Key Problem
In
the Bombardier study, Bombardier Aerospace is the third largest designer and
manufacturing aircraft company in the world. Bombardier Aerospace reported to
make $8.2 billion in revenues which is 55% of Bombardier Limited’s total
revenue in 2007. Bombardier is using a
legacy system since the early 1990s known as the Bombardier Manufacturing
Systems (BMS). BMS is based on a MACPAC
platform, which is starting to show its age as an insufficient solution. Bombardier
has made several acquisitions throughout the years and the MACPAC platform is
making it difficult for the future development of the company. The Vice President of Operations and Project
Sponsor is aware of the aging MACPAC platform and has a vision to make an
efficient upgrade so Bombardier can be a ‘One Company’ philosophy. The key
problem is Bombardier Aerospace needs to significantly improve their low
visibility of inventory and lack of integration within the company.
ERP
I - Implementation
Bombardier Aerospace tried to make a
significant technological improvement with an Enterprise Resource Planning
(ERP) system. An ERP application provides one platform for inventory, purchasing,
procurement, customer service and finance. The first attempt for the implementation
of ERP system project was not successful.
The ERP project was discontinued in 2000 and spent a substantial amount
of $130 million in sunk costs. There were several reasons why the ERP implementation
was a failure: Inappropriate businesses process, outdated company vision, a
weak sponsorship and insufficient involvement of employees. In my opinion,
Bombardier didn’t have best practices for the ERP implementation as there was
no structure, loyalty, organization and leadership for the IT project. The Bombardier
Aerospace ERP best practices should have been developing the inventory
management, integration, formal employee training, price consistency and a
master supplier listing.
ERP
II -Implementation
As you may know, the second ERP
implementation was started in 2001 by a group of senior managers from
Bombardier Aerospace’s Irish facilities. The senior managers developed the
Bombardier Manufacturing Information System (BMIS). BMIS was a motivated
realistic proposed plan to achieve project goals. The BMIS project was to have
a wider ERP strategy and focus on the processes that support manufacturing, inventory,
procurement, finance and engineer data. The main reason the ERP implementation
failed the first time was not having a detailed management planning solution. Also,
one of the BMIS objectives was to reduce the headcount for clerical roles since
the processes are automated and not input manually. The ERP system would
eliminate paper as most of the material would be automated. Employees could focus on more analytical tasks
rather than administrative tasks. The SAP enterprise system was chosen as the
ERP system for Bombardier Aerospace. There was value for deciding to use the
Mirabel plant as it is manufacturing plane site. The CRJ700 model plane is
manufactured at this location and the jet plane is Bombardier Aerospace’s
potential growth in the future. The one
site implementation approach is a more conservative approach which is needed
for a large scale ERP implementation. I
agree that big bang theory is not the best approach and would be more
challenging for the company. I commend that way the implementation was
structured using the Mirabel site as pilot with integrating testing, training
and Go-Live. Once SAP implementation was fully completed, the cost savings was extremely
favorable within the year. There was a significant reduction in $1.2 billion in
inventories within the first year of Go-Live. Employees’ attitudes changed for
the better as the ERP system started to make their job easier and more
efficient. In my opinion, the second ERP was successful but there is room for improvement
for the third ERP implementation.
ERP
III – Implementation
After reviewing a memo from an
executive, I will identify the ERP SAP best practices and bring the necessary
world class standard for the implementation project. The second ERP
implementation was a success but I want to ensure the third implementation will
be flawless. There are several action steps during the second ERP implementation
that I would continue to support for the third ERP implementation: BMIS,
One-Company (Integration) and less Consultants.
