Case Study: Smithkline Beecham

Problem
A major corporate merger requires disparate systems to work together and a new MRP.

Objective:
To find an MRP that's a close fit, and to customize it to allow the varying plants to continue to function

Jump ahead to:
The Challenge
The Solution
The Conclusion
The Postscript

Executive Summary
A major corporate merger, SmithKline and Beecham create various challenges to their manufacturing systems as they come together, which requires them to go in search of a workable MRP system and a productivity development tool that can modify it to fit myriad needs.

Case Study: Smithkline Beecham

The Challenge

Improving IS technology and techniques can be one of the most powerful weapons a forward-thinking corporation has to boost its market position. Just look at the Pittsburgh- based Consumer Healthcare division of SmithKline Beecham.

To maintain their position as a world leader in the production of pharmaceuticals and consumer products, SmithKline merged with Beecham. The Consumer Healthcare division, formed after the merger, manufactures such well-known products as Tums, Sominex and AquaFresh toothpaste.

As the dust from the merger settled, however, the newly formed Consumer Healthcare division was left with ill-equipped software to support the company's goals for expansion.

Tom Powers was the IS project leader at the time of the merger. He recalls that the old systems were weighing down the company, "We had three plants in the organization. But we didn't have a coordinated MRP system to manage them. Each plant had different manufacturing, materials management, inventory control and planning systems. One was on a System/36, another was PC-based and the third was on a mainframe. The new vice president of operations felt we needed to standardize and get all three plants on a single system for inventory tracking and control, planning, purchasing and finance."

Because each of the old software packages was so antiquated, bringing all the plants under one system's umbrella wasn't an option. For instance, the MRP software at the Aiken, South Carolina plant was not even designed for SmithKline Beecham's process manufacturing needs. Linda Pilot, a systems manager at the Aiken plant, explained, "In ordinary discrete manufacturing, which would include something like manufacturing a screen door, you know you'll need two screws, a wood frame, etc. Each input remains a part of the final product. And it doesn't matter which batch the screws come from.

"But in process manufacturing you have various levels of production. At each level certain resources are input. But they may also be consumed at the next level of the manufacturing stream. So it's very important to know which batch a resource comes from. Our old software system wasn't designed for process manufacturing. So we couldn't use it to mimic what our production process looked like on the floor."

Besides integrating the different plants in the post-merger corporation, IS was faced with yet another challenge. The current system was in disarray. "At one plant, for example, there was a system for tracking lots, but at another plant it was done manually. As a result, what you had was a system that provided the needs of a few within the plant, and other systems that couldn't be shared outside the facility." They had to be cautious, however, in finding a solution. While one of their goals was to centralize common needs, the potential loomed that a centralized corporate bureaucracy would stifle efficiency and innovation.

Ron Scott, the division's Operations Systems Director, explained, "With all the mergers, we needed to provide proper information systems at our plant level and coordinate it with headquarters. We wanted to put a software product in at the plants so they could develop the applications and reports themselves to meet their daily needs. This way, they wouldn't have to send in application requests to headquarters and wait. Before, there were no real coherent information systems."

Powers agreed, "We wanted a system that would provide users the flexibility to get the information they needed. In the past they were required to get in queue with the central data programming group in Pittsburgh. Then it would take three or four months to get the application."

The Solution

Revitalized with an expanded corporate focus, the IS staff sought out an innovative manufacturing system that would optimize SmithKline Beecham's efficiency and production. They formed a software selection committee and rolled up their sleeves.

The new MRP system would have to provide the maximum number of options with respect to development methodologies, yet require few to no modifications. The committee soon recognized that no single package could accomplish all of their goals. "Any package we looked at didn't quite meet our needs," said Scott. "There was always that one piece of data that was missing off an application or report. So I decided that the main aspect of our decision would be based on what information the new system could capture. Then we could use a Fourth Generation Language tool for anything that might be lacking in a given system application. That's how I approached it."

The committee solicited proposals from several software vendors, visited them, and held demonstrations and tutorials. After considering the alternatives, PRISM^TM, developed by Newton, Massachusetts-based Marcam Corporation, bundled with the mrc-Productivity Series^TM, developed by Lombard, Illinois-based michaels, ross & cole, ltd. (mrc), came out on top. "PRISM met our functional requirements closer than anyone else," Scott said. "We were also impressed by their software design and development methodologies."

The committee opted against customizing the new PRISM package, citing cost and inefficiency as the primary reasons. Thus, crucial to successful implementation was the mrc-Productivity Series' ability to fine-tailor the new system to the way SmithKline Beecham did business. "There were certain features that I needed in our 4GL tool. Of course, it had to run on the AS/400 (iSeries) platform. I was looking for easy use. And besides reports, it would need the capability to do online inquiries against databases, and maintenance over files." Powers added, "Anywhere the current applications were required by various departments, we had to find and match the types of applications that came out of the PRISM environment. They almost never matched one hundred percent. When the fit wasn't perfect, we wanted the mrc-Productivity Series to create the custom applications we needed."

