Conference Room Pilot

The following ERP conference room pilot was designed for an aircraft component manufacturer. You can adapt this scenario to create a test plan to suit your company's operations and proposed implementation path, and run it prior to "going live". It does not include some e-commerce characteristics. A conference room pilot is designed to suit your circumstances however and as such this is provided as a guide only. You will need to adapt this one, to reduce your risks. This article should be read in conjunction with "Implementing ERP Systems (After the Millennium bug has been exterminated)" and "25 questions to ask your IT specialist"

Links to further Best Practices and Training below

Purpose of Conference room Pilot

To see that the computer software can support all the things we need to do. (And many of the things that can go wrong in the business.)

To identify operational responsibilities. To identify new procedures needed, and to test draft procedures and policies.

To identify training needs.

To identify implementation method and issues to be resolved.

To test problem management procedures.

To confirm data definitions (will the system interpret the data codes devised and be able to use them)

To confirm data conversion rules (will the new system use the data converted from the old system properly)

To confirm the system testing already carried out, for batch processes and job streams and interfaces, will work in a repetitive production environment.

Who needs to participate?

Day 1 Day 2 Day 3 Day 4 Day 5 Day 6

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Mode of operation

1. The routine business processes associated with the complete production planning, execution and financial cycle will be simulated in a room running on compressed time. This will entail resetting the calendar at the end of each simulated days processing.
2. As far as possible people will play their normal roles, or a person from the function will represent a number of roles from that function.
3. The IT department will perform the role of system support and paper outputs will be requested from them and distributed by them. In the event of computer or program problems which cannot be immediately resolved, the session will be abandoned for that half day and resumed when the system problem is resolved. Problems will be documented at the time, using the problem management system.
4. Each participant will make notes of all significant problems and issues for discussion at the end of each half-day.
5. A key requirement is that the data to be processed is as realistic as possible and represents the range of possible data values. I.e. Typical products, order types, typical routes etc. It should also test that data converted from the old system will work in the new environment.
6. Detailed business scenarios need to be produced in advance, and will form the basis of the detailed proposed detailed procedures. A key requirement is that the system is operated during the conference room pilot in the same way that it will be operated routinely in production use. An example would be that Customer names and addresses are held once only and are used by the manufacturing and financial systems by an interface. This interface method must be used in the conference room pilot.
7. The software supplier will be in attendance for the duration of the conference room pilot.
8. Housekeeping at the end of each half-day will include running a backup representing close of play. (In the event of a problem the pilot can then be replayed). A backup should also be taken at the end of the initial data load, so that the pilot can be replayed from the start if necessary. This will also provide a convenient point to run batch interfaces, and reset the calendar if necessary.
9. At each stage of the pilot it should be assumed that the actions you have taken were incorrect and later information has now arrived which means that that session's work must be undone. This is to be achieved through transactions in the system and not by recovering the data to the last backup. Notes must therefore be taken of any deviations from the provided scripts.
10. Disaster recovery is to be tested by assuming a simulated disaster at three critical stages:

11. Enquiries

At any stage the person acting the role of sales, accounts, planning, purchasing, quality, or General Manager, may ask any question of any other function. The obvious ones being:

• When can I have my parts?
• What is the effect of that latest change?
• How much?

12. System wide parameters should be set as agreed at the outset of the pilot.
13. Daily, weekly, period end, and annual processing routines can be scheduled at any time but should be scheduled to include part complete, work order purchase orders, receipts and despatches not paid, invoices not processed etc. to represent the real world as far as possible.

Implementation

You may choose to implement the system in a particular way for example to load the static data before the dynamic data using interfaces or migration programmes. Before doing this please read "Implementing ERP systems". In particular you need to test the migration path as follows:

1. Load the static data
2. Check to see that all aspects of the system are operable using that data
3. Load the dynamic data
4. Check to see that all aspects of the system are operable using that data
5. Start the scenario below

Preparation for the conference room pilot

1 Prepare in advance a scenario for a representative (small) range of products:

• Existing customers(UK£,$,Euro), with at least one low credit limit and different ship and billing address
• Existing product / BOM / Batch sizes / safety stocks / lead times / current stocks and WIP, material costs
• Existing suppliers (£, $, Euro), with cheque, BACS, Swift, Proforma payment methods.
• Existing work centres, and cost rates(std, current actual, future)
• Stock locations for: GI inspection, R.M. Stores, Finished parts, stores, despatch, sub contractor, Quarantine
• Existing route(s) / Times / Outwork costs / planned yields

And load above to database in advance. Note if this data is being converted from the existing system, it should be loaded at this time. Initial interfaces must be run to ensure a valid start position with all databases synchronised. (Including finance, tools etc.)

2. All scenario scripts must be completed and individually tested by the appointed team members.

3. Prepare routine management reports, in job streams and ad-hoc reports to be run at suitable points of significance in the process.

Start

Consider both new & existing products in each case:

A. Raise Quotation (This part of the pilot is different for new products or repeat orders possibly from different customers.)

