Learning Curve Analysis, Essay Example

Abstract

The ERP program implementation requires multiple changes to the business processes as well as the implementation of new software technology.  Both of these factors will require the impacted users to perform the duties in new ways.  These new ways will require a time period to learn and adjust to the new processes.  The relationship between the rate in which the users learn the system by creating useful results compared to the timing of producing those useful results is the learning curve.  For the ERP project there will be differing levels for impact of the learning curve considering the scope and varying complexity of the changes occuring.  The oveall project will also incur the impact of a learning curve and that impact will initially impact the production of the finished good.  When the learning curve data is used as a tool, the project team can communicate and make the right decisions regarding where resources are needed to limit the impact of transitioning to the new systems and processes.

Learning Curve

The implementation of a new project no matter how large or small the scope if there are new functions that need to be performed then there will be a degree of learning required to for those performing those functions to become proficient.  When discussing a the rate in which a person or group of people take on and gain experience with a certain task the learning curve is often referenced.  A learning curve is a basic graphical representation depicting the changing rate of learning that is occurring for a given activity or function.  The basic curve or steepness of the learning curve is determined by the rate in which the individual interprets and processes the information for the given task and then implements what they learn.  The curve starts out steeper and then eventually begins to level off due to the fact that less and less available new information can be used regarding the tasks at hand (Badiru 2012).  With the implementation of the ERP program there will be new ways the company is going to do business on both the information systems side as well as the business process standpoint.  New processes, procedures and transactions will be infused into the process and each of these areas will have their own learning curve or ability for the actions to be completed and understood to ensure the business remains functional and eventually flourishes with their new and improved systems and business processes.

Learning Curve Model

Another key point to discuss prior to evaluating specific areas in which the learning curve will provide insights into the ERP implementation is the cumulative average learning curve model.  This theory demonstrates that the total number of units successfully produced is doubled the effort required to produce that unit will drop by a consistent percentage.  That being said all other variables must remain consistent such as process improvement, resource inputs including funding and workforce.  This is important to understand considering that the implementation of the ERP program will impact the entire input process to the manufacturing process as well as each individual process that will require their individual inputs and outputs.

Project Impact Overview

The learning curve for specific and intricate business processes and system transactions could have an overall impact on the project if not addressed in a timely and appropriate manner.  In order to understand what actions the project manager could take to eliminate risk and keep the project within scope, on budget and meet the requirements they must understand which areas will be most likely impacted by a learning curve not conducive to an easy transition from legacy systems to the new information systems and business processes.  In the areas that have a slower rate of learning, adaptation and adoption by the end user there are certain tools and techniques that could be utilized to facilitate that transition.

An example of differing processes that have varying learning curve slopes include that of how the business will process their receiving process and on the other hand there is a change in which the business is changing the way their create, maintain and implement their purchasing documentation to their suppliers.  In the first example the business is streamlining the out of the box functionality in which the receiver will change from a manual receiving process to a barcode and scanner method in which the receiver will scan the incoming shipments and the system will facilitate the transfer of ownership, inventory management and direct the receiver on where to take the incoming goods.  This example shows a near direct replacement of a manual process with the substitution of an automated process facilitate with slight changes and a new tool.  The learning curve would have a steep upward curve showing a fast implementation and learning adaptation.  On the other hand, the business is changing the underlying business process of creating and maintaining purchasing documentation to meet a new standardized method and then on top of adding the business changes to the mix there is an implementation of systems.  There are core changes to business processes and a new tool that both require the business users to learn the new business process as well as the navigation and functionality of the software tool.  This implementation would have a slower rate of learning and would be depicted as a drastically more horizontal slope in comparison to the receiving scenario.  The rate of learning is much slower which means it would require more time and effort to become efficient and effective to gain the full impact of the implementation.

Specific Impacts to Learning Curve

The specific effects of the learning curve can help in two areas.  There could be useful information obtained from the previous implementation of the specific areas that will be changed with the new ERP implementation.  If these areas had an implementation and subsequent metrics regarding their productivity or efficiency were measured it could provide an insight into the areas that may require additional resources to facilitate the transition (Magal & Word 2011).  This aspect will provide the project manager with more data points in order to create useful information for more informed project actions (PMI 2008).  Although it was noted earlier in the project that nothing of this scale was ever implemented in which entire information systems and business processes were implemented there were times when there were upgrades or changes to specific functions within those systems.  In the manufacturing environment productivity is measure by multiple standards such as units produced, errors occurring or quality issues.  By measuring the productivity gains over the course of time the learning curve can be calculated and presented in a visual representation.

