Life sciences manufacturer advances ERP implementation effectiveness with clear ownership of project requirements

Overview

A client began a re-implementation project of their ERP systems to remediate their end-of-quarter “hockey stick.”  More than 90% of their sales orders came in during the last week of the quarter, and the ERP was not configured to sufficiently handle the volume. Issues with order allocation and available-to-commit hindered the system's reliability. Also, the current pricing strategy based on customer-specific price lists needed to be more flexible to avoid the quarter-end “fire sale.”

Client Description

Life science manufacturer selling equipment and reagents to universities, research institutions, and corporate lab facilities. Their customer base belongs to procurement collaboration groups and has corporate procurement organizations whose goal is securing the lowest pricing.

Problem

The "hockey stick" problem was attributable to the company's pricing, managed through pre-negotiated customer price lists that already incorporated volume discounts and other pricing incentives. The custom price lists were difficult to manage, and the desire to implement a more flexible pricing model was a primary goal for their initial ERP project.

Before Vindasius, when it was time for the steering committee to sign off on the new pricing alternatives, no decision was made because there was no “owner.” This indecision continued for three months, stalling the project and delaying the initial go-live—causing a 20% overrun of the initial budget.

No decision on the new pricing model was ever made, so the team reconfigured the implementation scope to accommodate the current, manually intensive, customer-specific pricing structure, resulting in significantly less transformation than anticipated.

Solution

It was clear that ownership of the requirement would have allowed the project team to have a decision-maker before any work was done or time was wasted. Waiting for the decision maker to be identified was a costly mistake.

Vindasius helped the project team align on changing the pricing model and discontinuing quarter-end “fire sales” to truly change customer behavior. None of the executives “owned” this corporate objective, which would likely cause the company to miss their publicly stated revenue goals for a few quarters in order to get this customer behavior to change.

Outcome

This case study is an expensive example of the importance of executive alignment and ownership of all project requirements. All project requirements must be aligned at the executive level to avoid costly delays, wasted resources, and missed transformation objectives.