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bt2 – Business Transformation Project

BCG Regional Meeting - bt2 Update. bt2 – Business Transformation Project. April 15, 2008. Vision BCG in 1 of 2 New Homes in the USA. We Cannot Reach our Vision without Transformation. Barriers to Achieving the BCG Vision. Current State BCG in 1 of 5 New Homes in the USA.

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bt2 – Business Transformation Project

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  1. BCG Regional Meeting - bt2 Update bt2 – Business Transformation Project April 15, 2008

  2. Vision BCG in 1 of 2 New Homes in the USA We Cannot Reach our Vision without Transformation Barriers to Achieving the BCG Vision Current StateBCG in1 of 5 New Homes in the USA Enablers to Achieving the BCG Vision High Complexity Simplification of processes

  3. Vision BCG in 1 of 2 New Homes in the USA We Cannot Reach our Vision without Transformation Barriers to Achieving the BCG Vision Current StateBCG in1 of 5 New Homes in the USA Enablers to Achieving the BCG Vision Manufacturing Inflexibility Any Brand in Any Plant

  4. Vision BCG in 1 of 2 New Homes in the USA We Cannot Reach our Vision without Transformation Barriers to Achieving the BCG Vision Current StateBCG in1 of 5 New Homes in the USA Enablers to Achieving the BCG Vision Lack of Attribute Model Attribute-Focused Model

  5. Vision BCG in 1 of 2 New Homes in the USA We Cannot Reach our Vision without Transformation Barriers to Achieving the BCG Vision Current StateBCG in1 of 5 New Homes in the USA Enablers to Achieving the BCG Vision Combined vs. Consolidated BCG as One Company

  6. Vision BCG in 1 of 2 New Homes in the USA We Cannot Reach our Vision without Transformation Barriers to Achieving the BCG Vision Current StateBCG in1 of 5 New Homes in the USA Enablers to Achieving the BCG Vision Manual Control Environment Automated Controls

  7. Vision BCG in 1 of 2 New Homes in the USA We Cannot Reach our Vision without Transformation Barriers to Achieving the BCG Vision Current StateBCG in1 of 5 New Homes in the USA Enablers to Achieving the BCG Vision Limited Acquisition Capability Ability to Grow – Organically and through Acquisition

  8. Vision BCG in 1 of 2 New Homes in the USA We Cannot Reach our Vision without Transformation Barriers to Achieving the BCG Vision Current StateBCG in1 of 5 New Homes in the USA Enablers to Achieving the BCG Vision “Combined” vs. “Consolidated” High Complexity BCG as One Company Simplification of processes Manual Control Environment Manufacturing Inflexibility Automated Controls Any brand in any plant Limited Acquisition Capability Lack of Attribute Model Ability to grow organic/ acquisition Attribute focused model The BCG cannot move past these hard stops without a Business Transformation

  9. The bt2 project impacts 74% of BCG operational processes Design to Release Prospect to Customer Order to Cash Procure to Pay Finance & HR Transportation/ Logistics Schedule to Install Demand to Ship Forecast to Plan Information Services

  10. MS Access JD Edwards Friedman Excel Friedman Q20E M2OE JD Edwards MS Access MS Excel Data Warehouse EZ- CAB txnotes Pre Order Management EZPrint Masco MBA RightFax Intelli-Quote AOC Friedman Istatus Friedman-Parrish Friedman JD Edwards Pro Engineer Macro Express Inventor Excel Excel UNIX Shipping Friedman Concur EPM APC – Flex Automation JD Edwards Built To Track Time & Attendance MS Access Masco-SRM Excel BTT Minitab Data Warehouse Friedman MS Access Bar Code Scanning Data Pak Data Warehouse MRP Spreadsheet Server MBIZ CAR Works Active Pay Mini MRP XES Excel Friedman At Road Williams Excel Quick Book Rform SAM Track-IT JD Edwards Friedman AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy AS/400 - Legacy FAS Global CAR Dataware House MS Access Spreadsheet Server Oracle Applications/Tech Other Office Apps Custom Developed App This transformation simplifies how we operate, reducing the number of systems in each process and function Business Systems Architecture – As-Is Business Systems architecture – To-Be Prospect to Customer Quote to Cash 20 / 20 Metreo PlanIT Fusion MapInfo MBIZ DocLink Design to Release Demand to Ship Procure to Pay AutoCAD Auto EDMS Yield Optimization Forecast to Plan Micro Main/MP2 Transportation / Logistics Schedule to Install Rfile Finance / Human Resources PeopleSoft Hyperion Legacy or Package

