What is a Cutover?
Managing the process of transitioning from an existing system to a new one is not only a technical deployment but a business readiness exercise. Management and acceptance of change is critical, as is the leadership and accountability by senior management throughout the ERP program. Compromises between business needs and systems readiness will need to be made, as will the planning and monitoring of ramp down, shut down and ramp up; management of these compromises is tantamount to success.
Cutover usually takes place when the solution design and build is complete, and the business is ready to transition to the new ways of working. The timing of a cutover is key, avoiding critical sales periods where possible, and ensuring product supply is maintained is essential.
The technical cutover happens many weeks in advance of any shutdown, once the configuration has been completed and the development team confirms the system is tried and tested – it’s the actual technical I.T. piece of which there are many elements. For example, if it’s an ERP system, there are peripherals like printers and radiofrequency to consider; there are interfaces into quality systems and dispensing systems for manufacturing and any combination of these are going to be needed to proceed to deployment.
The business cutover is done once everything is in place technically. The business literally stops what they are doing and cuts off the old system. The business cutover then takes place between shut down and ramp up, preparing the business to begin processes and transactions on the new system.
“Before anything else, preparation is the key to success.”Alexander Graham Bell
Poor planning will directly impact production and, ultimately, the customer – if you don’t get it right, it’s a mess. A recent study showed that for a group of companies that underwent an ERP implementation:
The Important Details
It’s all in the Planning …
Planning is critical and should start at least 6-9 months in advance of a predicted cutover to ensure that key dependencies are not missed, business continuity is maintained and down-time and disruption are limited. An ideal date can be determined, taking into consideration demand across the supply chain, stock holding, financial needs, year end and peak seasons coming up such as the flu season.
Planning also needs to consider the softer side of resource availability like local holidays and festivals. Engaging with suppliers and logistics providers is equally important. It could be said that no time is a good time but the long-term benefits need to be realised. Any impact can be well managed if planned for.
Managing Ramp Down
Typically, a site would work at an increased manufacturing rate to deliver a stock build prior to the transition to the new system. Approximately 2 weeks before the actual business cutover; a controlled ramp down is needed, where operations slow to a point where a line or area stops completely. For example, in the case of manufacturing tablets, the process followed is granulation, compression and then bulk, which then goes into the finished product packaging, ready for dispatch.
The process should be halted at the end of any one of these completed stages, so that the end product of that discrete stage can be reconciled and placed into inventory then used as part of the ramp up as a good, initial first transaction. For example, a finished bulk can be used to input into packaging production when ramp up begins, or it could be packaged ready for shipping before shutdown.
Dispatch of finished products to customers before shutdown is also key to ensuring supply is not interrupted and it reduces inventory management at cutover, financial and physical reconciliation, and also the potential for additional movements and re-labelling.
Destruction and write-off of obsolete and expired stock must also be completed before shutdown. This is something that should be addressed as part of inventory accuracy, but it also avoids deploying unnecessary resources to relabel and count stock that will be thrown out.
Inventory accuracy is critical to a smooth cutover. As such, a cutover is a good time to clean inventories, write-off rubbish and remove phantom stock caused by historic system issues. From go-live forwards, with a clean system, good inventory practices and the use of mobile-data devices will allow operators to track movements at point of use and therefore increase inventory accuracy going forwards.
When Shutdown is Impossible
In certain types of manufacturing, there may be situations where it is impossible to have a period of complete shutdown. For example, manufacturing that involves chemical reactions taking place on a large scale or seeds that are growing.
The business may have to continue with a form of manufacturing, but off-system, keeping it at the lowest level possible with clear staffing responsibilities identified so that the task doesn’t distract the other cutover deliverables and the business needs.
Options include pre-picking and locating all the manufacturing inventory needed in the relevant area to avoid any additional movements, issue the stock off, and predict output quantity so that the financials balance. After production, adjust any differences in quantities.
The All-Important Cutover Plan
The Cutover Plan describes all the tasks that must be performed before the new system goes live; it should be split into different business areas, covering all activities related to planning, preparation and execution. It provides information on how to ramp down operations and shutdown existing systems, lock it down technically and prepare the new system to start-up operations and release for the ramp up phase. Typically, it will cover:
This includes not only the production environment, but also peripheral infrastructure such as printers, mobile devices, labelling solutions, weighing and dispensing systems and quality systems as well as interfaces to partners such as vendors or warehouse facilities.
This involves implementation of transactional data, such as re-keying purchase, sales or production orders.
The plan needs to ensure that staff have clearly defined roles and the relevant security access to their job.
Ramping Up and Going Live
There is an inevitable desire to get going as soon as possible but going too fast can lead to big problems. Keeping the first few days simple is the best approach; production-ready stock on site and starting with a simple, repetitive process is a good way to begin. Once that is established without any issues, you can begin to overlay more complex requirements; larger orders requiring complex dispensing is better scheduled for day three than day one.
If required products are not on site in advance, schedule the relevant production for weeks two or three. Allow more time for every process in the initial weeks to allow employees to get used to new ways or working, intricacies of the system and the final realisation of what they said they wanted to do and what that means when the operation is running.
There’s the human element too – it will become evident during this phase that it is no longer appropriate for someone to carry out a particular role in the same way, the system and new ways of working may change that.
What it cannot change, however, is the physical communication between individuals and teams and communications gaps may become evident during the ramp up; the handovers at the start and end of shifts, the flagging of supplier issues, those subtle elements that can’t be stored on the system.
These sessions can also be used to communicate changes in ways of working, what is going well, what needs attention. They should not only concentrate on the negative but also the positive and the benefits. Teams can become demoralised very quickly if all they are encouraged to report is the issues.
In the scenario where teams cannot be on-site, virtual meeting rooms, video cameras, photos, and screen cams all need to be utilised – people often need to see the issue so bringing them into the environment virtually will enable them to trouble shoot more effectively and to provide support to the end-users
Developing a ramp up plan and identifying the areas and processes that need to ramp up first is key to the deployment of the new system.
Potential bottlenecks need to be looked out for, for example, warehouses typically don’t get a slow ramp up, they need to receive product, supply production lines and ship products as well as make material movements all at the same time. Quality control inspections take time too, so inspected material needs be on site and released ready for production supply.
If you don’t have a product on site in advance, you shouldn’t be relying on it and production should be pushed to week two or three of the ramp up to ensure that the ramp up plan is not impacted.
All outputs such as purchase orders, packing lists, invoices and labels need to be checked to ensure compliance and that they meet market and customer requirements – mistakes here could cause delays to exports and getting the product to the customer.
Even though the system has been developed and tested across the environments, the final build into production and the data that is loaded will always have differences or even behaviours in the live environment than in the QAS landscape, therefore managing the ramp up is critical.
It is often week two or three, when volume and more complex business scenarios are being executed that will highlight either system or business process issues. A clear assessment of the issue and allowing time to analyse it correctly are the keys to success. With the right planning in place, there is no reason the cutover won’t be successful.
Poor planning will directly impact production and, ultimately, the customer – if you don’t get it right, it’s a mess. Support the areas where the issues are and don’t lose sight that the success of the business cutover isn’t in any one area alone.