Testing your ERP computer software using a Conference Room Pilot

Conference Room Pilot

The following ERP conference room pilot was designed for an aerospace 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

? ? ? ? ? ?

Mode of operation

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.
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.
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.
Each participant will make notes of all significant problems and issues for discussion at the end of each half-day.
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.
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.
The software supplier or an in-house application expert will be in attendance for the duration of the conference room pilot.
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.
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.
Disaster recovery is to be tested by assuming a simulated disaster at three critical stages:
1. Immediately before the overnight housekeeping
2. Immediately after the overnight housekeeping
3. Assuming a mid session failure (during the on-line day)
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?

System wide parameters should be set as agreed at the outset of the pilot.
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:

Load the static data

Check to see that all aspects of the system are operable using that data (loading dynamic data next is a non-trivial exercise)

Load the dynamic data

Check to see that all aspects of the system are operable using that data

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: Goods Inwards Inspection, Raw materials 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.)

Qualify
Tech Edit/ Contract review/ reconfiguration / credit limit
Raise new product codes / BOM (run CAD interface)
Raise new routes (run CAPP interface)
Allocate route to product (include alternative method)
Check
Complete cost details
1. Materials / weights / costs check?
2. Yields check?
3. Subcontract costs check?
4. Cost rates (std, actual, budget)
Calculate ex-works cost
Packaging costs check?
Transport costs check?
Commissions check? Etc.
Calculate total cost (roll up)
Change costs/work centre rates/route/time/yield and repeat
Set selling price
Delivery / Capacity check via MPS/RCCP
Issue quote

B Raise sales order/schedule

Forecast spares requirements. Convert to sales order
For new order, change Tech edit / Contract review /credit check
Check for existing valid quote
If not valid raise new quote
Check delivery feasibility (MPS, RCCP)
1. Create load profile
2. Update capacity & create new resource
3. Run MPS
Raise sales order (consume forecast)
- Within cumulative lead-time
- Outside cumulative lead-time
- Beyond MPS horizon
- Within MPS horizon
Raise acknowledgement to customer
Value order book

C. Take Action on MRP/CRP reports at:

Change batch size, lead time, safety stock
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

D. Raise production/purchase orders/schedules

Raise end product order using MRP
Raise lower level orders using MRP
Create / release shop orders
Repeat through BOM
Raise new supplier (address, terms, item price, special packaging, specs, single /dual source, sourcing rules)
Issue request for quotes.
Raise raw material order using MRP
Amend / Cancel PO
EDI
Run purchasing reports

E. Capacity Planning

Check capacity needed on all resources
Assume capacity overloaded
Reschedule order to smooth capacity
Produce work-to lists for all work centres

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

Act on MRP /CRP reports (manufacturing and purchasing)
Re-EDI

G. Change BOM/Route under engineering change

Using CAD/CAPP interface

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

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

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

Book 1st order to first milestone (include back flush op) (Report: yield & actual progress, time, etc.)
Book 1st operation on second order
Produce updated work-to list for 2nd operation
Book 2nd operation out of sequence
Report excessive scrap/loss/find
Re-plan to overcome shortage, expedite, and then clear shortage early
Change supplier with different costs
Change route /work centre/ route part (for this order only / permanent route change but include existing orders)
Reject work
Schedule and book rework operation
1. Extra operation
2. Rework order
3. Whole route sub-contract
4. One operation rework
5. Add extra material
Send to subcontractor (routed sub-contract and un-routed (abnormal)
Receive back from subcontractor (sample/full inspection)
Reject to subcontractor from WIP and Goods in
Receive back again (good material and concession)
Split batch and send ahead
Partial receive to stores
Receive/lose/find/despatch free issue material/line feed material
Mismatched assembly part
Complete orders/ raise release note/ C of C
Check for credit hold
Despatch both orders (full and partial ship, normal address, alternative address. Drop ship, Bill of lading/export documents)
Customer return/credit/strip down/replacement of faulty part/repair. Supply of free issue material
Run accounts receivable interface
Intrastats (To / from EEC)
Invoice Euro / £ / $
Review
- Costs verses estimate/std
- Delivery performance
- Utilisation
- Sales forecast
- Purchase commitments

K. Stock Adjustments

Unplanned receipt / issue
Adjustment
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

Raise / authorise purchase requisitions
Run reorder report based on consumables stock status
Buy/receive consumable items
Run accounts payable interface

N. Accounts Payable

Reconcile manufacturing view and ledger view
Suspense accounts
Match & Pass
Post
Price variance
Invoice and GI reserves
Pay (Cheque, BACS, Swift, pro forma), (normal, abnormal)
Debits/credits
Currency requirements
Aged creditors / balances
Bank reconciliation
Pay the electric bill (no purchase order or goods receipts)

O. Cost of Sales

Std
Actual / margin

P. Accounts Receivable

Reconcile manufacturing view and ledger view
Suspense accounts
Post invoices
Post payments (Cheque, BACS, Swift, pro forma), (normal, abnormal)
Debits/credits
Currency conversion
Aged debtors / balances(credit control)
Bank reconciliation
Forecast sales income

Q. General Ledger/inventory accounting

Reconcile manufacturing view and ledger view( stock, bookings)
Suspense accounts
Utilisation (std hours)
Stock/WIP valuation (std, actual, movements, variances, scrap analysis
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

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

T. Archive