B Raise sales order/schedule

1. Forecast spares requirements. Convert to sales order

2. For new order, change Tech edit / Contract review /credit check

3. Check for existing valid quote

4. If not valid raise new quote

5. Check delivery feasibility (MPS, RCCP)

• Create load profile
• Update capacity & create new resource
• Run MPS

6. Raise sales order

• Within cum lead time
• Outside cum lead time
• Beyond MPS horizon
• Within MPS horizon

7. Raise acknowledgement to customer

8. Value order book

C. Take Action on MRP/CRP reports at:

1. Change batch size , lead time, safety stock
2. B6,D3,D4,D5,E3,F1,G,H1,H2,H3, I1,I2,J1,J5,J8,J9,J14,J15,J16,J17,J18,J19,K1,K2,K3
3. D. Raise production/purchase orders/schedules
4. 1. Raise end product order using MRP
5. 2. Raise lower level orders using MRP
6. Create / release shop orders
7. Repeat through BOM
8. Raise new supplier(address, terms, item price, special
9. packaging, specs, single /dual source, sourcing rules)
10. Issue request for quotes.
11. Raise raw material order using MRP
12. Amend / Cancel PO
13. EDI
14. Run purchasing reports

E. Capacity Planning

1. Check capacity needed on all resources

2. Assume capacity overloaded

3. Reschedule order to smooth capacity

4. Produce work-to lists for all work centres

F. Change sales order due date / quantity (pull forward /push back/cancel orders)

1. Act on MRP /CRP reports (manufacturing and purchasing)

2. Re-EDI

G. Change BOM/Route under engineering change

H. Goods Inwards

Receive purchased parts (partial/full/early/late)

• To goods inwards inspection
• Sample/full inspection
• Direct to stores
• To WIP
• Reject/ return to supplier/debit note/inspection report
• Concession/accept locate in stores
• Missing C of C
• Track-side (back flushed)parts

Run accounts payable interface

I. At issuing time prepare kit/prepare tools and issue

1. Issue with shortages/without shortages
2. With standard or alternative parts
3. Issue Back flush parts to WIP
4. Shortage clearance (made in, bought out)

J. Booking Process (This process will follow through from piece-part manufacture to sub-assembly to final assembly)

1. Book 1st order to first milestone (include back flush op)(Report: yield & actual progress, time, etc.)

2. Book 1st operation on second order

3. Produce updated work-to list for 2nd operation

4. Book 2nd operation out of sequence

5. Report excessive scrap/loss/find

6. Re-plan to overcome shortage, expedite, and then clear shortage early

7. Change supplier with different costs

8. Change route /work centre/ route part (for this order only / permanent route change but include existing orders)

9. Reject work

10. Schedule and book rework operation

• Extra operation
• Rework order
• Whole route sub-contract
• One operation rework
• Add extra material

11. Send to subcontractor (routed sub-contract and un-routed (abnormal)

12. Receive back from subcontractor (sample/full inspection)

13. Reject to subcontractor from WIP and Goods in

14. Receive back again (good material and concession)

15. Split batch and send ahead

16. Partial receive to stores

17.Receive/lose/find/despatch free issue material/line feed material

18. Mismatched assembly part

19. Complete orders/ raise release note/ C of C

20. Check for credit hold

21. Despatch both orders (full and partial ship, normal address, alternative address. Drop ship, Bill of lading/export documents)

22. Customer return/credit/strip down/replacement of faulty part/repair. Supply of free issue material

23. Run accounts receivable interface

24. Intrastats (To /from EEC)

25. Invoice Euro / £ / $

26. Review

• Costs verses estimate/std
• Delivery performance
• Utilisation
• Sales forecast
• Purchase commitments

K. Stock Adjustments

1. Unplanned receipt / issue
2. Adjustment
3. Stock take/perpetual auditing

L. Product recall

The concession we made earlier has caused an aircraft crash!

What other batches are affected and which products must we recall, (include at least one other raw material batch.)

M. Consumables

1. raise / authorise purchase requisitions
2. run reorder report based on consumables stock status
3. Buy/receive consumable items
4. Run accounts payable interface

N. Accounts Payable

1. Reconcile manufacturing view and ledger view
2. Suspense accounts
3. Match & Pass.
4. Post
5. Price variance
6. Invoice and GI reserves
7. Pay (Cheque, BACS, Swift, pro forma), (normal, abnormal)
8. Debits/credits
9. Currency requirements
10. Aged creditors / balances
11. Bank reconciliation
12. Pay the electric bill (no purchase order or goods receipts)

O. Cost of Sales

1. Std
2. Actual/ margin

P. Accounts Receivable

1. Reconcile manufacturing view and ledger view
2. Suspense accounts
3. Post invoices
4. Post payments (Cheque, BACS, Swift, pro forma), (normal, abnormal)
5. Debits/credits
6. Currency conversion
7. Aged debtors / balances(credit control)
8. Bank reconciliation
9. Forecast sales income

Q. General Ledger/inventory accounting

1. Reconcile manufacturing view and ledger view( stock, bookings)
2. Suspense accounts
3. Utilisation (std hours)
4. Stock/WIP valuation(std, actual, movements, variances, scrap analysis
5. Overhead analysis

R. Period end

Can we despatch / receive on 1^st of month?

What goods-out are invoiced?

What goods-in are not invoiced by supplier, or paid by us?

Calculate reserves

Run ledger interfaces

Run P/L, Balance sheet

VAT

S. Year-end

1. Period end plus
2. Roll work centre cost rates and recalculate (cost roll up)

T. Archive

Archive

• Old parts
• Old routes
• Old stock movements
• Old bookings

Retrieve from archive, product recall data etc.

• Old system data
• New system data
• Mixture of old and new system data

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The following further best practice articles were also mentioned in this paper:

Go to:

The following training workshops deal with ERP systems design and implementation:

M16 Enterprise Resources Planning (ERP) Implementation

I3 Best Practice Data Processing

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© SM Thacker & Associates April 2000