  11. Core Project Team bt2 Extended Team Structure • Site Sponsor • Provides leadership and bt2 sponsorship at site • Ensures visibility of bt2 • Key Stakeholder • Reviews deliverables • Bears Ultimate responsibility for benefits realization • Change Ambassador • Assists managers at sites • Solicits feedback and addresses concerns • Subject Matter Expert • Provides deep subject matter knowledge • Viewed as thought leader • Data Cleanser • Reviews and “cleanses” data from legacy systems • Checks data for accuracy • Trainer • Provides knowledge transfer to end users • May become Super User • Tester • Executes test scenarios to ensure design works • May be Trainer/Super User

  12. Go-Live Current State Future State A performance dip is normal and expected during transformation CAPTURE the Value INVEST to Create Value

  13. Contents • Cedar Hill Go Live • New Schedule • Standardized Nomenclature • Customer Deployment Strategy • Brand Differences • Prospect to Customer • Order to Cash • Schedule to Install • Wrap Up

  14. Cedar Hill Go Live

  15. Cedar Hill Update • We are on track for the go live in late May • Go live focus – Quality Doors customers and operations • Mitre Door will go live at the same time • Designer Doors & BERPs, WERPs, TERPs & VERPs for QID customers • Invoicing will move to Adrian at Go Live • We have a team dedicated to ONLY Cedar Hill • Heavy user involvement from late March on • Cedar Hill SMEs are heavily involved in our second integration test • User acceptance testing late April early May • Go live approach for PTC, OTC – very few conversions & interfaces

  16. Cedar Hill Update (cont.) • RICEW (Reports, Interfaces, Conversions, Extensions & Workflow) objects • Interfaces: Quality Cabinet to Quality Door & Fed Ex • Conversions: Customer Master, A/R & List Prices • Extensions: Order workflow, pricing attributes, auto freight calculation & sales auto task creation • Reports: • Quality Door acknowledgement, invoice (paper and EDI) & A/R Statement • Many others used to run the business • Not in scope at go live • Electronic customer self service • Quoting for volume customers • TX Notes replacement (inbound faxes & document linkage to order)

  17. Updated Schedule

  18. Release 3 Scope Change • Revised Schedule • August, 2008 - Mt Sterling Assy. • October, 2008 - Tampa Branch • Builder orders Call Center Branch processes Lot management Progress bill • January1 , 2009 - Duncanville Assy • Orlando Branch • Denver Go Live • Quoting extension OI – if available • February, 2009 - Dallas Branch • Houston Branch • Phoenix Branch • Vegas Branch

  19. Quality Cabinets: Configurator For the Quality Cabinets implementation (current architecture), discrete end items will be converted, instead of being created through the Oracle pre-configurator process • The Oracle Configurator (for doors) will be completely tested and operational in R2. • 600 configurator models - average time to build a model is approximately 2 days. • Current State – models built once for bt2, and again for BCG architecture conversion. • Proposed - Convert item data, routings, and Bills of Material. Implement discrete part numbers in bt2 until BCG architecture change. • Minimum impact on the customer as over 90% of the customer orders are electronic. • The configurator team can focus on building the BCG Models (with the new architecture), reducing significant time commitment for R3. • The Ocala plant (Merillat brand) will be implemented in February 2009 with the BCG Architecture and Oracle Configurator • Quality cabinets will go on Oracle Configurator when the new architecture is implemented for Quality cabinets.

  20. Mt Sterling (release 3) Overview • Main functionality – QID customers and plant operations • Need to finalize Gulfport approach • Can Gulfport invoice out of Oracle – Precision Prehung only Gulfport customer paying with M2OE • Reico Gulfport approach • There will be no swing customers between Mt Sterling & Duncanville go lives (4 months) • Must test main branch functionality with Mt Sterling schedule • Have Demand to Ship Team for warehouse functionality • Need to Test Linkage Between Internal Plant-Branch Orders and External Branch-Customer Orders (IR-ISO in Oracle) • Cycle counting will be invoked with goal of eliminating monthly physicals

  21. Mt Sterling Overview (cont.) • Mt Sterling RICEW Objects • Interfaces: • EDI Invoice & Decision Express • TBD: EZ Cab-Oracle AND Oracle to Frontier (populates eStatus & Data Warehouse) or Frontier-Oracle-Frontier • Conversions – Open Sales Orders, Customers, A/R & List Prices • 3 Extensions: Internal to External Orders, Auto Upload of Receipts & Pricing Attributes • Many Reports • Not in scope at go live: • EZ Cab replacement • Rebate Management • Quoting & OI

