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
 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 Technical

Operationa Financial

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Strategic Perspective
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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Strategic benefits from integrated
• Improved customer responsiveness
• Improved decision-making
capabilities
• Enhanced organizational flexibility
• Strengthened supply chain
• Supports future initiatives and
building full fledged management
information system
Operational Perspective
• Lower process costs
• Compliance with external laws and
regulations
• Transparency
• Compliance with inter policies
• Improve and maintain operational and
staff productivity
Financial perspective
• Expand market share
• Increase revenue
• Return on investment
• Optimize asset utilization
• Manage Business risks
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Operational benefits from integrated
system
• 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
Financial benefits from integrated system
• Minimized operating cost
• Reduced assets deployed
• Increased return on investments
• Improved cash flow
• Better control over resources and their
deployment
 Technical Perspective Technical benefits from integrated
system

• Automate and integrate the • Integrated package forces a process-

enterprise chain
• Improve and maintain business
process functionality
• Product/Service innovation
• Acquire and maintain skilled and
motivated personnel
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

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

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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 2,000,000 18% 356,200

receivable

Inventory 3,000,000 20% 600,000

Fixed assets 3,000,000

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

Current xxx,xxx
liabilities

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 Non current xxx,xxx
liabilities

Stockholder's xxx,xxx
equity

Total liabilities xxx,xxx

and equity

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

Material 4,500,000 60% 5% $225,000

Labor 1,000,000 13% 10% $100,000
Overhead 2,000,000 27%

Administrative 2,000,000 $150,000

expenses
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
$500,000.00 $980,000.00
profit

Earnings per
$ 5.00 $9.80
share

Current stock
$30.00 6 * 9.80 = $58.80
price

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

24
 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.

25
 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?

26
 Messages Area
• For facilitating and receiving goods, inventory staffs should
now ordered goods and the date of arriving. 2

• Not accepting non conformance goods from suppliers is a

mandate for our organization. 2 4

• Purchase orders information can help inventory staffs for

2
accepting and receiving goods.
• Optimizing quantity on hands can remove stresses keeping
2
too high items and materials in inventory.
• Proper inventory planning and preventing not required
Purchase Requisitions could be result of accurate and up to 1
date inventory balances.
• Rapid and easy access to items in inventory requires a
2
proper item organizing in physical locations in inventory.
• Quality specifications on purchase orders are required for
4
proper quality inspection on received items.
• Non-conformance items prevention is a principle to gain
4
confidence for our finished products quality.
• Following production scheduling, is applicable when there
are required items in inventory and this can be reached 6 7 9 Mng
with appropriate inventory planning.
• Quick responding to inventory customers is a necessity in
2 6 7 8
enterprise.
• Organization costs reduction is a result of costs reduction in
all areas such as inventory; inventory cost reduction is a 2 Mng
result of decreasing of not required items in inventory.
• Decreasing human mistakes as a basic need can be reached
by decreasing hand-operated works and using automated All
processes by workers.
• Our company's success is not only dependent on sales, but
also on our company's ability to say, "Yes we have that All
item in stock”.

27
• Our inventory is one of the biggest, if not the largest
Mng
investment we have in our company.
• Reduction of unnecessary inventory is a factual need in
1 2 3 Mng
order to reduction o f the costs in any organization.
• ERP system help the warehouse people to get rid of
unreasonable challenges with consumers about inventory
2
through publishing on hand quantity of any item to any
corresponded user on line.
• Preventing keeping unqualified goods in the warehouse is
a real need to make consumers sure about the items they 6 7 8
get from warehouse.
• Ignoring the manual creation of material request from
6 7 8
warehouse is a serious need in any organization.
• Automatic creation of material request from warehouse is
needed to reduce the unfair challenge between consumers 2 6 7 8
and warehouse keepers.
• ERP integrated system is needed to reduce the waiting time
2 Mng
of received goods in the receiving location.
• Ignoring manual activities during material issue from
warehouse to consumers is very much needed to avoid 2
any problem.
• Systematic available quantity control during the process of
issuing requested material from warehouses is necessary 2
to save time and avoid human mistakes.
• Tracking the supplier lot through the production process is
2 Mng
required to claim suppliers on bad quality materials.
• It is necessary to know about the used batch of material in
the production of any product so that causes for low 4 6
quality of product will be discoverable.
• Material reservation in the inventory is needed to make
6
production planning possible in the factory.
• Online information about reserved materials in warehouses
is very necessary for inventory people to manage the 2
materials and issue right item to right consumers.