Analysis on this information could be conducted and a learning curve could be extrapolated related to efficiency and effectiveness of the users over the course of time to show how performing the tasks increased their abilities.  The second specific area in which the learning curve impacts the project is the activities that occur directly after the implementation and the “go-live” activities that occur.  Certain activities will require training and sustainment activities to complete the handoff between the project team and the end users of the system.  The gravity of the situation is one that having a failure based on the human factor will always be a risk and creating a more vertical learning curve will produce optimal results.

Impacts to the Learning Curve

The ERP implementation into the manufacturing plant for a single finished good product will go into production and must interact with normal business processes that will not be contained in a controlled environment.  With every change in the process there is a potential change to the rate of learning and adaptation needed by the end user to successfully complete their tasks.  This could include order management and the manufacturing schedule.  These two critical areas can change the rate and slope of the learning curve by changing the composition and ultimately the task being completed.  With order management, when a customer orders a different product than what is already being manufactured there could be a change in the manufacturing process which will lead to a new set of learning tasks the manufacturing line worker must learn.  With the ERP implementation there are already new tasks, inputs and outputs expected from almost every person in the supply chain so additional changes add to the already large scope of end user expectations (Monk, & Wagner, 2009).  As with a change to the process will change or shift the position on the learning curve so can taking breaks from repeating the process.  When conducting specific activities there is a rate of learning but there is also a rate of un-learning that occurs while not performing specific actions or activities.  This would occur during schedule maintenance shutdown periods, holidays or other breaks in production.  These areas of loss are interpreted as intermittent periods of forgetting (Badiru 2012).  These periods of loss could impact production but would not be a direct result of the ERP implementation but as a result of providing a break to the process of learning and training.

Mitigation and Impacts

To fully grasp the impact of the learning curve we can take the 80% rate of learning and adapt it to the project implementation.  If the current production of the company is topping the learning curve and the capacity of the manufacturing process was as efficient as possible we can compare where the company is now and where we will be regarding the implementation at the beginning of the implementation and where we can expect to be producing after a certain amount of time in the future.

Current production is at 1000 units per week.  This has been holding steady and was set as a standard for a specific amount of time.  This standard was set based on a cost benefit analysis and takes into consideration forecasts, budgets and supply chain capacities.  With business research conducted and prior projects implemented it was shown that the average production rate dropped by 20% initially due to configuration and becoming comfortable in the new system and processes.  These implementations were based on changing or upgrading software systems only and due to the scope and risk of our project we are going to estimate an additional 20% decrease in initial production.  For mathematical calculations we will utilize an 8 hour work day but in reality we will conduct separate analysis projects because the business has decide to add additional shifts to cover the potential lack in supply to meet the demand of our customers.  We can calculate the curve by using 80%.  According to Stewarts’s manual “Cost Estimator’s Reference Manual 2^nd Edition”, the learning curve is between 75% and 85% for complex manufacturing and systems processes.  The following depicts the learning curve.

The learning curve for this particular activity for the production of units in for the finished good in this ERP implementation shows that on the left hand axis the amount of potential units that can be ultimately produced based on the learning curve of the operators that are working the process.  On the bottom of the chart, time is depicted.  Each unit is representative of a week time frame.  The major takeaway for the ERP program is that this provides the project manager the ability to inform stakeholders that according to the learning curve the implementation should be up to normal operating temp by 8 weeks after the implementation.  We could also show the potential increase in potential productivity based solely on the individual inputs from the operators and not the other limits of the supply chain.

The project is impacted overall by the impact of the learning required to change from a legacy platform to a new information system as well as implementing new business processes to drive the business forward to remain competitive and potentially create a competitive advantage by engaging and remaining agile in the business models.  The risks of the learning curve can be mitigated by the enabling a transition team to be placed into the key areas in the supply chain to provide guidance and solutions to potential issues that may arise.  Also a training program focusing on in person sessions as well as walkthrough documentation on how to perform specific functions and why the functions are performed will be implemented and sustained even past project implementation.  The learning curve can be seen as an obstacle but can also provide insight and provide a target for the project manager to focus resources and eliminate potential risks prior to their fruition.

References

Badiru, A., (2012). Half-life learning curves in the defense acquisitions of life cycle. Defense ARJ. 19. 3. Retriever from: http://www.dau.mil/pubscats/PubsCats/AR%20Journal/arj64/Badiru_ARJ63.pdf

Magal, S. R., & Word, J. (2011). Integrated business processes with erp systems. RRD/Jefferson City: Wiley.

Monk, E., & Wagner, B. (2009). Concepts in enterprise resource planning. (3 ed.). Boston, MA: Course Technology Cengage Learning.

Project Management Institute, P. M. (2008). A guide to the project management body of  knowledge. (4th ed.). Newtown Square: Project Management Inst.

Stewart, R. (1995). Cost estimator\’s reference manual. (2nd ed.). Wiley.