilization of employee time

• Reduction in total logistics costs

• Reduction in procurement costs

• Improved maintenance life cycle time/cost

• Total visibility of the complete maintenance activity

• Lower process costs

• Compliance with external laws and regulations

• Transparency

• Compliance with inter policies

• Improve and maintain operational and staff productivity

Financial benefits from integrated system

Financial perspective

• Minimized operating cost

• Reduced assets deployed

• Increased return on investments

• Improved cash flow

• Better control over resources and their deployment

• Expand market share

• Increase revenue

• Return on investment

• Optimize asset utilization

• Manage Business risks

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A_1-3 why ERP is required, it is important and should be done at this time?

• We need an infrastructure that offers high availability and redundancy in order to provide 24x7 supports for our operations.

• Business managers and boards demanding better returns from IT investments. So we have to have a well known system.

• There is concern over the generally increasing level of IT expenditure. We have to implement such a system with the lowest total cost of ownership.

• The need for organizations to assess how they are performing against generally accepted standards and against their peers is essential.

• We have no more time and money to re-invent the wheels.

• We can control costs by reducing dependency on technology experts

• We can increase the potential to utilize less-experienced staff if properly trained

• We have to make it easier to leverage external assistance

• There is a chance to overcome vertical silos and nonconforming behaviour

Technical benefits from integrated system

Technical Perspective

• Integrated package forces a process-focused approach during implementation

• Internet-ready and web-enabled applications provide faster and secure access to the corporate information across the globe

• Integrated package reduces the level of training necessary to manage the business

• Seamless Integration of IT systems

• Automate and integrate the enterprise chain

• Improve and maintain business process functionality

• Product/Service innovation

• Acquire and maintain skilled and motivated personnel

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• Reducing risks and errors could save our survival

• This system could help us to improve quality

• Integrated systems help us to improving the ability to manage and monitor the enterprise

• Costs reduction could be achieved by increasing standardization

• We have to used of IT to optimize management of work and resources

• There is a potential to reduce or eliminate non-value added work by reducing interfaces and hand offs

• Jobs and roles can be enhanced via expanded information access. Integrated systems expand information access

• This system focuses on processes. So functional boundaries dissolve as processes become the focus

• Authority and responsibility move to the front line along with information. This system brings your information in hands

• Changes to business needs and additional technologies/capabilities can be embraced in an accelerated fashion

• The entire enterprise shares the same set of database information (parts in stock, material masters, production plans, maintenance costs, customers, vendors, etc.)

• We have to replace legacy systems with new systems because of low effectiveness and maintenance costs

• Processes' standardization and simplification instead of personal approach to processes

• By implementing ERP we can benefit from companies best practices

• With this system we adopt ourselves with global systems and can compete in the market

• We have to reorganize our structures because of survival

• Because there is a central database of information, the need to re-enter duplicate information into separate systems is eliminated

Help reduce operating costs

• ERP software attempts to integrate business processes across departments onto a single enterprise-wide information system.

• The major benefits of ERP are improved coordination across functional departments and increased efficiencies of doing business.

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• The immediate benefit from implementing ERP systems we can expect is reduced operating costs, such as lower inventory control cost, lower production costs, lower marketing costs and lower help desk support costs.

Facilitate Day-to-Day Management

• ERP systems offer better accessibility to data so that management can have up-to-the-minute access to information for decision-making and managerial control.

• ERP software helps track actual costs of activities and perform activity based costing.

Support Strategic Planning

• Strategic Planning is "a deliberate set of steps that assess needs and resources; define a target audience and a set of goals and objectives; plan and design coordinated strategies with evidence of success; logically connect these strategies to needs, assets, and desired outcomes; and measure and evaluate the process and outcomes."

• Part of ERP software systems is designed to support resource-planning portion of strategic planning.

The Competitive Business Environment and the Emerging Digital Firm

Four powerful worldwide changes have altered the business environment.

Emergence of the Global Economy

Today, information systems provide the communication and analytical power that firms need for conducting trade and managing business on a global scale. Globalization and information technology also bring new threats to domestic business firms.

Transformation of Industrial Economies

In a knowledge and information, based economy; knowledge and information are key ingredients in creating wealth. Knowledge and information are becoming the foundation for many new services and products.

Transformation of the Business Enterprise

The traditional business firm was and still is a hierarchical, centralized, structured arrangement of specialist that typically relied on a fixed set of standard operating procedures to deliver a mass-produced product.

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The Emerging Digital Firm

The intensive use of information technology in business firms since the mid 1990s, coupled with equally significant organizational redesign, created the condition for a new phenomenon in industrial society. The digital firm is organization where nearly all significant business processes and relationships with customers, suppliers, and employees are digitally enabled, and key corporate assets are managed through digital means. Business processes refer to the unique ways in which organizations coordinate and organization work activities, information, and knowledge to produce a product or service.

A_1-4 what are the risks of NOT implementing this system?

• We are not be able to achieve our objectives in business and organization

• Increasing decision-making costs

• Reducing capability to compete in the market

• Low flexibility in market and customers' requirements changing

• Weak management and control on enterprise resources (Man, Machine, Money and Material)

A_1-5 how do the changing market environment and customer needs force enterprise to implement ERP?

• In current competitive world, organizations should be so flexible and dynamic which can respond to market needs as soon as possible.

• Organizations should be able to monitor customers' behaviour and have good connection with their suppliers.

• Organizations' success is a result of unique and integrated operations in and between departments overall the enterprise.

• ERP systems, because of strong support of best practices that have been gained in small and big organizations, can deliver required flexibility to companies for adapting to market.

A_1-6 what is the timetable to implement ERP?

Project scheduling and selected systems fro implementation should be announced to departments.

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A_1-7 how should balance sheet be affected by this project?

Benefits from improved business processes and improved information provided by an ERP system can directly affect the balance sheet of a company. You have to show affect of the project in the balance sheet and show the decision-makers how this project could be valuable for the company. So you should prepare your company balance sheet as shown in the following example and use it properly in your meetings, communications etc.

(We have used following example with the permission of Dr. Scott Hamilton)

To illustrate this impact, a simplified balance sheet is shown in figure 1-7-1 for a typical manufacturer with annual revenue of $10 million. The biggest impacts will be on inventory and accounts receivable.

In the example, the company has $3 million in inventory and $2 million in outstanding accounts receivable. Based on prior research concerning industry averages for improvements, implementation of an ERP system can lead to a 20 percent inventory reduction and an 18 percent receivables reduction.

Figure A_1-7-1 Summarized balance sheet for a typical $10 million firm

Typical

Current Improvement Benefit

Current assets

Cash and other 500,000

Accounts receivable

2,000,000 18% 356,200

Inventory 3,000,000 20% 600,000

Fixed assets 3,000,000

Total assets $8,500,000 $956,200

Current liabilities

xxx,xxx

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Non current liabilities

xxx,xxx

Stockholder's equity

xxx,xxx

Total liabilities and equity

xxx,xxx

Inventory Reduction. A 20 percent inventory reduction results in $600,000 less inventory. Improved purchasing practices (that result in reduced material costs) could lower this number even more.

Accounts Receivable. Current accounts receivable represent seventy-three days of outstanding receivables. An 18 percent reduction (to sixty days' receivables) results in $356,200 of additional cash available for other uses.

ERP Benefits on the Income Statement

A simplified, summary income statement for the same $10 million manufacturer is shown in figure 1-7-2. For many manufacturers, the cost of sales ranges from 65 to 75 percent of sales (the example will use 75 percent). Using industry averages for each major benefit, the improved business processes and associated information system almost double the current pretax income.

Inventory Reduction. A 20 percent reduction in the current inventory of $3 million results in ongoing benefits of lower inventory carrying charges. Using a carrying cost of 25 percent results in $150,000 in lower carrying charges each year, identified here as part of the administrative expenses.

Material Cost Reductions. A 5 percent reduction in material costs because of improved purchasing practices results in annual savings of $225,000.

Labor Cost Reductions. A 10 percent reduction in labor costs because of less overtime and improved productivity results in annual savings of $100,000.

Increased Sales. Improvements in customer service typically lead to a 10 percent sales increase; this is not shown in figure 3.1.

Annual benefits totaling $475,000 in this example almost equals the current pretax income of $500,000.

