On-the-spot report of implementing ERP in Schneider Electric (China) Company.
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1999 10 9, the manager of the MIS division of Schneider Company just returned from a steering committee meeting, at which an important decision was made: the head office and two distribution centers will gradually implement the ERP software R/3 system of SAP by adopting a step-by-step strategy, in which different functional modules will be introduced one by one. After that, they will turn the implementation strategy into a "big bang" method, that is, in their seven joint ventures at the same time. This decision is the beginning of a revolution for Schneider (China) Co., Ltd., which will make the company far ahead of its competitors in the rapidly changing China market and lead the company's business into a beautiful and comfortable paradise, but it is bound to be a thorny road.
China Logistics System Project (CSL)
As early as 1993, Schneider made a decision to greatly reduce the impact of strategic business on national business management, so its China company completely changed the organizational model of the joint venture company, that is, the joint venture company was merged into a holding institution and reported to the national business manager before reporting to the central SBU. In order to support this new strategic operation, the company set up a team of engineers in the newly established "Support Operation" department, whose task is to comprehensively observe the business operation of Schneider Electric (China) Company from the perspective of process, and make strategic decisions according to relevant analysis, that is, to focus on all sales and distribution activities in China. The implementation of this integration strategy needs to cultivate strong logistics capabilities, which should be the most challenging job at that time, because the company has very senior talents who are well educated but relatively inexperienced. After years of training, they have become mature, but it needs to be admitted that they really have no experience in logistics, and such talents were really hard to find at that time. Therefore, the company has conducted a lot of training for those talents with very strong learning ability. In addition, at each site, the operation department and the engineering department are separated. Engineers face the same small accident every day on the construction site, but their duty is to ensure that the accident will not happen again as much as possible, and the duty of the operation department is to provide services to customers. Facts have proved that the establishment of these two teams is successful. Of course, it is very dangerous to open a distribution center in every country. At the beginning of the opening, the situation was chaotic, and Schneider successfully avoided this chaos. After two months, the service quality reached a high level and the business operation was orderly. It should be said that this is due to these outstanding talents in China.
Subsequently, three distribution centers were established. The first one, located in Shanghai Free Trade Zone, was put into operation in April 1998. Its core is to import products produced by non-China joint ventures (accounting for about 20% of the total sales in China). 1999, the second distribution center was put into operation in Beijing. It initially distributed products imported from Shanghai distribution center, which were stored in Beijing. After that, it began to distribute the products of the joint venture and expanded its business to the joint venture without finished product inventory. In 2000, the third distribution center was established in Guangzhou. These three distribution centers will not replace the existing 300 dealers in China, because everyone's role is different. In order to implement this strategy, Schneider Electric (China) Company must adopt an integrated information system to replace the existing logistics information system, that is, the so-called enterprise resource planning (ERP) system.
ERP implementation decision
When Schneider (China) Company started to implement the new strategy, its information system infrastructure was highly decentralized. Most of the joint ventures in the company adopt the PC planning system of the four-level company and implement it with the support of the MIS department. The distribution center in Shanghai uses the internally developed SDS (Schneider Distribution System) logistics package, while the financial department uses another PC-based system (CIEL) for financial reporting. This separated IT situation reflects the organizational structure of a joint venture, which has independent operation and decentralized management of multiple financial departments.
Deciding to implement a mature ERP system is a gradual process. When the new CFO 1997 arrived in China in September, he found that his predecessor had left a note on his desk telling him that he should adopt the new accounting software as soon as possible. The French PC accounting software used at that time became increasingly unsuitable for the company's development. Although logistics problems are not highlighted, they will be exposed sooner or later with the implementation of logistics projects. Therefore, a financial and logistics software suite suitable for holding companies becomes necessary. In the end, Schneider's logistics project determined the framework for choosing a French solution.
More precisely, the necessity of implementing ERP system in China lies in the integrated management of business activities, rather than the centralized logistics operation. The distribution center itself should be able to use SDS software for logistics operations. However, the strategic adjustment of taking Schneider (China) Company as a "joint venture company" rather than a "joint venture aggregate" aims to manage Schneider (China) Company as a merged business entity, and SDS software cannot integrate the detailed financial information of all business activities in China.
ERP implementation process
Supplier selection
Specific to the selection of suppliers, it has also gone through a step-by-step process. 1997 since February 17, the investigation and analysis of three suites listed in the headquarters of Schneider Electric Company have been carried out. The first one was eliminated because it was not a truly integrated system, and the second one could not fully support localization. Finally, the R/3 system of SAP was chosen because of its high integration and full support for localization. Although all relevant managers think that this system is the most complicated and difficult to implement, it is still selected. In fact, when the financial module of 1998 R/3 was implemented in the first venue-Shanghai distribution center, the supplier of ERP was still in the air. 1998 initially realized FI(R/3 financial module) to observe its operation; 1April, 1998, SAP drew up the plan for Greater China; In early June, the plan was handed over to senior management. When the company started to implement the financial module, it had planned to implement the MM/SD (Logistics Management, Sales and Distribution) module, but the joint venture company knew nothing about it. Because the idea at that time was that they would only tell the news to the joint venture company if they were sure that the financial module could run well and the top management could realize it. So in fact, this decision was not adopted by everyone, but by the central government.