The challenge of implementing a new system for a corporation SmithKline Beecham's size would give anyone a nervous stomach and sleepless nights. Luckily for the Tums and Sominex producer, the PRISM project team's intensive planning and patience paid off -- eliminating their having to take a dose of their own medicine.

From March, 1990 to October, 1991 the PRISM project team received PRISM and mrc-Productivity Series training, created the general system design document, the functional design document and took part in conference room testing. The strategy was to take their time in the beginning to make sure the implementation was done right, "Wanting to be successful with the system, we looked at ways to make sure we started off on the right foot," recalled Pilot. "We sat down in a systematic approach, looked at each functional area within the plants and flowed out our current environment," Powers elaborated. "We asked questions like, 'what are we doing today? What information is being passed back and forth to various departments? Is this standard information or does it require special reports?' We put together a data flow diagram and created what we call a pilot to see where we could mesh it to PRISM's functionality and features.

"We timed the implementation at each facility as much as possible to our inventory schedule. So when they were conducting the annual physical inventory to close out one system, we were loading that same day to start up the new one.

"The job was enormous. Because the data was so different between the old and new systems, we literally started with blank sheets. We had approximately 1,500 resources that we had to gather current information on, code input sheets, and then load and verify. It was a very busy, hectic period."

In Conclusion

The PRISM project team's hard work and dedication paid off. With the new integrated system in place, they were poised to achieve their final goal of maximizing production and efficiency. The implementation team established a system where reports and applications relevant to more than one plant would be developed at corporate headquarters. Any ad hoc applications or reports suited only for a particular plant would be developed there, in-house.

Debbie Jurich, a programmer/analyst at headquarters, is responsible for developing custom mrc-Productivity Series applications for corporate-wide use. Right after installation she was inundated with requests, such as one for a vendor rating application system for the purchasing department.

Jurich designed this application to look at transactions making their way through the vendor delivery process. Through PRISM, she set up files to identify the transactions, and determine what's being done to the product resource at any particular stage of the manufacturing process. She explained, "We wanted to be able to rate vendors based on a number of criterion. Those included the quality of the vendors' performance, the manner in which they shipped raw materials and packaging components, and their accuracy based on how well they delivered orders to our specifications. We take all this information to get a total vendor rating." Jurich believes this mrc-Productivity Series application has been crucial to SmithKline Beecham's quality control program, "We hold an annual vendor seminar where we meet with suppliers and vendors and talk about problems. We use the application as a way to put vendors on notice or to let them know whether or not we're pleased with them. It's a really big deal to our purchasing department."

The PostScript

Other mrc-Productivity Series applications Jurich developed centrally to benefit all of the plants include:

• A weekly production report analyzing the progress of all goods being produced at a particular plant;
• A master production plan application that looks at a particular product being made, estimates the target date of completion, and analyzes what resources were produced in a standard batch; and
• A perpetual inventory report which looks at all of the activity that takes place during a given period of time for each item being produced.

Further, Scott has designed an online application, used to create a PRISM item Resource Master, that tracks production requirements. It allows all departments to simultaneously enter item information into the system rather than having to wait their turn for a hard copy form to reach them.

In addition to satisfying headquarters' needs, a crucial test for the new system was whether it provided sufficient flexibility at the plant level. "We've designated a couple of key people in each plant location to create mrc-Productivity Series applications," Powers said. "So, when users need to provide plant managers specific information once or twice a year, they can generate ad hoc reports and applications without having to put in IS requests to headquarters."

Pilot is responsible for new application development at the South Carolina plant, "Being involved in the day to day operations, oftentimes I'll hear them say they're having a problem with this, or it would be nice to have an application that does that. Then I see if there's something already on the system I can modify to meet their need. If not, I can develop it using the mrc-Productivity Series."

For example, to help the plant's cost accounting department plan the upcoming year's budget, Pilot developed an application enabling them to predict actual production costs against their production models. "Our PRISM budget entity can't generate a planning run against the cost models we develop. I created a mrc-Productivity Series application that allows them to input the projected production volume and compare it to the model. Then the application does a whole complicated series of conversions and calculations. It explodes the figures out to the finest detail to show managers what their raw materials costs will be, their packaging components and their labor requirements to operate the plant in the next year. It gives them a feel for the increase or decrease in the volume from one year to the next so they have the information they need to decide how many people they'll need, and how much material to order."

The budget forecasting application alone saves the cost accounting department about 60 hours of time compared to their PC-based system. Scott is convinced the new package has greatly reduced development time and costs, "There's no doubt that the package has already paid for itself."

Pilot feels the new MRP/4GL system has been instrumental in helping the IS department do its part to fulfill SmithKline Beecham's expanded corporate vision, "It's kind of hard to assess the benefits of the package because I can't picture being without it. If we weren't able to do the kind of creative things with PRISM and the mrc-Productivity Series that we do now, we'd have a reversion to duplicated efforts as people go back to their own methods. The new system is only as limited as your mind."