The 5 Keys to Supply Chain Success

The 5 Keys to Supply Chain Success

If selling supply chain systems is difficult on the outside, it isn't much easier inside. Operations people are accustomed to dealing with phone calls, faxes and hunches scrawled on paper and will most likely want to keep it that way. If you can't convince people that using the software will be worth their time, they will easily find ways to work around it. ERP at least erases the old ways of working by blotting out legacy software systems. Supply chain software is less militant. You cannot disconnect the telephones and fax machines just because you have supply chain software in place.

One company that got the internal sales pitch wrong was Keihin Aircon North America, says Michael Mitsch, vice president of operations for the Indiana-based tier-one auto parts manufacturer. Problem was, Keihin Aircon went too far to make its employees happy when it became an early adopter of software company Glovia's supply chain package in 1996. Mitsch admits that when he installed the new system at one of the company's Indiana plants, he overcustomised interfaces - specifically, order-entry screens used to send orders to suppliers - to placate a group of employees who did not like the interfaces Glovia provided.

"It was very hard for employees to give up their spreadsheets to adopt a more centralised theme," Mitsch says. To appease a group "that was not willing to change very much", Mitsch customised 20 per cent of the system to match the way they did things. "We spent a lot of money getting it that way," he recalls. The bill for customising the system came to $US100,000 - five times the company's original plan.

Worse, customising Keihin Aircon's software only made it more difficult to get Glovia's help when things went wrong. Like most vendors, Glovia does not support customisations of its software. "You're divorcing the software vendor from its responsibility for the product," laments Mitsch. "You have to build a little side infrastructure, and your IT people have to support it." Mitsch had to hire three extra full-time employees - at more than $US50,000 in yearly salary apiece - to customise the system. Those employees are still there supporting the changes.

The customisations also make it harder to upgrade the system when a new version of Glovia's software comes out, because the customised pieces must be completely rewritten to fit the new version. "You lock yourself into whatever version you customise," says Mitsch.

When it installed the same system in another plant, Keihin Aircon dumped its customised scheme. Employees at the second plant - having learned of the software maintenance horrors at its sister plant - understood that learning a new system, while difficult, was a one-time occurrence, but that rewriting customised software was forever.

Ultimately, the company worked with Glovia to develop a standard system more in-line with both employees' needs and Glovia's ability to support it. Keihin Aircon has seen its investment pay off but only after learning a tough lesson about keeping employees happy: don't sacrifice system integrity to do it. In the end, Keihin Aircon spent 20 per cent more on its system - $US1.2 million from a budget of $US980,000 - than it needed to, according to Mitsch.

At NCR meanwhile, the employees most reticent to change were those who had to learn new ways of doing their jobs to go along with the new system. A new customer service component, for example, shifted emphasis from a simple, scripted telephone interaction to a decision-making process that put greater responsibility (and accountability) in the hands of the person serving the customer. Not everybody bought into it. "People in business are very quick to find workarounds," Shaw says. "You've invested all this money in the new tool, and you find out people aren't using it."

To help the process along, NCR hired an outside consultant to train employees on the new system. The company also set up an incentive program that considered internal leaders of the project for promotions and other incentives if they got other employees to adopt the new system.

Managers and outside consultants focused their efforts on the 20 per cent who resisted the new system. Shaw and Webster had to explain to them how the whole thing hung together - that if employees chose to ignore the new system, NCR would lose credibility with suppliers and fail to realise ROI from the project. Managers also took the time to listen to employees on a personal level and let them vent their frustrations.

But for the stragglers, it took a not-so-subtle nudge and some close monitoring from a manager to make the system more attractive. For the most part, though, once employees understood that their individual participation in using a new system was critical to the success of the company, they bought in to the new scheme.

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