Figure 1-7-2 Summarized income statement for a typical $10 million firm

Typical

Current Improvement Benefit

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Sales $10,000,000 10%

Cost of sales 7,500,000

5% $225,000

10% $100,000

Material 4,500,000 60%

Labor 1,000,000 13%

Overhead 2,000,000 27%

Administrative expenses

2,000,000 $150,000

Pretax income $ 500,000 $475,000

ERP Impact on Key Financial Ratios

Ration analysis provides another way to look at the impact of an ERP system. Three ratios illustrate the effect---two related to liquidity and one to operating performance.

Inventory turnover (Cost of Sales/Inventory). Low inventory turnover can indicate possible overstocking and obsolescence. It may also indicate deeper problems of too much of the wrong kind of inventory, which can create shortages of needed inventory for production and sales. High turnover indicates better liquidity and superior materials management and merchandising. Given the example $10 million company, the current number of inventory turns is 2.5. With a 20 percent inventory reduction, the number of inventory turns increases to 3.1.

Days of Receivables (365 * 1/(Sales/Receivables)). This ratio expresses the average time in days that receivables are outstanding. It is a measure of the management of credit and collections. Generally, the greater the number of days outstanding, the greater the probability of delinquencies in accounts receivable. The lower the number of days, the greater the cash availability. With an 18 percent reduction in receivables, the current day's receivable of seventy-three days can be reduced to sixty. This means $356,200 is available for other purposes.

Return on Assets (Profit Before Taxes/Total Assets). This ratio measures the effectiveness of management in employing the resources available to it. Several calculations are necessary to determine the return on assets. In this example, the return on assets can be improved from 5.9 to 12.9 by effectively implementing an ERP system.

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Performance evaluation based on ratio analysis can also use comparisons between one's own company and similar firms in terms of size and industry. The Annual Statement Studies provide comparative ratios for this purpose. This use of comparative ratio analysis will use the same three ratios for inventory turnover, days receivable, and return on assets. To perform the analysis, you identify the median and upper quartile ratios for firms in the same industry. These roughly correspond to average and good performance. By comparing the ratios with your firm's current performance, you can calculate how much better your company should be performing to be competitive. The same analysis can be performed using the “BenchmarkReport.com” website.

Using the inventory turns ratio for the example $10 million manufacturer, assume the Annual Statement Studies indicate that the median and upper quartile are four and six turns for other firms in the same industry. Average performance of four inventory turns translates into an expected inventory of $1.875 million ($7.5 million divided by four). If the example firm had this ratio, it would have had $1.125 million less in inventory. With inventory carrying costs at 25 percent, this would produce savings of $281,250 each year.

For the days receivable ratio, assume the Annual Statement Studies indicate that sixty and fifty days are the median and upper quartile. The days receivable in the example $10 million manufacturer is currently seventy-three days; an improvement to sixty days would reduce receivables by $356,200 (using a daily sales rate of $27,400 and a thirteen day reduction). This means that cash is available for other purposes.

Note that the return on assets ratio is 5.9 for the example company. Assuming the Annual Statement Studies indicate the return on assets is ten and fifteen for firms in the same industry at the median and upper quartiles, improving the return on assets to equivalent levels would mean increased profits or asset turnover.

ERP Impact on Stock Price

If the integration and improved information of an ERP system results in a better balance sheet and increased profits, these improvements should impact stock price for the company. Although stock price is affected by a variety of factors, the typical effect of improved profits and balance sheet ratios can be estimated. Using the already described example of $10 million manufacturer and typical benefits, and assuming 100,000 shares outstanding and an existing stock price of $30.00 per share, the stock price exhibits the effects of an effective ERP, as figure 1-7-3 shows. With a price/earnings multiplier of six, the stock price for the example company could be increased from $30 to $58.80 per share.

Figure 1-7-3 Calculating the potential stock appreciation

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Before ERP After ERP

Before tax profit $500,000.00 $980,000.00

Earnings per share $ 5.00 $9.80

Current stock price $30.00 6 * 9.80 = $58.80

Multiplier 6 6

These calculations suggest that ERP systems can lead to significant impacts on financial results, including the balance sheet, income statement, key ratios, and stock price.

A_2- Training and messages to managers, supervisors and project team All managers and supervisors have to be skilled in the following areas, which we leave them

to companies and just name the titles:

• Change management and resistance management courses

• Courses related to managing meetings, conducting an useful conversation, skills to motivating and creating hope to people, speech skills, creating feed back channels

• Leading and coaching skills

A_3- Customers and Suppliers Any integrated system has some effects on internal and external users. Usually all the focuses

are on internal users i.e. managers, supervisors and employees and two main group of users, customers and suppliers are neglected. These two groups should be aware of the new changes, which are going to happen in the enterprise and incoming consequences. Therefore, most of the mentioned messages or even trainings that are required for internal users should be transferred to external users too.

Desire for general purposes

General benefits extracted from Infromation Technology(IT)

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Added Benefits of IT:

• IT breaks down departmental barriers

• IT increases information transparency over in the enterprise

• IT provides data for TQM (Total Quality Management)/Continuous Improvement

• IT provides single business view of enterprise

• IT gives time-based competitive advantage by making real-time control possible

• IT helps in delayering the organisation

• IT shrinks the organisation

• IT provides very powerful decision support systems and executive information systems

• An information system can defined technically as a set of interrelated components that collect, process, store, and distribute information to decision making, coordination, and control in an organization

• Information technology can play a powerful role in redirecting and redesigning the organization.

• Online easy and quick access to reliable information

• Each data in entered only one time in the system so data redundancy and scattered data is eliminated.

• Integrated systems integrate internal agents (Departments) and external agents (Customers & Suppliers).

Intangible Benefits:

• Increased market share

• Better customer satisfaction

• Improved vendor performance

• Reduced obsolescence

• Increased flexibility

• Reduced premium freight

• Elimination of annual stock taking

• Floor space reduction

• Reduced quality costs

• Improved resource utilisation

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• Improved information accuracy

• Improved decision making capability

• Better cost visibility

• Improved coordination between all departments

• Reduced expediting

• Improved morale

• Having numbers to run the business

• Better decision making capability

• Increased transparency

• Having accountability throughout the organisation

• Improved quality of life

• Time available for innovative and creative activities

Some other tangible and intangible ERP Benefits

Note: Instead of N put your goal percent number

• N percent increase in sales due to timely and faster shipments

• N percent increase in productivity due to availability of matched sets, reduced follow up and overtime

• N percent reduction in purchase cost due to less expediting and more time available for sourcing

• Customers/suppliers interaction improvement

• Lower implementation time and costs compared to tailor made systems

• Flexibility and scalability in new situations with low time and cost

• Forcing enterprise to rethinking and redesigning business processes to best practices

• Eliminating not necessary soft wares developed in home or by third parties

• ERP systems are process-oriented instead of traditional function-oriented approach

• In ERP systems business processes and data flows subordinate from each other

• Modules integration is automated and completed

• It is not necessary to implement all modules rather depending on requirments you can expand the system

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• ERP system is based on Work Flow Management System(WFMS)

• ERP system is supported and updated from vendor

• ERP system is web enabled

• We implement ERP to organise your business and improve business efficiency, which reflects in reduced inventory

ERP is a tool to:

• Address “confusion” element of cost

• Coordinate various business activities

• Improve customer service

• Reduce time spent by material in waiting

• Provide proper basis for performance measurement

• Gain better control over business and accurate information, a necessary condition for any business improvement

• ERP is a powerful tool if used properly

• ERP is an integrated and formal approach

• ERP checks resource availabilty at each step. For example material, capacity, finance, human resouce, suppliers, information and time

• ERP simulates (What-If) capability at each step

• ERP provide "plan vs. actual" comparisons to improve subsequent planning

• ERP breaks down the business plan to various levels of detail

• ERP simulates resouce loads

• ERP commincates and cordinates results and operating information

ERP Is Not:

• A magic tool to solve your business problems

• A resource optimisation tool

• Merely computerisation

• Merely a tool to automate business transaction processing

• Merely a tool to reduce inventory

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Benefits of an ERP system:

• The most significant quantifiable benefits involve reductions in inventory, material costs, and labour and overhead costs, as well as improvements in customer service and sales

• Significant paper and postage cost reductions as part of the yearly savings

• Faster product/service look-up and ordering, saving time and money

• Automated ordering and payment, lowering payment processing and paper costs

• Fast access to detailed account histories, providing more abundant information and improved planning and analysis

An ERP system in the Department of Management would:

• Save enormous time and effort in data entry and report production for budgets

• Allow more innovative and extensive budget report content and analysis

• Link the budget system to payroll, accounting, personnel and other departments, allowing nearly instant data exchange and ensuring such information is consistent and uniform across the board

• Provide easy access to trend data—financial information from years past is quickly combined into an up-to-date long-term view

• Empower departments to more closely measure program performance and results

A_4- ERP inventory trainings and messages

A_4-1 Who are the end users of inventory system?

