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How ERP Supports Lean

For a long time, the idea of implementing ERP and getting lean seemed like they were worlds apart.  ERP was robust and embraced all aspects of the business:  analyzing sales trends… forecasting inventory… pushing materials through production… managing the many aspects of the business.  Meanwhile, lean was small and responsive… material is pulled through production… just-in-time inventory planning becomes paramount… paring things down to their simplest proportions and keeping things moving constantly are key.

And yet.  When you look at lean coupled with ERP—as so many companies do today – you begin to see the synergies.  Streamlining processes (via lean), then automating them (via ERP).  Stripping complexity down (lean) and then using the improved process repeatedly throughout your workflows to eliminate redundant steps and waste (ERP).

Take kanban.  These are visual signals used to resupply inventory.  They’re an important early step in the lean process, and especially effective in single plant locations.  ERP supports kanban by turning these visual signals into electronic trigger points, and they work just as effectively across multiple locations.

A key principle of lean is the just-in-time inventory noted earlier.  You want just enough material to meet demand and keep flow moving.  It’s all about eliminating waste.

Well, with ERP, you can analyze individual workstations or shop floor cells.  You can investigate and analyze the impact of, say, setup times or machine changeovers or maintenance, and their effects on the overall schedule plan.

In the same vein, your ERP reports provide you with the data you need to compare your current inventory levels to your sales demands, and adjust accordingly – and quickly.  That’s critical to keeping inventories low, just-in-time and always moving.

In similar fashion, ERP can identify and track waste, the bane of lean.  You can’t improve something unless and until you can measure it, and with the right ERP setup you can track your most wasteful production areas, and know where to focus your efforts to eliminate it.

In other words, ERP allows you to analyze all of the many factors that come into play on the shop floor, and throughout the business.  It can provide the raw information you need then to begin to identify mistakes, inefficiencies and waste – on the way to getting lean.

We’re big believers in the combined power of lean and ERP.  In our view, they go together like a hand and glove – and together, they are the single most important factor in improving performance and profitability among firms that are growing – and those that want to grow.

 

Recently another ERP blogger we frequently reference, Eric Kimberling of Colorado, wrote about some of the lessons he’s learned from 12 years of guiding clients in their ERP pathways and decisions.

Given our thirty years of experience, we thought we’d take a few of Mr. Kimberling’s comments and splice them with our own to provide a few thoughts on some of the key lessons we’ve all learned about what he likes to call “digital transformations” or broadly speaking, ERP implementations and workflow improvement initiatives.  For the most part, the topic points are his, and the advice following is ours.

  1. Here we are in unanimous agreement: It’s more about the people and processes than it is about the technology.   Identifying key processes, establishing the right workflows, seeking to make users comfortable with change… and mapping all these efforts into a suitable software solution that removes redundant efforts, eliminates disparate information silos,  streamlines peoples’ jobs and ultimately serves your customers more efficiently – these people- and process- focused initiatives are the real key to digital transformations.
  2. There is no one-size-fits-all answer. There’s a lot of good software out there.  Just as there are a lot of good implementation consultants.  Unfortunately, there are also a lot who know the technology but not the business processes.  Why would you hire anyone that’s not a subject matter expert in your chosen field?  Ours expertise is manufacturing and distribution — so don’t hire us to install your dental practice management software (or fill your cavities) — and vice-versa.
  3. Your business should drive your software and transformation needs – and not the other way around. That also means that if your software cannot be matched to the way you work, then you need to find different software.  (Another reason for hiring implementation consultants that know your territory, i.e., business.)
  4. Take the hype and the jargon with a major grain of salt. Tech is notorious for having a million buzzwords.  Cloud, SaaS, big data, XML, agile… the list goes on forever.  Once again, what’s best for the business?  At the end of the day, where your system is located (local, cloud, etc.) is less important than whether the tool you choose is going to be the right one for the way you work, and be up and running over 99% of the time.  The buzz words and the tech, while sometimes important, always matter less than the interests and flow of your business.
  5. The best technology will not fix broken business processes. We always insist on making the business process analysis the first item on our agenda.  Identifying process flows, both the current ones and what they should look like in the end, is what creates the road map to everything that follows.  Involve all the key stakeholders and users in your project in this crucial step from the very beginning.  That will ensure you’re starting from the right foundation.
  6. Failures, like successes, don’t happen overnight. Usually, win or lose, there is a trail of decisions, events and actions – all driven by people­ – that determines the success or failure of most ERP projects.  These occur along a timeline.  So when you see something going off the rails (and we always tell our own consultants this), be the first to pull the cord and stop the train.  Run towards the fires (issues).  It will usually only get worse if you don’t stop, pivot, re-evaluate and take corrective action to fix the flaws in your foundation sooner, rather than later.

