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As ERP system implementation goes live, ERP benefits start accruing

In this ERP case study of Peet's Coffee's ERP system implementation, the CIO decides between a big bang or phased go-live and begins accruing ERP benefits.

Just last month, Peet's Coffee & Tea Inc. leapt into the future when it threw the switch on its ERP system implementation, which now handles orders from its 195 retail stores, 8,300 grocery stores and other partners helping with the company's expansion.

As described in part one of our ERP case study, Peet's 20-month process to map business processes, choose a vendor platform and integration partner and find ways around customizing Microsoft Dynamics AX had culminated in a critical decision. To avoid business disruption as much as possible, should CIO Tom Cullen go for a quasi-big bang approach, or a phased approach? Both had pros and cons.

"Originally, I was going to separate out and then do financials first, then fulfillment and then manufacturing," Cullen said. "But I realized that doing that many separate releases resulted in a lot of extra customization, which was throwaway work to build temporary bridges to the new ERP system."

Thus, he opted for the quasi-big bang approach. IT simultaneously retired the financials, order management, inventory management, procurement and fulfillment systems and made them ERP modules within Microsoft Dynamics AX. (Still to come is manufacturing, which will launch later; it is the most complex of the modules and relies on the other modules' capabilities.)

Preparing for the big moment in the ERP system implementation

The go-live event followed months of preparation, from system design to training, with business documentation authored not by the vendor or consultants but by business colleagues.

One objective in the design phase was to avoid customization. To accomplish that, partner Junction Solutions used its experience in past ERP system implementations to install an out-of-the-box vertical layer on top of Microsoft Dynamics AX that funnels data from Peet's different sales channel front ends into a consistent order and fulfillment process. That lets the ERP system handle just one transactional workflow.

"The best way to approach a Microsoft Dynamics implementation is to keep the level of customization to a minimum," said Kirk Sloan, director of consulting services at Junction Solutions LLC in Englewood, Colo. "That's the key to any ERP implementation because more customization means a longer timeline, more testing, more costs and more likelihood that the project will fail."

Meanwhile, as employees get settled in using the new system, they have business-written documentation to rely on. Though Microsoft conducted several formal training sessions, Cullen had business unit leaders write their own training manuals in the language of their given department and train their employees.

"Having the senior people in accounting or order management write the training materials and conduct the training kept it relevant, but I think what really motivated them was when the release dates [for the ERP modules] got closer and they were a little scared and said 'Maybe I should go over this one more time,'" he said.

ERP benefits

Just weeks after phase one of the ERP implementation, the company has much more precise inventory levels, which help with costing everything that moves through the plant. Fulfillment for replenishing the stores and filling orders is automated and consistent. One system now handles order tracking, as the systems running the sales channels have either been integrated with Microsoft Dynamics AX or run directly on the ERP system. Financial systems have been centralized as well; before, costing information had to be gathered from several systems and reconciled manually.

Growth continued to expose the need for the new system.

Tom Cullen, CIO, Peet's Coffee & Tea Inc.

With business benefits starting to manifest, the ROI of an ERP system is becoming clearer, but Cullen will be the first to tell you that it took a lot of prodding to get people fully behind the project.

"I'm not going to lie -- it's not like everyone signed up and just came on board," he said. "You can't stop the business for 20 months to do [an ERP implementation]. The business needed to continue to grow and expand in the multiple channels we operate in, but in doing so, growth continued to expose the need for the new system."

With the all-important holiday season still a distance away, Cullen is gearing up for phase two: manufacturing. He held off on this phase because of the complexity of the company's manufacturing operations and the need to 'settle' the business on the new financial, order/inventory management and fulfillment systems before 'layering' on an additional module like manufacturing, which relies on all of those functions to work properly. Stay tuned for the results of the final rollout this fall.

Let us know what you think about the story; email:Christina Torode, Senior News Writer

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