To determine the users, which are aimed to get the messages, we have divided the entire inventory area into following areas. Then we address these areas in the description of messages. In addition, we address all the areas, which are in relation with inventory people in the processes.

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A_4-2 What are the messages required for each group of inventory end users?

These messages cover followings:

6-2-1) why we need to implement ERP in inventories and is important to implement it at this time?

6-2-2) what are the risks of NOT implementing ERP system in inventory

6-2-3) who are the people that affect from this system?

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Messages Area

• For facilitating and receiving goods, inventory staffs should now ordered goods and the date of arriving.

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• Not accepting non conformance goods from suppliers is a mandate for our organization.

2 4

• Purchase orders information can help inventory staffs for accepting and receiving goods. 2

• Optimizing quantity on hands can remove stresses keeping too high items and materials in inventory. 2

• Proper inventory planning and preventing not required Purchase Requisitions could be result of accurate and up to date inventory balances.

1

• Rapid and easy access to items in inventory requires a proper item organizing in physical locations in inventory. 2

• Quality specifications on purchase orders are required for proper quality inspection on received items. 4

• Non-conformance items prevention is a principle to gain confidence for our finished products quality. 4

• Following production scheduling, is applicable when there are required items in inventory and this can be reached with appropriate inventory planning.

6 7 9 Mng

• Quick responding to inventory customers is a necessity in enterprise. 2 6 7 8

• Organization costs reduction is a result of costs reduction in all areas such as inventory; inventory cost reduction is a result of decreasing of not required items in inventory.

2 Mng

• Decreasing human mistakes as a basic need can be reached by decreasing hand-operated works and using automated processes by workers.

All

• Our company's success is not only dependent on sales, but also on our company's ability to say, "Yes we have that item in stock”.

All

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• Our inventory is one of the biggest, if not the largest investment we have in our company. Mng

• Reduction of unnecessary inventory is a factual need in order to reduction o f the costs in any organization. 1 2 3 Mng

• ERP system help the warehouse people to get rid of unreasonable challenges with consumers about inventory through publishing on hand quantity of any item to any corresponded user on line.

2

• Preventing keeping unqualified goods in the warehouse is a real need to make consumers sure about the items they get from warehouse.

6 7 8

• Ignoring the manual creation of material request from warehouse is a serious need in any organization. 6 7 8

• Automatic creation of material request from warehouse is needed to reduce the unfair challenge between consumers and warehouse keepers.

2 6 7 8

• ERP integrated system is needed to reduce the waiting time of received goods in the receiving location. 2 Mng

• Ignoring manual activities during material issue from warehouse to consumers is very much needed to avoid any problem.

2

• Systematic available quantity control during the process of issuing requested material from warehouses is necessary to save time and avoid human mistakes.

2

• Tracking the supplier lot through the production process is required to claim suppliers on bad quality materials. 2 Mng

• It is necessary to know about the used batch of material in the production of any product so that causes for low quality of product will be discoverable.

4 6

• Material reservation in the inventory is needed to make production planning possible in the factory. 6

• Online information about reserved materials in warehouses is very necessary for inventory people to manage the materials and issue right item to right consumers.

2

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• ERP system is an integrated information system which publishes unique data entity about any fact through enterprise.

All

• ERP system makes it easily possible to track and monitor all transactions done on any particular item. 2 6 7 8 9

• Preventive maintenance requires inventory of spare parts to be planned in sync with the maintenance plans. 7

• Inventory planning people need to have on time information about maintenance required spare parts to be able to satisfy these requirements on time.

1

• Effective production planning needs integration between the production planning department and inventory for effective material replenishment planning.

6 1

• Completion of the production plans need very seriously on time supply of the required materials by warehouse. 6

• Every manufacturing enterprise needs coordination and synchronization between production plant and warehouses and on line information transfer between them in order to fulfil customer orders

6

• It is obviously necessary to access to finished goods inventory information to have correct plan for accepting customer orders and ATP (Available To Promise).

8

• Locator controlled organizing of finished goods warehouse is really needed in order to pick the right product for the right customer on the right time.

8

• Efficient production planning needs on line access to inventory On hands information for production people. 6

• Flexible coding structure is a real need to cover the fast grows up of number of items in large enterprises. 1 2

• Item classification is required to have useful desired report on inventory items. 1 2 Mng

• You need registration in a control workspace and share the registered information for all business areas. All

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• If you do not have an integrated system you may book orders beyond the capability of you factory and then you will have displeased customers.

8

• You can not have a real vision of your finished goods inventory and so not able to have a real plan on booking sales order if there is no ERP system.

8

• Supplying required items on the required time need to raise purchase requisitions on the right time in order to provide purchasing department with adequate time.

10

• We use reports and inquiries daily to extract information that upper management can understand and can use to take appropriate actions, if necessary.

All

• The Total cost of an item is much more important than the price of an item 4 5

• Awareness of purchase order specification can expedites inventory keeper operations. 2

• Awareness of in coming receiving items can reduce errors in receiving activities. 2

• Any mistake in receiving operations, which is the result of lack of purchase order information, will have difficult consequences in inventory and finance.

5

• Too much quantity for some items and shortages for the others is the result of absence of an effective inventory planning and will have some difficulties for inventory staffs.

2

• Manual activities for delivering of requested material from warehouse not only waste too much time of the warehouse personnel but also cause unfixable human mistakes.

2

• If there is no integrated systems in a factory tracking of the lots (batches) in the production line will not be possible. 6

• If you do not have an integrated information system you can neither analyze the cause of low quality products nor stopping producing low quality products.

4 6

• It is rarely possible to manage reservation in the warehouse without an information system. 2 6 7 8

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• It is hardly possible to fulfil production orders without an integrated system which coordinates inventory with the production plant.

6

• If there is no integrated system there will be multiple inconsistence data about one fact and this makes every body confused.

All

• Backorders because of the inventory inaccuracy are simplest problems in the case of no integrated system. 8

• Without integrated systems we have to have inventory adjustments in warehouse on a daily basis which increases inventory costs.

2 5 Mng

• Lack of integrated information system cause the organization to loose his customers because of variance in their orders fulfilling.

8 Mng

• Without an information system the company will have much risk in fulfilling customer agreed demands because of not on time access to finished goods inventory.

8

• It is easily possible to deliver wrong product to customer if you do not have a locator controlled on hand quantity info. 8

• Without an efficient integrated system the inventory people may issue reserved materials to the wrong consumers and so falls into trouble.

2

• Lack of integrated system makes a lot of challenges for the warehouse people against consumers. 2

• We don’t plan to fail; we just fail to plan All

A_4-3 What are the benefits of ERP implementation for the users involved in inventory system and ultimately for organization?

Messages Area

• ERP system with providing stored items information to responsible staffs, help them respond quickly to their internal and external customers.

2

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Messages Area

• ERP system with the help of MRP can help company to manage purchase orders and prevent redundant ones. Mng 1

• ERP systems assure existence of the required goods in the required time via applying appropriate replenishment planning procedure for each item.

6 7 9

• ERP integrated system makes it possible to check the received goods in accordance with the purchase orders. 4

• ERP integrated system assures that only accepted goods in compliance with the required ordered specifications will kept in the warehouse.

1

• ERP system makes it possible to categorize the warehouse items from planning point of view and assign the best planning method of category.

1

• ERP system organizes the warehouse in locators so that accessing to the required items is very fast and easy. 2

• ERP system reduces manual required activities for delivery of requested material from warehouse to consumers via automatic issue process.

2 6 7 8

• ERP system provides you with the possibility of on line tracking of raw material batches through the production lines as well as quality cause and effect analyses based on quality of lots.

4 6

• ERP system integrates inventory and production and synchronizes them so that fulfilling production orders will be efficiently feasible.