  22. Tampa Branch Release Overview • Utilize PIT team as process experts • Involvement in early integration test cycles • Catch any gaps as EARLY as possible • Help change branch processes • Provide their training expertise during branch rollouts • 1st go live for: • Lot Management • Auto generation of measure, installation, top installation & inspection tasks • Workflow with automated inventory checking • IR-ISO (current SO-SI in Frontier) • Schedule to Install + Lot Management = New SAM • Revenue Recognition at Install Complete • Delay invoicing until all builder obligations have been met

  23. Tampa Branch Release Overview (cont)

  24. Tampa Branch Release Overview (cont) • Hub will be only Inventory Organization • Hub and Spoke locations will roll into one overall P & L at Hub level • Denver will roll to one P & L with direct and cross dock orders • Hub P & L will have all inventory (hub & spoke) • Spoke locations P & L will have revenue and COGS only • Will be able to generate OTC & TTF for each market • Branches will have 2 sub inventories • One for finished goods (bonepile) and one not checked on each order • DCD • Desire to have P & L by Showroom & Production • OTC & TTF must be broken out by showroom and production • Approach will be to use a zone for Showroom & 5 for production • Dealers ordering directly from Ocala will not be coded as DCD customers but will roll into P & L • Dealers who cross dock through DCD will be coded as DCD customers

  25. Tampa Branch Release Overview (cont) • New RICEW Elements • Open sales order conversion (SO-SI to IR-ISO) • Manual conversions: open service requests, inventory and POM • OTC/TTF and other reports (definition of OTC does NOT change) • Out of scope at go live: • Quoting & OI • Wireless order entry from measure • Mobile Field Service • Installer pay (Telenav creates Installer schedule)

  26. Standardized Nomenclature

  27. Key Challenges • Define a single product specification string format for all BCG cabinet brands (Quality Doors will be fully configurable) • Make the format usable for all quoting, order entry, electronic commerce, and customer facing processes • String format is scalable for all future configured parts • Develop list price through configurator rules (post go live) • Support the ability to establish price and cost, supply information for catalog/book creation and generate quotes • Maintain rules for determining valid orderable end items • Develop consistent vocabulary (Brand, Product Line & Door Style) • Ability to accept part number and product strings orders from Reico, PlanIT, 20/20, etc. • Minimize the increase in order entry time per item

  28. Standardized Nomenclature - Examples

  29. Comparison – Old to New Nomenclatures Today: HEHA B15PT Tomorrow: HER-RO-S-HVNO-SSSS-C B15RPT

  30. Comparison – Old to New Nomenclatures Today: ROSM BBC36/39LHDS Tomorrow: SNR-RO-S-MDNO-SSSS-C BBC36/39LHD

  31. Product Specification String Format - Proposed

  32. Strategic Guidelines for Customer Deployment

  33. Strategic Guidelines for Customer Deployment • BCG will NOT force customers to change their processes and conventions at the same rate as the new processes and conventions are enabled by bt² (impact on customer must be able to be phased in over time) • After the first plant and until an entire brand is live, new product introductions will occur in both systems • After an entire brand is live, new product introductions only in Oracle and EZ Cab & M2OE will not have these new products • With a very few customer-specific exceptions, customers will be expected to adopt new processes and conventions over time so old practices and systems can be retired (example: Reico ordering system limitations will be supported on a near-term basis – BCG and Reico can work to transition to new conventions over time) • List prices do not change when bt² goes live and will become attribute based

  34. Implications of Strategic Guidelines • Double maintenance of customer-facing data over extended period • Product data and nomenclature • Pricing • Additional data conversion requirements • Design & Quote Conversion – Internal & External • Multiple legacy price lists • Customer item number cross-references • Additional temporary interfaces • From legacy order entry systems to Oracle • From EZCab & M2OE to Oracle • Increased complexity in solution design (standard Oracle and extensions) • Requirements to maintain and process legacy product nomenclature • Requirements to maintain multiple pricing methodologies and pricing history

  35. Future State and Deployment Recommendation

  36. Recommended Deployment Approach • Solution needs three “phases” of capability rollout: • Distribution Customer Care ordering functionality • Multi customer • Global Options • Internally tested prior to Customer roll out • EZCab replacement functionality • Single Customer Business to Business (B to B) Solution • Truck-based ordering • M2OE ordering functionality • Single customer B to B with more portal functionality • KAAT • ACH Payments • Etc • 1st phase of new tool needs to be available as close as possible to Mt Sterling go-live