Incremental method
The above supplier selection method refers to the phased implementation of the strategy, that is, multiple modules are implemented in turn; In addition, a module will not be implemented in all venues, but a specific venue will be selected as a pilot. After these pilots are verified, follow-up implementation activities will be carried out.
In this way, 1998 65438+ 10, the financial module of SAP R/3 was implemented in Shanghai distribution center, and SDS was also implemented to support the logistics operation of the distribution center. Of course, it was clear at that time that the logistics module of R/3 would replace the SDS system.
The next step is to implement the R/3 financial module in the holding company, including regional sales offices and representative offices, because they belong to the holding company in the legal sense. Next, the second distribution center in Beijing was selected as the pilot of R/3 logistics module, because it is geographically closer to the head office, so it can be monitored more closely. The difference is that here, the establishment of the new distribution center is synchronized with the implementation of the new R/3 logistics module.
group
The implementation of the first stage is based on foreigners with 20 years of financial experience and rich experience in China, and benefited from the help of an internal small team composed of two MIS personnel and three financial personnel. The expatriate's professional experience enables him to evaluate the external consultants hired by SAP in the first phase according to the benchmarks that powerful financial software tools should achieve. When the employee left in July, 1998, a China manager was assigned to take charge of this project, but he obviously lacked confidence. So he sought support from many sources and finally found a consultant from PricewaterhouseCoopers. The consultant comes two or three times a month for six months, that is, until the financial module is implemented in the headquarters and regional sales offices and representative offices.
It is because of this process that Schneider (China) Company has formed a good cooperative relationship with PricewaterhouseCoopers, and continued to cooperate in the second stage of project implementation and the installation stage of more complicated logistics modules. However, Schneider Electric (China) Co., Ltd. is more inclined to train its own ERP implementation talents to reduce its dependence on external consultants and save costs. In this regard, PricewaterhouseCoopers provided some guidance, and the main consulting work was undertaken by so-called internal consultants belonging to the MIS department, each of whom was responsible for an R/3 module.
For this project, the selection of team members is very special and critical, and they all represent different functional departments. Generally speaking, each role is assumed by knowledgeable users (so-called key users). As the ERP implementation project is embedded in the wider CLS project, Schneider Electric (China) Company set up an engineering team named OMC (Order Management Cycle) in the supporting operation department to analyze and redesign the company's logistics process. The OMC team is a part of the mechanism to realize the interaction and communication between users and m is personnel. In fact, the company has always called OMC personnel key users, and they are super key users. In the whole project implementation process, these people must do one thing: the next time they implement the project, they will know what the implementation process should be like and work with consultants to speed up the implementation process.
Of course, this group also makes the management have another worry: they worry that these young and inexperienced people don't know how to use the software, thus reducing the actual use efficiency. The company hopes that SAP can take one step, two steps or even ten steps forward until 2005. But sometimes, they worry that these young people simply don't have such a long-term plan.
Planning steering Committee
The Steering Committee consists of the Director of Support Operations, the Chief Financial Officer, the Director of Management Information System and the Senior Consultant of PricewaterhouseCoopers. Initially, the sales supervisor also participated, but this position has been vacant since June 1999. Although the original plan was to hold a steering committee meeting once a month, it was actually held every other month. The duty of the steering committee is to review all the problems, but at first they didn't really play a role and were inefficient, probably because the relevant decisions have not been formally made.
"Purchasing and ordering" problem
Once the project scope and hardware architecture are determined, the main activity of ERP implementation process is to customize ERP system. The biggest difficulty in the customization process is to ensure that the system can effectively handle the required business processes, and at the same time, it can make full use of the built-in business processes of the system to summarize knowledge. However, there is often a gap between the process of software implementation and the requirements of existing or expected business processes. In addition, the cost of changing existing organizational processes and structures that are considered to be efficient will definitely reduce the benefits of adopting processes that are more in line with system capabilities. Similarly, changing the cost of software will inevitably reduce the benefits of adopting software that can better meet specific business needs. Therefore, Schneider Electric (China) Company finally decided to change the software instead of the business process in most cases. The project manager in charge of ERP implementation process considered this compromise as follows: "We just applied the standard functions of SAP to some business processes and developed various programs to enhance the standard functions to meet the requirements of our users. Of course, this is very expensive. Next time, we may use standard functions more. "
There is also a special problem in the implementation process, accounting for almost 60% of all problems. It is about a specific ordering process called "purchase order". Specifically, some special products are not in stock. If customers want goods, they need to order them from France and send them to customers after arriving at the warehouse. If the customer finally doesn't want this product, it will be scrapped sooner or later. After using the SAP system, if an order of "purchase order" or "delivery according to order" is encountered, the product will not be transferred to the inventory. At the moment of receiving the product, it has been recorded as the cost of product sales, but in fact no sales have taken place. In this way, the company's inventory is contrary to the facts, resulting in errors in product sales cost, gross profit and profit, as well as all subsequent errors.