6

• ERP system will omit delay in material delivery from warehouse to production via on line information transfer. 6

33

Messages Area

• ERP system gives the sales people power of planning on the market via correct information about finished goods inventory. 8

• ERP information system prepares information space to record large number of characteristics for each item. All

• ERP system captures a huge set of attributes for each and very item which determine the behaviour of the item in different transactions.

All

• ERP system categorizes purchasing conditions of all items so that purchasing process is predefined for any item and purchasing department will easily follow that.

10

• There can be little doubt that well implemented supply chain integration saves labour costs and improves inventory control. 5 Mng

A_4-4 What is the best time, data package and communication channel for each group of users to disseminate the messages?

Time and type of establishing communication are important factors for effectiveness of the messages and trainings too. Therefore, you have to consider these two factors and make a decision depending on your situations.

Here are some tips about the subject:

• You should to be sure users have understood and are aware of the new system before delivering system to them.

• Try not to send messages in workload picks such as cycle counts, end of fiscal year and so on.

A_4-5 how should balance sheet be affected by inventory?

As we talk about the project effects on financial statements in A_1-7, you should do the same and highlight them regarding to inventory effects.

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D_Desire to participate in the change

D_1- What are the benefits, advantages and objective of an integrated inventory system?

• Reduction of the total cost of organization through reducing unnecessary inventory.

• Maintain safety stock for each item insures the availability of items in critical situation.

• Considering inspection of part of receiving process for received items.

• Keep unchecked received goods in receiving section separately from usable items.

• Adding qualified goods to the usable inventory after inspection.

• Avoid keeping unqualified goods in the warehouse but rejecting them.

• Lot genealogy is available for tracking from product lot to raw material lots.

• Lot based quality is there.

• Total item specifications can be seen in system.

• We can search items on each specification

• Place and location of item in all inventories are visible in system.

• More than 90 percent of paper operations for purchase requisition, purchase order and item move order from inventory can be omitted.

• We can check on hand quantity of one specific item over all inventories in enterprise.

• We can attach any technical documents and drawings to purchase requisition and everybody in approval hierarchy can see them.

• We can check all receipt items, which are not in conformance with purchase order and control balance between orders and delivered items.

• Most of human communications and physical presents for approving items can be ignored.

• Inventory optimization recovers profit from inventory by making it easier to eliminate excess stock, reduce lost sales and minimize the cost and time in doing so.

• Inventory management tracks the ins and outs of a product/item down to its color and size level, using capabilities such as purchase order process, receipt process, allocation process, distribution process, transfer process, style consolidation process, physical count process, and inventory freeze process

• Do you have effective, fact-based decision-support for identifying and prioritizing actions to stop unnecessary material inflow to inventory by dollar impact? ERP can help you

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• Does your decision-support system pinpoint undesirable inventory dollar movement by item? ERP can help you

• Do you have decision-support capability that continuously assesses specific items inventory reduction potential? ERP can help you

• Does your decision-support system help you establish a baseline, set clear targets and provide on-going performance measurement for every item in your inventory? ERP can help you

• Determine the minimum required inventory based on Reorder Point Planning, Min Max Planning etc.

• Elimination of duplicate Inventory items

• Reduction of slow moving Inventory

• Inventory accuracy on physical and Book information

• Utilization of available inventory items

• Possibility for automated item coding by system.

We get following benefits from an integrated system too:

• Fewer shipping and receiving errors

• Lower total cost per unit shipped

• Reduced inventory out-of-stocks

• Reduced losses from stolen, damaged, or misrouted product

• Reduced order input errors

• Reduced inventory and warehousing costs

• Reduced customer service costs

• Reduced phone communication costs

• Improved delivery accuracy and timeliness

• Increased profitability per order and per customer

• Supply Analysis & Planning, Demand Planning & Forecasting, Inventory Modeling, Replenishment, Distribution and Re-Distribution, Analysis Tools are another capabilities

Characteristics of Inventory Optimization systems include:

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Lead time forecasting – forecasts the most appropriate supplier lead-time for any item or supplier.

Service level analysis – information monitored includes demand history, demand variation, profit margins and lost sales.

Demand forecasting – includes seasonality and life cycles, promotional filters, demand spikes, trend analysis and item profit margins.

Order frequency – correct order frequency analysis can reduce inventory by 10 – 15%

Replenishment – takes into account timing of the order, order point, potential overstock/under-stock situations, promotional information, and production changes.

Network aware – inventory planning is done taking into account the requirements of the entire supply chain network including suppliers and customers.

Collaboration - new browser-based technology allows for planning through the participation of the entire supply chain community. This was previously not possible in the past, where systems were not open to integration.

How is the ROI of Inventory Optimization measured?

Inventory optimization systems add value by recovering profit from inventory in the following areas:

• Increased profitability by avoiding markdowns and obsolescent write offs.

• Lowered working capital cost of holding excess stock through redistributing excess

• Better purchase order management

• Better cost management associated with space utilization, both at warehouses and stores.

• Lower transportation costs through network planning

• Eliminating excess stock by accurate forecasting of demand

• Increased customer service levels

• Improved product mix

• Dynamically reduced safety stock and therefore holding costs.

• Lost sales reduced.

• Slow moving items treated accordingly.

• Exception management and event management

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D_2- What kind of reports could be extracted from inventory system after implementation?

These are some kind of reports, which can help project team to attract users' desire:

• We can get reports i.e. average on hand quantity, usage rate and values for those items that have maximum/minimum usage in specific period.

• The average lead-time from requesting to delivering items from inventory

• Items with maximum inputs to main stores and their information

• Inventories with maximum/minimum inputs/outputs

• Inventories with maximum/minimum value

• Items value (maximum/minimum) with no request in specific period

• Average item waiting time in receipt location

• Items value in receipt location

• Returned goods values in last period

D_3- What are the roles of project team and business managers during inventory system implementation?

Managing director protection is one of the key success factors for any development and change process in any enterprise. One of the key rolls of project manager is to make managing director believe in the benefits of the new system and the related changes which are going to be implemented over the enterprise. So project manager must setup periodic meeting with managing director to issue the required information to him and convince him about the benefits. This information must be selected from the expressions already prepared under the topic of awareness or desire phase. Obviously the selected information must be those which nominated for managing director and top managers which satisfy his high level needs.

Also project manager must request managing director to force his top managers to challenge with project manager.

Convincing the owners of business areas (top managers) to make them believe in new system and changes and getting them ready is the other key role of project manager. So project manager must setup sessions in all phases of the project with top managers who owe business areas. In this sessions project manager must make business area owners ready to accept the changes. Getting managers ready for changed is very important to assure the success of change process. This process is not a one-day task. It should be considered as a continuous process. In the other word you can not expect top managers to accept and follow changes immediately

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after go live if you do not create the readiness for changes during the entire implementation phases.

So project manager must plan some accrual sessions with top managers from the begging of the implementation and follow up these sessions all over the phases.

Project manager in each session must discuss with top managers about part of the messages which already have published about the system benefits and needs under awareness and desire topics. So that the top managers believe in benefits of the coming changes for their area.

Project manager must communication with owners of business areas to answers their questions and resolve their issues. So that the owners will sense they are collaborating in the process of applying changes. They should not feel they are put aside and changes are to them beyond their desire.

Project managers must take action to be sure that expressions for awareness and desire creation are published to the appropriate users at right time.

Project manager must force the project team to sit with their users periodically to convince them about the benefits and answers their questions and resolve their issues.

Job descriptions

Project sponsor:

• Provide direction for the project

• Confirms project objectives fit with the overall company program strategy

• Maintain a thorough liaison throughout the project with company senior executive management

• Conflict management

• Chairs the project Steering Committee meetings

• Manage and resolve contractual issues with the vendors

• Ensure a proper strategy for know-how transfer

Project manager:

• Review the project plan and all project deliverables and approve the same

• Ensure that the project produces the required solution to the required standard of quality and within the specified constraints of time and cost Schedule resources from company side and coordinate tasks

• Ensure that the right staffs are being involved at the appropriate stages of the project

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• Balance the demands of business, users and suppliers

• Ensure internal and external communications are efficient

• Build the groundwork for the implementation

• Monitor the project team performance and ensure that all team members are completing their assigned duties in accordance with the project plan

• Monitor the project progress according to plan and raise any issues that impact the project progress

• Take effective action to recover the original plan, or to minimize the variance

• Arrange to gather all required information for the project progress and ensure that any change in the information is promptly and properly circulated.

