Introduction
Geneva Pharmaceuticals Inc., a subsidiary of the 'Novartis' life sciences company, is one of the leading generic drug manufacturers in the world. Geneva produces over 200 products in 500 package sizes resulting in a huge number of operating procedures. In the past, each of Geneva's business functions were carried out using separate systems many of which were incompatible with one another. By 1996 the company had begun to search for a solution in order to integrate each process, ultimately increasing accuracy, value and ease of use while reducing maintenance costs. Geneva's requirements were best covered by an Enterprise Resource Planning (ERP) system. It was decided that the R/3 system from SAP would be the most effective. Application of R/3 was designed in three phases, the first of which began by 1997.
Geneva Pharmaceuticals Inc., a subsidiary of the 'Novartis' life sciences company, is one of the leading generic drug manufacturers in the world. Geneva produces over 200 products in 500 package sizes resulting in a huge number of operating procedures. In the past, each of Geneva's business functions were carried out using separate systems many of which were incompatible with one another. By 1996 the company had begun to search for a solution in order to integrate each process, ultimately increasing accuracy, value and ease of use while reducing maintenance costs. Geneva's requirements were best covered by an Enterprise Resource Planning (ERP) system. It was decided that the R/3 system from SAP would be the most effective. Application of R/3 was designed in three phases, the first of which began by 1997.
Phase 1
The execution of phase 1 of R/3 began on November 1st 1997. The aim of the process was to incorporate all of Geneva’s supply functions onto the SAP system. Previously these functions had been carried out by individual systems and involved a high input of manual labour.
The purpose of phase 1 was to transfer the functions already computerised by the Macpac system onto R/3 and encompass all supply-side data into a specific, synchronized database. The implementation was also expected to reduce manufacturing costs and the expenses involved in cataloguing stock. ASAP, a methodology of accelerated SAP application was undertaken. The execution of R/3 required around ten information systems staff, ten full-time and ten part-time users all of whom had to be removed from their usual positions within Geneva.
Within four months it had become clear that installation had not progressed as planned, even although substantial investments in hardware, software and consultants had been made. The ASAP ideology, although rapid in installation, was not adept enough to take into account the more delicate programming issues. Supervision of the project was overtaken by Randy Weldon who was employed as Geneva's new CIO in February 1998. Weldon intended to make up for lost time and from his his previous R/3 management experience, understood the requirement of a strong project management team.
A team of R/3 experts were brought in to aid the progression of the project and a new management system was adopted. Although Weldon did not approve of ASAP, to take on a new approach at this stage would only have held the project back further. By February 1999, phase 1 was "up and running". The only remaining problem was, as of yet, it would not be compatible with phase 2.
The execution of phase 1 of R/3 began on November 1st 1997. The aim of the process was to incorporate all of Geneva’s supply functions onto the SAP system. Previously these functions had been carried out by individual systems and involved a high input of manual labour.
The purpose of phase 1 was to transfer the functions already computerised by the Macpac system onto R/3 and encompass all supply-side data into a specific, synchronized database. The implementation was also expected to reduce manufacturing costs and the expenses involved in cataloguing stock. ASAP, a methodology of accelerated SAP application was undertaken. The execution of R/3 required around ten information systems staff, ten full-time and ten part-time users all of whom had to be removed from their usual positions within Geneva.
Within four months it had become clear that installation had not progressed as planned, even although substantial investments in hardware, software and consultants had been made. The ASAP ideology, although rapid in installation, was not adept enough to take into account the more delicate programming issues. Supervision of the project was overtaken by Randy Weldon who was employed as Geneva's new CIO in February 1998. Weldon intended to make up for lost time and from his his previous R/3 management experience, understood the requirement of a strong project management team.
A team of R/3 experts were brought in to aid the progression of the project and a new management system was adopted. Although Weldon did not approve of ASAP, to take on a new approach at this stage would only have held the project back further. By February 1999, phase 1 was "up and running". The only remaining problem was, as of yet, it would not be compatible with phase 2.