In my
opinion, the BMIS functional strategy is one of your strongest assets to the
development of the ERP implementation. I would continue to utilize the BMIS
philosophy as it provides the right focus on the Bombardier’s functional
processes. BMIS focuses on the functional processes, such as: inventory
management, manufacturing, procurement and finance. BMIS shows a detailed
analysis and structure to implement thoroughly and effectively. I do support
the VP of Operations and Project Sponsor’s One-Company approach. It is
necessary to have all checks under the Bombardier name and have an integrated
system. I am in favor of less third party consultants and I do like the ratio
of employees to consultant (1:10). Employees can get frustrated with too many consultants
explaining the processes and can be challenged with a new ERP implementation. There
will be a better working environment with fewer consultants.
I would recommend 4 areas to make improvements
so your team can learn from the mistakes from the second implementation: training,
eliminating legacy systems, processing purchase orders and Finance. There were several
opportunities to improve your training program. The third-party consultants didn’t
provide the proper training material and the staff expressed dissatisfaction
with the training program. At this point, I wouldn’t recommend training from a
third-party consultant as the Mirabel plant is your training material. The BMIS
team and the Mirabel plant users can provide a formal cross training program
during the new ERP implementation. The Mirabel employees can provide feedback
to the new users that the ERP system has saved them a significant amount of
time. Your employees will learn from
each other, and it would boost morale.
There
were users after the Go-Live from the Mirabel plant that were using the current
legacy systems. I would recommend discontinuing the ERP user from using the current
legacy systems. In my opinion, the employee isn’t adding any value and this is
not an effective way of learning a new system. The VP of Operations and Project
Sponsor’s should send out an email to the managers and not give permission for
users to use the legacy systems. I would encourage managers to send out a
problem list to the BMIS project team so they can problem solve for any new
issues in SAP.
There
were challenges with processing purchase orders during the Mirabel
implementation. I encourage revamping the purchase order process as vendors are
either receiving too many faxes or not receiving purchases orders. SAP was automatically sending fax purchase
orders to vendors, causing problems within the MRP engine. Suppliers were receiving
too many faxes every time the MRP engine was being updated. At this point, ERP
SAP has the capabilities to email purchase orders rather than faxing a PO to
your vendor. It was unacceptable that the BMIS team was printing, stapling and
mailing purchase orders to vendors for three weeks. Also, the BMIS team should
create an IT audit to ensure vendors are receiving POs in a timely manner.
Key
Performance Indicators (KPIs)
In
my opinion, Key Performance Indicators (KPIs) are an excellent way to monitor
your goals and improve your business. Once the third implementation of ERP SAP
is installed, I would recommend utilizing KPIs on a monthly basis. ERP systems
can provide a plethora of KPIs and you can choose what KPIs are most important
to your department. There is a
significant amount of opportunity to improve your trade working capital
(inventory + trade debtors – trade creditors). For example, Bombardier
Aerospace has done an outstanding job with a one-time reduction of $219 million
reduction in inventory costs. The reduction in inventory costs can lead to
other financial opportunities for your company. Overall, KPIs give excellent
visibility for achieving goals within your organization.
Conclusion
SAP is creating an effective and
efficient solution for your inventory and integration problems. An ERP implementation
can be successful with the proper vision and dedication to the system.
Management needs to be confident in their product and encourages users there is
a benefit to their daily workload. Bombardier Aerospace must emphasize that ERP
systems give you an upgrade and an opportunity to grow the business. In my
opinion, it’s time to eliminate the outdated legacy systems and look to the ERP
system as a resource of future growth. ERP
systems provide the following services better than legacy systems in the
following: organization, inventory visibility, purchasing, customer service,
finance, employee morale and function control. The Mirabel ERP implementation
contributed to a $1.2 billion cost saving reduction which is impeccable! This
will give Bombardier additional cash flow, improve Bombardier’s balance sheet
and make potential company acquisitions. I would eliminate the legacy systems completely
and replace them with the ERP SAP.
The
ERP SAP system would
be just as efficient as the design of your aircrafts. The CRJ700 jet plane
needs an engine to fly with power and speed and the wings to bring control effectively
to the aircraft. The ERP SAP system will bring a fast and powerful one platform
solution and provide an effective solution with integration, inventory,
purchasing, sales and finance.