• Ensure that user needs and expectations are being met or managed

• Ensure that all company's project documents (hard copy and electronic formats) are filed and archived properly.

• Prepare a transfer of technology program, report on the progress against that program and recommend any improvements.

• Report to the Project Sponsor

• Prepare a newsletter on the progress of the project and ensure its proper circulation in a timely manner.

• Ensure that the project produces the required solution to the required technology infrastructure

• Ensure that the system (H/W and S/W) is set up and installed in a proper manner

Functional leaders:

• Leading and supporting power users/key users in related department

• Distribution of tasks assigned to his team by the Project Manager to appropriate power user and report on the progress of these tasks to the Project Manager.

• Control of progress of the tasks assigned to his team

• Quality assure deliverables prepared by his team

• Escalating unresolved problems and issues to project manager.

• Attending training and provide support during system setup.

• Providing (in coordination with his team) input to process design.

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• Providing (in coordination with his team) input to the development of test scripts and perform acceptance testing.

• Preparing (in coordination with his team) training material with input and support from project manager.

D_4- What are the users’ (organizations') worries and concerns’ about implementing this system?

- Loosing their job. “ I will loose my job when system is running and doing everything.”

- System might mistakes and I will be responsible for the mistakes.

- System will make me busier because I have to do manual work as well as new system.

- My information will be shared to everyone in the organization.

- System makes conflict with my expertise. “I can not trust the information which are passed to me from other areas through the system”

- I cannot trust on the calculations done by system because I do not know about them.

- Will it be possible to extend the system in future?

- Is there enough flexibility in the system to cover the improvement in the process when going ahead?

- I will be dependent to system vendor for maintaining system.

- System may fail any time and cause disruption in my work and manager claims on me.

D_5- What are the probable barriers and constraints for this implementation? Change manager is to identify the list of probable barriers, which can be faced during the

implementation before it gets started. For inventory business area, the most probable constraints can be listed as follows:

Many of the people working in this area are not so educated. Therefore, they are not capable to be trained with the new high technology system and use it.

Many of the users are not having the potential and capability of participating in the implementation process and following the changes in processes and practices. This is a serious issue when the users are mostly old and not fresh.

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Change resistance is one of the most important stop points for any ERP implementation. This resistance can be due to different reasons, which must be identified by the change manager.

Some of the reasons are:

• The worries which users have about new system. We listed the worries in the previous section.

• The infrastructure required for smoothly using the ERP system is not available in the inventory locations. This infrastructure refers to :

• Network infrastructure: Non-availability of network can postpone the actual use of the systems. This delay can cause the users to loose their interest and so the entire implementation will fail.

• Industrial Automation: ERP covers the automation layers 2,3,4 but not the layers 0,1. The low layers must be covered by industrial automation systems like PLCs, DCS, SCADA etc. Therefore, when these systems are not available it is very difficult to input data to ERP system and the users mostly cannot use it.

• Item coding structure is not there at all in the entire organization.

• Asset coding structure is not available at all.

• Some of the materials kept in warehouses and sub inventories are not measurable. In the other words there are not measurement equipments for them. So transaction data for those items can not be captured in the system.

Change manager should plan to resolve the above barriers before the real implementation is started.

D_6- Is there any success story is this area? If yes, who are they and what did they gain from that?

Some success stories and theirs gains are illustrated in success_story_ADKAR.ppt file.

D_7- What are the risks before and after implementation? • The contractor cancels the contract or denies his liabilities.

• Managers or Process owners change during the implementation.

• The project exceeds the time limitation.

• The cost of the project exceeds the budget limit.

• The required infrastructure does not get ready by go live time.

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• The servers get not ready in the right time.

• The power users do not follow up the system after it is live.

• The contractor or project team do not provide efficient support after go live.

D_8- What are the future business processes? It is obvious if the people change get a positive and even excellent attitude to a change but

they do not know how to run it and then change will fail. So one of the most important roles of change manager is to provide the people with enough knowledge of the new way of doing their activities once new solution is established.

Especially in inventory area your people need to know how their jobs must be done after ERP implementation? What are the changes in the route of doing their jobs? For Example how picking (P) and receiving (R) functions will be done? What to do when I go to pick an item and there is no product in the bin? (P) What do I do when the wrong product is in the bin? (P) What do I do when I am receiving and the vendor sends a replacement item? (R) What do I do if the item in the bin is damaged? and What do I do if the item is not in the bin, but I see the item in overstock? (inventory)

For this knowledge, you must properly model and document future way of doing jobs in all inventory areas. In the other words all the processes in inventory business area is to be illustrated and described. This modeling and illustration can be accomplished by two means, which are the flow of future process and procedures of running processes.

Before jumping to these models, it must be well known that inventory system in all ERP solutions is managing all inventory areas, that means Raw Material Inventory, In process inventory and finished goods inventory. Therefore, it owns separate processes for each area.

You should transfer knowledge of each process to the appropriate users.

One more point that is important is that in each module of ERP there are some functions that must be done occasionally. These are called one-time activities. In inventory system, one-time activities are defining inventory structure and item definition that each one are depicted as a process flow.

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Functions flow (1): Inventory Structure Definition Process Flow

Define Inventory Orgs

Define Warehouse Locations

Define Locators

Define Inventory Accounts

Define Costing Method

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Item Code Generation

Define General Attributes of Item

Define item categories Define statuses Define catalogs

Functions flow (2): Item(Material) Definition

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Inventory Control (Replenishment Management.)

Purchasing Receipt

(Delivery from supplier to receiving location)

Goods Inspection

Transfer to main stores

Reject to Supplier

Automatic generation of accounting entries

Pick release from consumers

Evaluate the requests

Issue to plant floor stock Sub-inventories

Return from floor

Issue to maintenance Sub-inventories

Return from maintenance

Issue consumable to cost centers for usage

Issue fixed assets to departments Miscellaneo

us transactions

Process flow for purchased goods (3)

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Delivery finished goods to warehouse

ATP calculation for sales Dept.

Cycle counting & inventory adjustment

Receiving pick requests from sales

Evaluation of availability of product

Reservation & pick from warehouse

Automatic generation of accounting

Period closing

Process flow for finished goods inventory (4)

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K_Knowledge about how to change

K_1- What are the training requirements for each group of users regarding to new processes, systems and tools?

As we discuss in K_4 to K_6 regarding to processes and procedures, company should teach all those aspects to users. As you can see in these sections, concerned roles and their tasks are depicted there.

K_2- What is the level of computer science needed for users? Depending on your computer environment regarding to using PCs, thin clients, terminals etc

all computer users should be familiar with the following:

- Main parts of the machine from the hardware point of view

- Steps to start and shut down the machine

- Main general software installed on the machine and how to use them

- Steps to connect to internet and check web sites and e-mails

K_3- Computer facilities for reporting and analyzing Apart from reports and analytical tools prepared in your applications, specific users should

be familiar with general features in computer for analyzing data. For example if Windows is operating system for users, they should be familiar with Excel, Word and PowerPoint.

K_4- How will processes be done after change?

K_5- What are the job descriptions and roles after inventory system implementation?

K_6- What is the position of people in the chain of processes? The three above main questions are to be responded and well described by the Procedures of

running processes as below:

Procedures & Instructions to run the new processes. After preparation of process flows for all inventory business processes which are explained

in part D_8. You must design the procedures. The procedures will include instructions for running each process and its functions which describe step by step tasks to be done for a

48

process to get completed. These procedures must be well documented and published to all appropriate users. It is very important to know that the tasks in these procedures are part of new job descriptions and Roles of the people in your organization. This must be realized for the people by the change management team very well.

Attention: It must be known very clearly that running new processes and new procedures might need some changes in organization chart.. But the critical point here is that While ERP implementing, first thing to be designed and figured are business process and procedures to run them and not structures. Structure of organization and especially organization chart should be analyzed and redefined if needed after business processes are perfectly mapped.

In this part we are going to figure out executive procedures to run and support the depicted process flows of the entire business area.

A) Procedures of Inventory Area Before starting lets have a look at inventory structure in ERP solutions. If you look at the

depicted process flows (flow 1 to 4) you will find out that the inventory system is managing processes of all warehouses and stores through the enterprise including purchased items stores, finished product, items and even floor stock Sub-inventories.

