Process harmonisation as part of a SAP (new) launch project – or, how much change can an organisation bear?

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– written by Christian Peter, itelligence AG

In my last entry I described the essential principles of process harmonisation. Today I’d like to look at the issue more closely as it relates to the launch of new SAP systems. In starting out, I am assuming that a decision to introduce a uniform, standardised ERP system has already been made. The question that needs answering now is: Are people willing to standardise the various processes and process sequences for the individual sites and companies and in doing so confront the organisational changes that are a part of any such standardisation? How much change can an organisation take anyway? And how quickly can these changes be implemented without having negative consequences on the quality of the products and services and their capacity to be delivered and provided and thus without risking customer satisfaction?

In looking at these questions, it is especially important to take technical feasibility into account. Not all processes take place in the SAP system. There are interfaces to other systems and peripheral devices such as reporting systems, production planning tools, barcode scanners, warehouse management systems, internet platforms in addition to many more. It’s also essential to take infrastructure such as networks, particularly with regard to bandwidth and security, as well as workstations for end users and the connection and integration of printing stations into consideration.

A Consistent, Standard Organisational Structure

It is easy to recognise that there is plenty of preliminary work to be carried out before the actual work of process harmonisation with its detailed processes and sequences can begin. As a general rule, I begin by creating a conceptual representation of the company’s organisational structure in SAP. There are different approaches to doing this. The most well-established approach is to structure all legal entities (companies) globally in a single client (the SAP term for a single self-contained data entity or unit within an SAP system) as accounting areas. In this way, intercompany relationships can be shown without interfaces, and a uniform material master, customer master and supplier master can be accessed. Subsequent to this, the structure of sites, sales, distribution and purchasing entities can be added. In doing so, I make sure that a uniform scheme valid for all entities and companies is used. In addition, at itelligence, we define a standardised logic for naming and numbering the organisation units and entities.

Building on this, it is then possible to create a standardised controlling structure in order to subsequently be able to evaluate planning, forecasting and results across the entire company structure. A global account plan should be created. In individual countries, the structure of cost centres as well as the account plan itself can be individually adapted, but it is essential that mapping is carried out for the predetermined global structures.

Master Data

After the organisational structures have been taken care of, I turn next to the master data. At this point it is indispensable that a clearing-up, revision and standardisation process take place first. From this point on, only standardised material numbers may exist in order to be able to represent the intercompany relationships in the processes. The same is valid for customer master data. In order to be able to take advantage of synergies in purchasing, the same must also be true for the supplier master.

For the processes, the respective areas of operation need to be considered separately as they are harmonised. For example, companies who place a strong emphasis on high, globally-uniform quality standards would strive for strong harmonisation of quality attributes. It’s a different story with logistical processes. For logistics, I tend to differentiate regionally: deliveries in continental European markets like Germany, with their relatively short distances, need to be considered differently to deliveries in regions like Scandinavia or the United States, where deliveries have to be planned and scheduled differently on account of the enormous distances. In inventory and warehouse management, there can even be differences specific to individual sites, as we often find differing warehousing structures in places, and the infrastructure itself (bar coding, RFID system, high bay warehousing etc.) is often heterogeneous and standardisation is only possible with additional large investments.

It’s clear that harmonisation doesn’t mean that we make everything the same; instead, the harmonisation of processes as part of SAP projects requires a step by step approach, good preparation and an accurate examination of the options.

If you have questions relating to this issue, you can reach me via email at christian.peter@itelligence.de.

In the next blog entry, I will be describing process harmonisation in the context of system consolidation.

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