Late last year, Portola Packaging, a global manufacturer of tamper-evident plastic closures for the food and beverage industry, implemented a new enterprise resource planning (ERP) system (Glovia International, 800-223-3799). The new system was designed to integrate all of the company's financial, manufacturing and distribution operations in the United States and abroad.

Since then, the San Jose, Calif.-based company has realized dramatic improvements in productivity and inventory accuracy across its operations.

"Inventory accuracy at our New York plant used to be between 30 and 60%," says Ara Chakrabarti, Portola's chief information officer, citing just one example. "Now, we're over 99% accurate and we're doing it with a lot less manual effort."

Numbers like those would make any manager proud. What makes them especially sweet is that Chakrabarti promised them in order to get funding.

That's because return on investment, or ROI, is everything today. "Approval for every project I see is predicated on the business case for change," says Scott Elliff, president of Capital Consulting, (703-370-2607). "Senior executives want to see the benefits spelled out for them before they'll sign off on a project."

While Portola implemented a software system, the same holds true for materials handling projects. Despite the emphasis on returns, all too often big software and equipment projects fail to deliver results. That's because many companies put their energy into getting the project approved.

"It's amazing to me how many companies are lackadaisical about managing their projects to get an ROI once they get approval," says Art St. Onge, president of St. Onge Co. (717-840-8181). "They just expect good things to happen because they said it will happen when they went to the board."

That doesn't have to be the case. Getting from the start of a project to a return on investment is a journey. Like any road trip, it requires research, planning, and a road map with milestones along the way:

• Building the business case
• Designing the system
• Going live
• Managing day to day

If your project breaks down during any of those four, it's going to be a bumpy ride. Do them well, and the ultimate payoff comes at the end of the trip.

Building the business case for change is the first critical leg of the journey toward ROI. Down the road, it will be the yardstick used to measure success or declare failure.

That's why the business case has to be grounded in reality: "When we put together our case for a new ERP," says Chakrabarti of Portola Packaging, "we wanted attainable goals that we knew we could achieve with our organization."

Chakrabarti included the hard savings he expected from inventory accuracy and more efficient planning. But "cost-avoidance"—the potential cost to Portola Packaging of not doing the project—was also a factor.

"We quantified what we expected from functional improvement," Chakrabarti says. "But we also knew that we were struggling in our operations because the left hand didn't know what the right hand was doing. We were often planning based on a gut feel rather than real data, and it was impossible to validate the gut feeling."

To create those attainable goals, a company has to benchmark its facility against other facilities performing similar functions, even in other industries.

A shampoo manufacturer, for instance, may compare online complete deliveries, inventory turns and warehouse worker productivity against facilities shipping green beans or television sets. The reason: "They're all products going to a customer in a box that needs to be picked, packed, shipped and managed," says Elliff. "The idea isn't to see where you stand versus your direct competition, but where you stand versus what's possible from business leaders."

Once the gaps in your performance have been identified, the next step is to determine the root cause of the problem. Does a conveyor line move too slowly to keep up with orders? Or do you need a new warehouse management system to manage picking? The answer to those questions will suggest possible solutions to close the gaps.

Once the business case has been built, the next leg of the journey is to design a system that not only meets the needs of the project, but that protects the ROI promised the executive committee.

"The key to protecting your ROI is to design a system that is flexible enough to adapt when change occurs," says Art St. Onge. "A good system can adapt. But there's little chance that a poorly designed system will get the results you were expecting.

Great projects get great results from team efforts. That's why Scott Elliff looks for companies with solid, committed team members and a willingness to provide the resources to get the job done. "A project team with too many competing initiatives will end up with a bad design," says Elliff. "If you have five key managers who are each involved in five other projects, none will get the focus or attention needed to get the anticipated results."

Chakrabarti created a core team with senior managers from each of Portola's functional areas: finance, materials management, purchasing, international logistics and manufacturing.

He then added team members with operational experience to redefine the company's business processes and then design a system to address those new needs.

One point that was stressed over and over at Portola was that this was an organizational project that impacted workers on the floor, and not an IT project.

"We knew that if we implemented a system designed by a steering committee without taking into consideration the guy in the plant or the warehouse who had to use the system, we were going to have trouble," says Chakrabarti.

The implementation is the next exit on the ROI highway. "Without a successful implementation, you end up with shelf-ware," says Scott Elliff. "That's a system that's barely used or not used toward its potential."

While volumes have been written about how to do a successful implementation, the most important adage might be to keep the original purpose front and center. Think of it as keeping your eye on the road and both hands on the wheel.

"If you allow the original design of the project to be compromised during implementation, your project will bog down under its own weight," says St. Onge. "That's a major contributor to performance not meeting expectations."

Along with sticking to the original plan, it's important to also create an environment that encourages workers to embrace the new system.

At Portola, for instance, employees initially had more, not less, work on the plant floor. That's because they were now doing more bar code scanning to collect data and track materials, labor and product throughout the process than had ever been done before.

"We spent a lot of time educating our guys so they knew there was a reason why they had this extra work," says Chakrabarti. "At the end of the month, they saw the result because they no longer had to do a physical inventory. The more they proved the system and learned that our data was now accurate, the more they trusted the system."

Going live may be the end of the trip, but it's not the end of the road.

"By the time you've gone live, your business will have changed and you may be out of synch with reality," says St. Onge. "You have to constantly monitor and measure what you're doing to get your ROI."

Order profiles, for instance, may change. A distribution system designed to send full truckloads and full pallets to a central distribution center may now need to send mixed truckloads directly to stores. Or a system designed to handle cartons and pallets may now have to process eaches and parcel shipments.

"Either change is going to have a dramatic impact on a facility that may require additional capital," says St. Onge. "The initial design and ROI shouldn't be held accountable for that unless it could've been anticipated up front."

Customer requirements have not appreciably changed since going live at Portola Packaging. But that doesn't mean they're operating on cruise control. In a push for continued improvement, Chakrabarti and his director of materials management have begun publishing inventory accuracy numbers and giving recognition to those plants that demonstrate the best results each month. "We've now got a competition going between the plants," says Chakrabarti. "That's encouraging everyone to do a better job."

And it's ensuring that the returns on investment keep coming.