28
• ERP system is an integrated information system which
publishes unique data entity about any fact through All
enterprise.
• ERP system makes it easily possible to track and monitor
2 6 7 8 9
all transactions done on any particular item.
• Preventive maintenance requires inventory of spare parts to
7
be planned in sync with the maintenance plans.
• Inventory planning people need to have on time
information about maintenance required spare parts to be 1
able to satisfy these requirements on time.
• Effective production planning needs integration between
the production planning department and inventory for 6 1
effective material replenishment planning.
• Completion of the production plans need very seriously on
6
time supply of the required materials by warehouse.
• Every manufacturing enterprise needs coordination and
synchronization between production plant and
6
warehouses and on line information transfer between them
in order to fulfil customer orders
• It is obviously necessary to access to finished goods
inventory information to have correct plan for accepting 8
customer orders and ATP (Available To Promise).
• Locator controlled organizing of finished goods warehouse
is really needed in order to pick the right product for the 8
right customer on the right time.
• Efficient production planning needs on line access to
6
inventory On hands information for production people.
• Flexible coding structure is a real need to cover the fast
1 2
grows up of number of items in large enterprises.
• Item classification is required to have useful desired report
1 2 Mng
on inventory items.
• You need registration in a control workspace and share the
All
registered information for all business areas.

29
• Supplying required items on the required time need to raise
purchase requisitions on the right time in order to provide 10
purchasing department with adequate time.
• We use reports and inquiries daily to extract information
that upper management can understand and can use to All
take appropriate actions, if necessary.
• The Total cost of an item is much more important than the
4 5
price of an item
• Awareness of purchase order specification can expedites
2
inventory keeper operations.
• Awareness of in coming receiving items can reduce errors
2
in receiving activities.
• Any mistake in receiving operations, which is the result of
lack of purchase order information, will have difficult 5
consequences in inventory and finance.
• Too much quantity for some items and shortages for the
others is the result of absence of an effective inventory
2
planning and will have some difficulties for inventory
staffs.
• Manual activities for delivering of requested material from
warehouse not only waste too much time of the warehouse 2
personnel but also cause unfixable human mistakes.
• If there is no integrated systems in a factory tracking of the
6
lots (batches) in the production line will not be possible.
• If you do not have an integrated information system you
can neither analyze the cause of low quality products nor 4 6
stopping producing low quality products.
• It is rarely possible to manage reservation in the warehouse
2 6 7 8
without an information system.
• If you do not have an integrated system you may book
orders beyond the capability of you factory and then you 8
will have displeased customers.
• You can not have a real vision of your finished goods
inventory and so not able to have a real plan on booking 8
sales order if there is no ERP system.

30
 • It is hardly possible to fulfil production orders without an
integrated system which coordinates inventory with the 6
production plant.
• If there is no integrated system there will be multiple
inconsistence data about one fact and this makes every All
body confused.
• Backorders because of the inventory inaccuracy are
8
simplest problems in the case of no integrated system.
• Without integrated systems we have to have inventory
adjustments in warehouse on a daily basis which increases 2 5 Mng
inventory costs.
• Lack of integrated information system cause the
organization to loose his customers because of variance in 8 Mng
their orders fulfilling.
• Without an information system the company will have
much risk in fulfilling customer agreed demands because 8
of not on time access to finished goods inventory.
• It is easily possible to deliver wrong product to customer if
8
you do not have a locator controlled on hand quantity info.
• Without an efficient integrated system the inventory people
may issue reserved materials to the wrong consumers and 2
so falls into trouble.
• Lack of integrated system makes a lot of challenges for the
2
warehouse people against consumers.
• 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 2
and external customers.

31
 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 6 7 9
procedure for each item.

• 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 1
the warehouse.

• ERP system makes it possible to categorize the warehouse items

from planning point of view and assign the best planning 1
method of category.

• 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 2 6 7 8
issue process.

• ERP system provides you with the possibility of on line tracking

of raw material batches through the production lines as well as 4 6
quality cause and effect analyses based on quality of lots.

• ERP system integrates inventory and production and

synchronizes them so that fulfilling production orders will be 6
efficiently feasible.

• ERP system will omit delay in material delivery from warehouse

to production via on line information transfer. 6

32
 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 All
transactions.

• ERP system categorizes purchasing conditions of all items so that

purchasing process is predefined for any item and purchasing 10
department will easily follow that.

• 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.

33
 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

34
• 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:

35
 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

36
 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

37
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

38
• 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.

39
 • 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.

40
 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.

41
 • 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.

42
 Define Inventory Orgs

Define Warehouse Locations

Define Define Define

Locators Inventory Costing
Accounts Method

Functions flow (1): Inventory Structure Definition Process Flow

43
 Item Code Generation

Define General Attributes of Item

Define item categories Define statuses Define catalogs

Functions flow (2): Item(Material) Definition

44
 Process flow for purchased goods (3)
Inventory
Control
(Replenishment
Management.) Reject to Supplier

Automatic
Receipt generation of
Purchasing Goods Transfer to
(Delivery accounting
Inspection main stores
from supplier entries
to receiving
location)

Issue to Return
plant floor from floor
stock Sub-
inventories

Return
Issue to from
Pick maintenance
release from Evaluate maintenance
Sub-
consumers the requests
inventories

Issue
consumable
Issue fixed to cost
centers for
assets to
usage
departments
Miscellaneo
us transactions

45
 Process flow for finished goods inventory (4)

Delivery finished
goods to warehouse

ATP calculation Cycle counting & Receiving pick

for sales Dept. inventory adjustment requests from sales

Evaluation of
availability of product

Reservation & pick

from warehouse

Automatic generation
of accounting

Period closing

46
 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

47
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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 S Task Period Steps
eq
W
1

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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

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