However, as you know each of these warehouses points may be owned by a separate area or department in enterprise. For example in most production companies finished product stores are owned by sales and shipment area. Floor stock Sub-inventories are owned by production. Purchased materials warehouse is under a separate department commonly called inventory department or maybe owned in high level by purchasing section itself. Even part of purchased warehouse, which deals with production raw material, might be under the control of production section itself. The most important issue for ERP inventory system is that each and every place which some goods of any type is kept must be defined and declared as an inventory location for the system and for all people in enterprise. This declaration should contain even places which materials are kept temporarily to wait for use, like floor stock inventories of raw materials and subassemblies. This is one of the important best practices, offering by ERP solutions to prevent any loss of inventory

In addition to the above need, warehouses can be grouped in some organizations for categorizing and grouping inventory transaction to make tracking and reporting easy. This grouping is naturally regardless with type of inventory. This organizing can also be beneficial to do separate setups for each set of warehouses. It means that all warehouses which must have common basic parameters can be organized under one organization separate from other warehouses.

Finally, we have to organize each inventory organization into warehouse location and locators.

Warehouse location: it refers to each distinguishable physical place to store goods regardless of the type of goods. Storage place can be a hall, a room, or a zoom with specific boundaries.

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Warehouse locator: refers to distinguishable physical points within an inventory location. This mostly is distinguished by row, rack and bin.

If you want to have a look at the entire warehouse structure adapted with ERP system, it is as following diagram.

Inventory organization locations locators

Note: All of the above organizational structure design to support ERP best solutions are to be done by a group of high-level mangers of warehouses. In a normal factory, having warehouses ownership structure described before, the group responsible for structural definitions described above is consisted of:

A. Sales and shipment representative for finished product warehouses.

B. Manufacturing representative for floor stock Sub-inventories.

C. Purchasing inventory representative for purchasing warehouses.

The above concepts must be taught to all user groups in inventory to help them adopt with that so that they can follow their new procedures.

B) Procedures and instructions to execute functions of mapped process flows. The following notations are suggested to be used for documenting procedures in a way that

the people are cleared about all what must they do and how they must do.

A .Tasks, which should be followed one by one consequently to accomplish the procedures

B .Concerned roles, responsible for each task

C. Trigger, the event which makes the procedure start

D. Systematic / nonsystematic

E. Related function(s), the function(s) in the process flows, which is accomplished by the procedure.

F. Pre requirements & necessities.

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Although procedures are required tasks to accomplish (run) a function of a process, but each procedure itself may have some pre requirements. It means some tasks should have been done and/or some structures should have been already designed and established before the procedure can get started.

C) Procedure for Item Definition This procedure is to define the behavior of item in a specific process or Area. Defining and

maintaining items need to be done by a group consisting of variety areas not by a single department. In Addition, as there are different sorts of items in an enterprise so this group it self is composed of sum subgroups. The entire illustration of this group, subgroups and related tasks is as follows.

A very important point about this procedure is that a group of people should run it from different departments, which are in relation with different types of goods as consumers or supplier. So the tasks of this procedure will become as part of the job of all of the people including in the group. These tasks are to be considered in their job description in addition to their duties within their department daily work.

Group: Central Item Group

Subgroup1: finished good Item Management

This subgroup must take care of finished goods definition and managing their attributes changing over the periods.

This subgroup must do the following specific tasks:

Task1: Code generation for each finished good (FG) which are sold by the enterprise.

This Group must define FG coding structure one time and then it should match to any item over the org.

Concerned roles:

Representative of sales

Representative(s) of Manufacturing

Representative(s) of quality

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Task2: Definition of general attributes for each finished good item.

These general attributes are UOM, Conversions, descriptions, stock able, make or buy …

Concerned roles:

Representative of inventory

Representative of sales & shipping

Representative of manufacturing

Representative of quality

Task3: Definition of planning method & attributes

Includes replenishment planning Method in warehouse (MPS, MRP, Min, Max …)

Concerned roles:

Sales Representative

Manufacturing Representative

Inventory Representative

Task4: Inventory Attributes Definition.

At least includes: Stockable warehouses, tracking Method while entering and out going from warehouse (lot based, serial based…), safety stock, expire date ….

Concerned roles:

Representative of inventory

Representative of quality

Task5: Definition of sales & shipping attributes.

This at least includes: Sales method, sales price list, customers, Delivery method, shipping method, shipping vehicle, Tax, Vat, Receipt method,….

Concerned roles:

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Representative of sales.

Task6: Definition of production Attributes includes: production plant source of production (order or Demand)…

Concerned roles:

Representative of Manufacturing

Applicable: Make items.

Task7: Definition of costing Attributes

Includes: costing method (Standard, Average, Lifo, Fifo…), costing enabled, Fixes Asset enabled

Concerned roles:

Representative of costing Department, Representative of inventory

Applicable: All Finished goods

Subgroup2: Raw material item Management

This subgroup must be formed in a manufacturing organization. It is overly responsible for defining all raw materials, which are used in a manufacturing plant, and determining their attributes. In addition, it should take care of changes in the attributes of items as well as new items definitions.

Task1: Raw Material coding

Coding structure must be defined one time for raw materials. Then when a new raw material item is to be used this group must determine its code following the predefined structure.

Task2: General Attribute's definition of each item

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Concerned roles:

Manufacturing representative

Inventory representative

Quality representative

Task3: inventory replenishment planning method (Min – Max – MRP...)

Concerned:

Representative of Manufacturing

Representative of inventory

D) Procedure of Inventory Structure Definition This procedure is defined to run the process of inventory structure definition and it is aimed

to establish a well-organized structure for all warehouses and stores in all areas of the entire organization. This procedure is to be run by a group including the following people:

- Inventory department representative

- Sales department representative

- Purchasing department representative

- Production management representative

Trigger: The procedure must run before lunching the system as it makes the initial master data, which is needed for all inventory processes to run. In addition, each time a new warehouse location is making up in the organization this procedure must run to define it well so that it can get into use.

Tasks:

Distinguishing all locations through the entire organization, which some goods are kept for holding or even for use like floor sub inventories.

Concerned roles:

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All member of the group. Each member is to introduce the locations within his department.

Categorizing the stores

Concerned roles: All

Code generation for each store

Concerned roles: All

Assigning locators and sub locators to each store if necessary

Concerned roles: All

Costing method determination

Concerned roles: All

Pick up method for each store

Concerned roles: All

E) Procedure of initial Receipt 1-Goods, which are receiving to our organization

Suppliers gradually carry goods to organization and accompanied by a shipment note from which has purchase order number on it. When a party is at the entrance point of our organization the receipt person must check the purchase order number on the shipment note to realize which purchase order is being shipped. Then he must find purchase order number in the system and find its items and control them against the item has been shipped. If it matches (partial matching), the receipt person must permit the goods to be put at receiving location.

2- If the party is carrying some thing different from purchased items the receipt person must refer to non-conformity of received goods procedure, which will describe separately.

3- Receipt person must create a receipt note in the system. This is related to purchase order number and includes quantity of items received. This transaction will only indicate entering part of ordered goods to our plant. The goods in receiving location indeed are not counted as on hand quantity. It does not mean the goods are usable.

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Responsible position:

Receipt of goods

Pre requirements & necessities:

1- Purchase order should be printed from the system and sent to supplier

2- An agreement must be agreed between enterprise and among all suppliers to send their goods with a shipment note including purchase order number. This needs a change in communication of our company with its business partners.

3- A receiving location is to be defined physically in the plant to keep received goods before quality check and moving them to store. This location can be a separate location for a big plant but for small plants receiving location can be part of main store which is distinguished via a dedicated locator.

If this is even not possible physically we can separate goods in receiving status instead of separating receiving location. It means you must keep the received goods, which are not controlled with a label indicating status as non usable or not controlled. Then after accomplishing quality checks, the status of passed goods will become "quality passed" or "usable" and status of rejected ones will become "Rejected" or "non usable".

In this case, the principle should be strictly established to prevent using non-controlled goods. This may need more effort in the sense of change management rather than when receiving location is separated physically.

4- The procedure of quality control for each good must be defined before receiving that item. This quality procedure, which must includes quality elements, criteria, accepted ranges testing methods and responsible for control is part of quality system procedures.

F) Procedure of received goods inspection related to function two flow2. 1- For each of the received item waiting for inspection inventory people, the inventory

inspector must do the inspection and register the result in the system.