Phase 2
Phase 2 was primarily concerned within improving "demand-side" functions as existing applications were unable to keep up with the transformations that the company was going through. Recognising that "Phase I was somewhat of a disaster" they put steps in place to ensure Phase 2 would not be a repeat. The system was designed “Top Down” so that it was refined into smaller modules. The design was mapped out on post it notes, open to critique and modification, and evolved into a better model that met its objective of providing more efficient technology. The process also identified existing problems which meant that process changes could be made to coincide and enhance effects of system changes.Many major company-wide projects fail due to staff being unaware of their own responsibilities and the complexities of a new system. However, Geneva managed the change very well; key measures where initiated to ensure staff was going to embrace the new systems, these included publicising the change, provided support to answer any queries and training - provided in advance. Trust in the system was important and influential members were selected to be “Super Users” which prevented any problems of staff revolting against the transformation. Resistance to change was handled by altering training approach, moving away from teaching staff to change their jobs to how to do their jobs on the R/3 system.
Phase 2 was primarily concerned within improving "demand-side" functions as existing applications were unable to keep up with the transformations that the company was going through. Recognising that "Phase I was somewhat of a disaster" they put steps in place to ensure Phase 2 would not be a repeat. The system was designed “Top Down” so that it was refined into smaller modules. The design was mapped out on post it notes, open to critique and modification, and evolved into a better model that met its objective of providing more efficient technology. The process also identified existing problems which meant that process changes could be made to coincide and enhance effects of system changes.Many major company-wide projects fail due to staff being unaware of their own responsibilities and the complexities of a new system. However, Geneva managed the change very well; key measures where initiated to ensure staff was going to embrace the new systems, these included publicising the change, provided support to answer any queries and training - provided in advance. Trust in the system was important and influential members were selected to be “Super Users” which prevented any problems of staff revolting against the transformation. Resistance to change was handled by altering training approach, moving away from teaching staff to change their jobs to how to do their jobs on the R/3 system.
Phase 3
Phase 3's main requirement was to deal with sales and production planning problems that the existing system had. Main areas that were tackled included data Entry, time taken to make up production schedules, ability to cope with orders placed less than a month in advance and dealing with both expected and unexpected orders. This ultimately aimed to satisfy main performance indicators such as customer service and reducing costs.
A 'Just in Time' approach was adopted reducing holding costs of raw materials and finished goods. Customer service improvements were managed by developing new software, ATP (Availability To Promise) had the "intelligence" to reduce time needed to generate an "optimal" production plan by 80%, giving a better estimate of delivery date and prevented customer dissatisfaction when orders were not fulfilled. ATP was developed by drawing data from many databases to ascertain volume available, volume required, and earliest possible fulfilment date considering many different influencing factors.
We can learn from this that in order to effectively make judgements it is important to consider all factors that may influence or have an effect on the outcome. Also, in this case production plan time was reduced and we can see that in order to be efficient, the planning process must be quick reliable and hence relevant.
Phase 3's main requirement was to deal with sales and production planning problems that the existing system had. Main areas that were tackled included data Entry, time taken to make up production schedules, ability to cope with orders placed less than a month in advance and dealing with both expected and unexpected orders. This ultimately aimed to satisfy main performance indicators such as customer service and reducing costs.
A 'Just in Time' approach was adopted reducing holding costs of raw materials and finished goods. Customer service improvements were managed by developing new software, ATP (Availability To Promise) had the "intelligence" to reduce time needed to generate an "optimal" production plan by 80%, giving a better estimate of delivery date and prevented customer dissatisfaction when orders were not fulfilled. ATP was developed by drawing data from many databases to ascertain volume available, volume required, and earliest possible fulfilment date considering many different influencing factors.
We can learn from this that in order to effectively make judgements it is important to consider all factors that may influence or have an effect on the outcome. Also, in this case production plan time was reduced and we can see that in order to be efficient, the planning process must be quick reliable and hence relevant.
Lessons
From the Geneva process of R/3 implementation there are a number of lessons to be learnt. Below, the most important points are highlighted:
From the Geneva process of R/3 implementation there are a number of lessons to be learnt. Below, the most important points are highlighted:
- A solid design reflecting system requirements is important. The more resources spent at this stage may reduce costs further into development.
- The design process should highlight existing problems within an organisation. Parallel improvements with policy changes will ultimately help the organisations efficiency beyond that of the system capability.
- Manage change effectively to avoid resistance.
- Establish predefined KPIs to test the system’s effectiveness.
Conclusion
The implementation of the R/3 SAP system by Geneva Pharmaceuticals Inc., although highly effective still indicated an explicit requirement for in-depth planning and maintenance of resources. Through the use of such management processes Geneva successfully improved the main business functions by incorporating a suitable, efficient ERP system.
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