Finally, after compromise, we decided to adopt the "delivery according to inventory" process instead of the "delivery according to order" process. But in this way, the connection between the sales order and the purchase order is lost, which means that some customers can't receive the products because the orders are lost or the products they ordered are used to fulfill other orders. The timely delivery rate will temporarily drop from 95% to 87%. At first, the problem was not so serious. When the new logistics system was just implemented in Beijing distribution center, this problem began to appear and became more and more serious. Later, this problem was solved by another batch program, which needs to be run once a day, but it takes some time to sort out what happened in the week when the problem formed. Moreover, this solution has caused great losses to customers and increased the work intensity of logistics personnel.
Data conversion problem
The last step before the system is put into operation is to transfer data from the old system to the new system, which is the so-called data conversion process. In addition to the technical complexity that this process may involve, one of the most common problems is data quality. For example, in R/3, if there are no links related to product information in the document, the system will not be able to continue processing orders. Similarly, there are a lot of automatic controls for inputting data in R/3. If they are not satisfied, the data processing process will stop automatically. Therefore, data conversion not only means that the data is moved from one file to another, and the data structure remains unchanged, but also ensures that the content of the data meets the standards required for running the new system, that is, it must ensure the correctness of the data at the semantic and grammatical levels.
Because any trading system has a large amount of data, the task of data conversion is quite heavy. In fact, apart from spending a lot of money to check every item of data one by one, the only way to successfully complete data conversion is to conduct a comprehensive test conversion, that is, before putting into actual operation, migrate the whole database to a new system and run the system in a real environment. Unfortunately, Schneider Electric (China) Company did not do so. Because of self-confidence, they omitted the real transformation that should have been done and only made a test transformation. It turned out to be a huge mistake. In addition, after the opening of the system, the MIS department was busy solving data quality problems, and did not communicate with users enough to tell users about the problems. Users continue to input data in R/3 in an invalid format, which eventually makes the problem worse. Finally, it took the company another month to solve the above problems.
Project results
Although Schneider (China) Co., Ltd. encountered some major problems in the implementation process, it finally succeeded in achieving its original planning goal-to build a "MIS skeleton" to support the new strategy of concentrating all sales and distribution activities in China, that is, to form a "company with joint ventures" instead of an aggregate of joint ventures. The implementation of ERP enables Schneider (China) Company not only to deal with the logistics problems involved in this project, but also to manage this entity from the business perspective. In other words, the integration of Schneider (China) logistics and financial system is the core of this project, and this integration process will be completed at the end of June 1999 1 1 this project.
In addition, the project management objectives have been basically achieved. Due to the existence of "purchase order problem" and "data conversion problem", the implementation of Shanghai distribution center was delayed by one month than originally planned. However, the implementation of the system did not exceed the budget, which means that the problem can be solved smoothly without investing additional resources in the project. At first, everyone was worried about seeing some accidents, because it was very difficult and expensive to implement SAP system, but there were no accidents. Moreover, it is not so difficult to implement SAP system, and other software products have the same problem. In China, the preparation time for decision-making is very short. If there is a problem, the enterprise should actually predict that it is not a problem of SAP, but a problem of management and preparation.
For the financial module, the result is very satisfactory. Almost all the goals have been achieved, covering the number of all online users and the breadth and depth of financial information. For example, for any product category or site of the holding company, real-time cost inquiry can now be made. In addition, the new group accounting and statutory accounting have been integrated.
However, users are somewhat dissatisfied. Because of the special method to solve the problem of "purchasing and ordering", the end users must bear more workload. In addition, before the implementation of the project in Beijing Distribution Center, users did not use other systems, and they were very enthusiastic about the new system, while users in Shanghai Distribution Center thought that the new system was much more complicated than the old system (SDS). The end users of distribution center hope to participate in the project earlier and receive more in-depth training.
Future challenges
The next step is to implement R/3 in all seven joint ventures. Senior managers predict that there will still be problems in this process, but these problems can be solved. Some managers may resist the implementation of R/3 system because it will reduce their autonomy. However, due to the limited resources of enterprises, it is difficult to start implementation in an all-round way at the same time, and we can only start with something more open and sustainable. There must be resistance, but the situation at that time was like a domino, unstoppable.
Finally, the success of the next phase of project implementation will benefit from the enthusiasm and professional skills of the project team members. Schneider (China) aims to establish a competence center composed of small internal SAP consultants and business process experts. Of course, this will also meet new challenges. When they receive complete training, they will implement SAP system in other places, which is not well paid. Although Schneider has noticed this result and made appropriate efforts, he still regards it as a potential challenge.
It should be said that up to now, the implementation of this project has achieved great success, which laid the foundation for the company to establish a unique strategic position in the China market and opened the distance with its competitors. Of course, there is a longer and even more difficult road ahead.