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2- For each received goods waiting for inspection which its inspection needs quality control, this inspection must be don by the appropriate quality person based on the quality procedure defined for that item.

3- If it is mentioned in the purchase order that requester needs to check the received material from technical aspects then the received item or some sample of that should be sent physically to the requester. Requester code is written in all purchase orders and receipt notes and requester location is clear on all purchase orders as delivery location.

Concerned position:

inventory inspection position

4- If step 3 happens, the requester must send the result of his inspection to the inventory inspection responsible. This is normally done out side of the system.

5- If step 4 happens, the inventory inspection responsible must register the result in the system.

Pre requirements and necessities:

1- For each item, which is defined as purchasable item the method of receiving inspection, must be determined (visual inspection by inventory inspector or quality inspection by quality inspectors).This must be determined one time when item master attributes are being defined by ICG. Then this determined method will be followed as and when the item is received as it is illustrated in steps 2-3.

2- All catalogues and technical documents, which are required for technical inspection, must be attached to purchase request when raising the request by requestor. It is used when inspection is done to prevent any mistake.

3- For each item, which its receiving inspection method is defined to quality inspection, the quality procedure should have already been figured out.

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This procedure, which should include quality elements, criteria's, accepted ranges & tolerances, out of range action, testing methods and responsible position for each one, is part of quality system and procedures. We will focus on that when discussing quality system.

G) Procedure of transfer to main stores Trigger: once inspection result is set to Accepted ok.

Steps:

1. Inventory keeper of the appropriate store for each accepted item will be aware that some item is ready to enter the store. This may be done by a popup or notification on the system or by opening the receiving window in the system. (Systematic)

Concerned role:

Inventory keeper

2. Inventory keeper must take a list of found items in step 1 and go to receiving location to move them to its store. (Outside system)

3. Inventory keeper must register the transferred items and their quantities in system. Once this is done, the received goods will be created as inventory on hand quantity and will be usable. (Systematic)

H) Procedure of request for material from warehouse Trigger: As and when some item is needed in a Department.

Steps:

1- A request for material comes from a user Department to main store. The request should have passed the approval cycle defined for that and should come to inventory system in approved status. The requests may come from manufacturing plant, maintenance departments or other departments. In the other word, the request might be of one of the following types:

1-1) Raw material request coming from manufacturing plant

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Concerned role:

Inventory controller in manufacturing plant or kanban Responsible

1-2) Spare part Request coming from maintenance department

Concerned role:

Maintenance

1-3) Request for general goods coming from all departments. Employees sitting in their departments for their general task raise these requests.

Concerned positions:

All employees in all locations

2. Request should be evaluated and checked whether the requested items are available in the entire main store or there is shortage. Inventory controller with the help of system (systematic) must do this control.

Concerned role:

Inventory controlling

3. In consequent of step 2, for one request, the inventory controller finds the items available to transact and finds their storage location. Therefore, he/she passes these lines of request to inventory keepers of the specified store locations to be transacted.

Note: Availability is calculated in system based on the following formula:

Availability=on hand quantity – Reserved quantity – Expired quantity

Concerned role:

Inventory controlling

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I) procedure of purchase requisition generation from warehouse Triger1: Stock level of an item comes to reorder point

Trigger2: Some requested items in a material request are not available in store.

J) Procedure of item delivery to manufacturing plant Trigger: A request is forwarded from inventory controlling section to manufacturing raw

materials store location.

Steps:

1- Raw materials inventory keeper should look at the requested items on the system and find locators which items are stored (Systematic).

Concerned positions:

Raw material inventory keeper

2- Material reservation should be done for the specified items and nominated locators. (And also lot & serial if applicable).This will be done by reservation form in system. So that the quantity of item stored in the reserved location and locator will not be transact able for any other request. It also is not counted in available on hand quantity calculations. (Systematic)

Concerned position:

Raw material inv keep

3- Inventory keeper must make materials ready for transaction physically. It means if materials are to be packed for movement, packing must be done. If they must move to staging location for outgoing, it should be done. (Non-systematic)

Concerned position:

Raw material inventory keeper & material warehouse worker

4- Reserved prepared materials will be delivered to the requesting plant. This physically may be done via an automated transferring mechanism like conveyers either the inventory

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responsible of the plant will transfer the materials by means of some vehicle like truck or loader and so on. (Non-systematic)

5- Once step 2 is done, an issue should not be registered in the system. This indicates delivery of materials to the requesting department and should include request number for integration purposes. It will also contain source location, locator, lot and serial as well as destination. Once this is done, quantity of material in the specified location and locator (lot and serial if applicable) is decreased and quantity of material in floor stock sub inventory of the plant is increased.

Concerned positions:

Raw material inventory keeper of main stores

Note: If manufacturing is running on JIT system, no floor stock sub inventory will be existed. It means the issued materials are directly used in the plant. Therefore, issue note in the system indicates decreasing main store quantity against increasing used materials in plant.

K) Procedure of spare part delivery to maintenance requester fulfilling spar part requests

Trigger: when a request for spare part is forwarded to spares inventory location in main store.

Steps:

Steps will be same as steps for procedure J. Only different is on concerned positions. In fact, all raw material inventory keepers should be replaced with spare part inventory keepers. In addition, whenever manufacturing plant inventory controller is written maintenance person should be replaced.

L) Procedure of delivery of consumables requested to the requesting department or user or fulfilling requests for consumables.

Trigger: when a request for some consumables coming from a department it is forwarded to consumables location in main store (after passing the evaluation process).

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Steps:

1- Inventory keeper finds the locator which the requested goods are stored. This is done via the help of query in system.

2- Inventory keeper must make the nominated goods ready for delivery. It means packing or transferring to staging (Non-systematic).

Concerned role:

Inventory keeper of consumables location of main store

3- Goods are transferred to the requesting department and delivered directly to requester (Non-systematic).

Concerned role:

Worker

4- A delivery note or inventory outgoing document is created in system by inventory person. This document indicates delivery of requested quantity goods to the requester and reduction of inventory and adding up used quantity. The document must include source location, locator, item, quantity delivered and destination. It also includes the original request number for integration.

Concerned role:

Inventory keeper

5- The requester must sign electronically the delivery.

Concerned role:

Any employee in any department

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M) Procedure of delivery general goods of fixed Asset type to the requesting department or full filing the requests for Asset type of general goods

Trigger: When a request for general goods of fixed Asset type coming from a user is forwarded to a fixed asset location in main store.

Steps:

Steps to be done are same as steps for consumables described in procedure L. The only different point is as follows:

Note: When doing step 4 which is registering outgoing document, it is very necessary to enter the recipient of each good. Because fixed assets are not consumed during usage, but they are depreciated. Therefore, after delivery to user it is recorded as liability of user. Therefore account of the employee using it will be debited. It will remain as this by the time that fixed Asset is returned to store.

Note: In some of organizations, there are some roles (positions) for fixed Assets management in each department. It means when a fixed Asset is delivered to an employee in a department, from financial point of view, it is the fixed Asset manager of that department which has received the fixed Asset. In the other word, his account is debited and he is responsible to give it back or compensate.

N) Procedure of accounting entries generation for all inventory transactions. Trigger: Whenever a transaction of any type happens in any warehouse

Steps:

There are no tasks to be done for any body over enterprise for running function of inventory accounting records generation because this function is automatically done once an inventory transaction of any type happens. The exact description of accounts, which will be affected as debit or credit, is coming in the next topic. We have to remember that correct generation of account entries needs some pre steps. These are described in the following as pre requirements and & necessities of procedure.

Procedures for running the function of process flow 4 which is concerned to finished goods warehouse.

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O) Procedure Of finished goods (FG) delivery from production plant to warehouse Trigger: When some quantity of a product is produced and qualified and ready for store in

FG warehouse.

Steps:

1- System shows that some quantity of a finished product is ready to store. The quantity can be equal to one batch or on lot size if product is under lot control. Obviously if our company makes to order, the order number & customer number are attached with the product information.

Any way FG warehouse keeper after getting this indication from system must look for empty suitable locations and locators for the product. This is done by the help of system. He must find places which have enough spaces to keep this much quantity and have proper conditions matching the stocking condition of the coming product (if such conditions are there).

If there are some rules for arrangement of stored products in warehouse, these rules also must be considered by warehouse keeper when doing this step.