  37. Recommended Deployment Approach • Customers will be expected to transition to new systems and conventions on the following schedule • Quality Doors customers – May 2008 when Cedar Hill goes live – Only species, color and glaze product attributes change • All QID customers – July, 2009 (6 months after Duncanville go live) • Quality Cabinets builder channel – transition will be transparent to builders • Merillat Dealer/Distributor & MCS – January, 2010 (6 months after Adrian go-live) • Modular Builders served by Merillat - January, 2010 (6 months after Adrian go-live) • Merillat builder channel – transition will be transparent to builders • New customer strategy • If new customer added before new tool is ready - EZ Cab / M2OE / Manual • If new customer added and shipping plant not on Oracle – EZ Cab / M2OE / Manual • If new customer added and first order will be after shipping plant is on Oracle – New Tool

  38. Brand Differences

  39. Brand Differences Going Forward • Quality and Woodstar terms will be the same • Allows customer to order either product line on the same order • Consolidates QID customer numbers • Commissions, Coop and Volume must take product line into account • Freight Charges –TBD • Logos on customer facing paperwork • Masco Builder Cabinet Group on acknowledgements, invoices and packing lists • No brand identity at the top of the forms – • May have brand display on each detail line • Brand and hopefully product line on product label • DCD -TBD • New customer self service module will NOT be different by brand • Goal is to have best in breed transactions for our customers • Items not mentioned remain the same as today

  40. Prospect to Customer

  41. Prospect to Customer - Accomplishments • Can not merge to one customer number for all brands • Will get to one Merillat, one Quality Cabinet and one Quality Door customer number • Main reasons why we can not get to one customer number: • Terms which are key brand differentiators • Different sales organizations • Customer Master will be converted for Mt Sterling • We will need an customer master interface • Some customers will have new numbers • We will have a conversion table from old to new number for interfaces • Commissions, Coop and Volume must take product line into account

  42. Prospect to Customer - Accomplishments • Remaining sales functionality to be developed after Cedar Hill • Assign trade lead to dealer • BCG annual sales goals • Current sales hierarchy will not change • Sales functionality rollout plan • Once concept is proven at Cedar Hill only training and rollout remains • Sales rollout can follow plant/branch or its own roll out schedule • Until quoting and OI go live, a customer set up form will exist • Quoting functional specification is complete • OI will be integrated with quoting process with what if capability • Thanks everyone for their help with Quote and OI design • Will not have wizard going forward

  43. Order to Cash

  44. Order to Cash - Accomplishments • Lot management (new POM) functional specification complete and being coded • Thanks to Allen O. and Sheryl W. for their help on the design • Will have plant to branch to jobsite as well as plant direct to jobsite order flows • QID flow will be one Oracle order per truck ID • Will use Oracle function called ship set to ensure the entire truck ships together • Allows the truck to be planned easily • Decision to recognize revenue at installer task status change from onsite to installed or installed complete • This trigger will not be automatic at go live • We are ensuring the devices Ramon uses for his project will work with Oracle Mobile Field Service • Does not change the definition of On Time Complete (OTC)

  45. Order to Cash - Accomplishments • Will invoice builder once customer requirements are met • List pricing will be converted as is • Attribute based pricing will take effect after each brand’s plants are live • Invoicing will be done from Adrian as branches go live • Outside purchase items will be brought into Oracle so they can be purchased from the external order • Will begin with discrete items (Liberty Hardware, CDX Board etc.) • Will go from items on the most quotes to least • POs can be created automatically from orders within Oracle • Configured items will be quoted as today (Mantles, Tops etc) • Our team is following the job responsibilities as defined in the 2007 call center – branch kaizen • Our understanding is that all processes up to the schedule of the install are done at call center • Once product is installed, branches have the responsibility

  46. Order to Cash – Open Issues • Masterpiece strategy still to be developed • How branch groups truckload of products together • How quickly we will have the new customer self service tool ready

  47. Schedule to Install

  48. Schedule to Install - Accomplishments • Demo to SMEs mid March • All functional specifications written • Oracle functionality has been compared to SAM • Less key strokes • Ability to handle multi day installs • Auto generation of install or install with tops service requests • Go live strategy will not convert scheduled installation tasks automatically • Branches will use SAM for any old installs • Oracle will be used for any new installs once go live happens • OTC and TTF calculated automatically • Reports will be combined • Will not be able to change the codes once entered

  49. Wrap Up

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