These rules can be product based rules or customer based rules or rules for simplifying and expediting release process of product for shipment, etc.

Find result of this task is selection of appropriate location and locator to keep coming finished product.

Concerned role:

Finished product warehouse keeper

2- Inventory keeper of FG warehouse orders the workers to transit the specified quantity of the product (specified at task 1) to the selected location and locator of warehouse (non-systematic).

3- Once step2 is done or simultaneously with step2 a document must be created and registered in system which indicates delivery of the product with a specified quantity. It also contains lot or serial number of delivered product (if applicable) as well as the stored location and locator. All of these elements are to be entered by inventory keeper who is receiving the product. It means that it is inventory person that approves delivered product & quantity. Of course, in an ideal factory, industrial automation is established and so all of these data will be automatically transferred in to ERP system but any which way responsibility of this task is on inventory of finished warehouse (systematic).

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Concerned role:

Inventory keeper of finished product warehouse

Pre requirements & necessities:

1- System considers only those quantities of products which quality control for them has been done and quality results has been registered in the system with accepted ranges. This is an optimum practice that its concept is "to prevent any not accepted item of any product to be kept in finished products warehouse and so warehouse contains only those item which can be shipped to customer".

To follow this optimum practice of the ERP systems it is needed that quality control of final product physically be done once it is produced and has passed the final operation of production cycle and it is still in production plant and has not gone out.

This may need a real change in current procedure of final quality in organization and ERP team (implementer as well as process owners) must take care of that.

2- A close communication and cooperation between inventory keeper of FG warehouse and quality control people and manufacturing production control people.

P) Procedure of Available To Promise (ATP) for finished products Tiger: When sales department wants to book a sales order or wants to finalize it monthly

promises to customers.

Tasks:

1- Sales department sends the sales order in not booked status or its monthly demands before approval to the inventory management via system (systematic).

2- Management of FG warehouse after getting this information runs ATP program. This program will calculate how much of the entire demand is available in warehouse. The result of this program is sent to sales department to make it aware that how much of the planned demand can be satisfied by existing availability of inventory.

It is obvious that sales department after getting this info from warehouse will pass it to manufacturing to check whether capable to promise quantity calculated by manufacturing area will be fulfilling the balance of the total planned demand or not (Systematic).

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Concerned role:

Warehouse management of FG

Pre requirements & necessities:

Clearly ATP formula for each production should be defined before running the procedure. This is one of the one-time tasks that must be done in part of master items as described already.

Q) Procedure of getting pick release request from sales Trigger: When scheduled shipped time of a sales order is matured

Tasks:

A pick release request or move order is raised from sales system and is notified to warehouse user. The request may be raised automatically by the system once scheduled shipped date of a sales order is matured or by a user of sales system. It depends on the setup of sales system and will be described in sales system book. Any which way the request will contain product item requested, quantity requested, way of loading … and sales order or sales agreement number. In addition, if any special specification or quality parameters are mentioned in the sales order, these also should be included in the request on the system (systematic).

Concerned role:

Sales orders delivery supervision in sales department

R) Procedure of evaluation of availability of requested product Trigger: After a pick release request comes from sales to finished good warehouse

Tasks:

1-Once a pick release request is notified to supervisor of FG warehouse, he must look at the request items, quantities and specifications and then look for availability of such criteria's in the whole FG warehouse. This search can be done by the help of system very easily.

Note:

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If our company is producing based on make-to-order scenario, each item in warehouse is belonging to a specific sales order & customer and it is findable in the system. So the only action that warehouse supervisor must do is to look for items belonging to the sales order number or customer name which is written on the coming request.

Any which way, after seeking the availability, the request should be forwarded to inventory keeper of the warehouse which location items is found. If the availability is there for part of request into two parts, one part will be ready to deliver and should be forwarded to appropriate warehouse location. Second part that contains the non-available quantity is set to batch order, which means waiting for availability.

Concerned role:

Supervisor of FG warehouse

S) Procedure of product reservation to pick release request (sales) Trigger: When a Move Order (pick release request) for some quantity of some product item is

forwarded to a FG warehouse locations.

Tasks:

1- The inventory keeper of the warehouse location that receives the request will register a reservation record that includes the item, quantity, locator; request number allocated for and may be sales order number. Inventory keeper selects locator.

This systematic reservation prevents the reserved quantity to be allocated to or transacted for any other request. This is a very important principle implemented by system and appropriate culture for that must be tuned in the company (systematic).

Concerned role:

Inventory keeper of FG warehouse

2- Reserved items must get ready for picking

This may include shifting item to a specific physical location or packing them depend on the nature of item. (Non-systematic)

Concerned role:

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Inventory keeper & worker of FG

3- Picking items

The reserved prepared items are picked from their warehouse location and nominated locators at this step. This picking may be either transferring them to a staging location or directly loading items to vehicles.

Vehicles will come from shipping department and are loaded by warehouse workers. Vehicles may belong to shipping department of our company or to customer or shipping agent. (Non-systematic)

Concerned role:

Worker of FG warehouse & inventory keeper

4- Once task 3 is done, a loading document or let us say pick from warehouse should be created and registered in system. This document indicates the items requested are picked from warehouse to be shipped to the customer. All related information like item number, qty, location, locator, lot, serial, date, request number, sales order number, etc must be showed on this document. Once document is saved the inventory will be reduced and shipped quantity will be increased.

Concerned role:

Inventory keeper of FG warehouse

K_7- Do users have any check list for checking daily, weekly or monthly tasks? What are the steps for each task?

Purpose of this checklist is to help user with:

-Know what are his daily, weekly, monthly and yearly tasks in one view

-Steps required to be followed for each task from the system point of view

For this reason regarding to your software capabilities and abilities fill out the following table for each and every group of users such as example. (Reporting should be included too)

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Period Seq

Task

W

Steps

1

2 ü

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K_8- What are the main principles for training? Following are some tips that should be considered in training:

You have to consider training needs carefully for end used, power (key) users, managers and supervisors regarding to their roles and responsibilities.

Try to teach total process to uses and showing them their position in this total process. Users have to know their importance in this chain.

It is necessary that users understand specifics of integrated systems. They have to know the importance of correct data entry and its consequences.

Do not forget technology transfer in your trainings.

Help desk team/ project team should be trained with reporting tools.

You have to clearly mention the objectives and expected outputs in test scripts.

You have to consider the way procedures work in planning training courses.

In training, do not just focus on forms and reports but also try to bring real conditions in picture which users can simulate their real works.

Before go live repeat and repeat training till you be confidence with users skills on working with system.

Do not interrupt training after go live. You have to continue training for several months after go live. At this time, users have come to picture more seriously and have different views compare to before go live.

Training materials and manuals should be prepared in advance.

Do not forget managers and supervisors in your trainings.

AB_Ability to implement the change

AB_1- What are the check points to identify users’ progresses? 1-Plan some practical tests after training is done to be assure of the effectiveness of

training.

2-Plan and do some retraining courses for each group of users based on their roles in the system:

The managers should be retrained about how to analyze the system reports and get help from the system for their decision-making.

The planners should be retrained about how to do planning activities via the system.

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The inventory input-output users should be retrained about how to best use the system for their daily activities.

3- Design some questionnaire to gather information about the users' opinion about the system. This information can realize how much the users are getting near to the system.

R_Reinforcement to sustain the change

R_1- Is there any time that can be used as awarding and admiring users? We can use following times, with attention of system status, for awarding and admiring:

• Cycle count periods

• Fiscal years

R_2 what are the measures to check users' usage of the system and their progresses?

Getting report on the data, which have been input into the system by the users in all business areas, is the key tools which shows how much the system is in use. For inventory area, the reports must show the following indicators:

The entire inventory transactions, which have been entered in system, in compare with the actual transactions. This indicates how much the system in use generally.

The accuracy of inventory data in compare with the real data. This accuracy must be measured on quantity and volume. This indicates how much the users are familiar to the system.

The cost results of inventory transactions. As each inventory transaction yields accounting entries, so reporting on accounting transactions sourced from inventory is a very important indicator for the efficient use of the system.

Management reports which are showing total summaries of inventory input, output and value also indicates the system usage performance.

Getting inventory replenishment planning from the system at any given planning period indicates how good the system is in use for planning.

The time that each process of inventory takes is another important indicator. This time intervals should be compared with a target time. In addition, it can be compared over the consequent periods to evaluate the progress of system us