Both Kimberling and we could list more, but today’s list should provide any company about to embark on a digital transformation or process and software upgrade with the key lessons they’ll want to know – before they begin the effort.

 

(This is the second of our two posts reflecting the thoughts of noted NAV blogger Eric Wauters on the upcoming release of the new Microsoft Dynamics NAV 2018.  His full, original post can be found here.)

 

Fact 8: Microsoft Dynamics NAV 2018 will be released on December 1st.  Thanks to the Directions conference in Orlando last month, and the feedback and the passion of the partners, this had to happen.  As Microsoft has already announced, the product itself is ready.  It’s the pricing and positioning issues they are working on that have delayed the release.

Fact 9: Extension V2 will work on Dynamics NAV 2018.  In non-Geek-speak this simply means that a very modern development experience in VSCode will work on the December release, and that we will be able to create extensions on top of our own customizations and products as well.

Fact 10: Yes, you will be able to white label your product, but you don’t have to.  “Powered by Microsoft Dynamics 365” or not, it’s your choice.  (Early word last month was that Microsoft would change the marketing thrust from promoting “NAV” to promoting a “Powered by…” approach, thus allowing resellers and ISVs the ability to “white label” their accouring offerings.  But really… I mean, really?  Would you rather by “Brian’s Accounting & Manufacturing Powered by Microsoft Dynamics” or simply Microsoft Dynamics NAV, as you always have?  No brainer.

Fact 11: Microsoft is working on the pricing.  Considering the various options… on-premise… cloud… as discrete functional-areas apps (like CRM or Marketing) and not just the “ful-blown” complete ERP system… Microsoft has a lot to think about.  But it’s coming.

Fact 12: There is no monetization in AppSource – but it will come.  This one is mostly for partners.  It means that we’ll be able to sell customized apps through the Microsoft App Store, and there will be a ‘monetization’ policy at some point.  In other words, Microsoft will likely have an approval process for apps and then make them available on the store and take their cut.  Think of Apple’s app store model.

Fact 13: Microsoft Dynamics NAV consumes an insane amount of Azure stuff – and that’s a good thing.  Cloud based NAV can generate a lot of data and metrics on its Azure cloud, and that stuff will eventually be available as analytics of some kind or another.  It’s a work in progress for now.

A new development environment… new features… the ability to run either in the cloud or at your own site… the ability to create apps… the enhanced capabilities to run with the Microsoft “stack” of applications from Windows to Office 365 (Word, Excel, etc.) to Outlook… Dynamics NAV will be at the heart of it all.

And for our customers, that safety in numbers and place in the Microsoft hierarchy of applications upon which you run your business might be the very best news of all!  It all starts happening in December.  Are you ready?

Eric Wauters is a most knowledgeable and well-known blogger about Microsoft Dynamics best-selling ERP system, Dynamics NAV.  Wauters recently put together a great list of the key highlights (his ‘Facts’) gleaned from recent conferences and conversations regarding the upcoming release of the newest NAV version, 2018.  While we’ve written a bit about NAV 2019 (codename ‘Tenerife’) here recently, we felt his list of news & updates was the most definitive yet.

Since there’s too much to push into a single post, we’ll edit for length and publish Wauters’ facts in our own blog here as two posts, today and in the post following.  For the original article, go here.

 

Fact 1: the market around the product we know as “Dynamics NAV” keeps being a partner model.  NAV is Microsoft’s biggest ERP cash generator, and partners have been selling, implementing, customizing and supporting the product successfully for years, making or exceeding Microsoft’s goals for the product.  In the future, that won’t change, nor does anyone want it to do.  Now, on to the NAV product itself…

Fact 2: NAV will be available in the cloud.  In Spring 2018, there is going to be Microsoft Dynamics 365 in the cloud, based on NAV.  And that’s important to those, like us, who serve the SMB (small to midsize business) market exclusively.

Fact 3: There is a roadmap beyond Spring 2018.  Because NAV is now developed in what’s known as an ‘agile’ development environment (i.e., quick, incremental releases keeping the product fresh and up-to-date), it’s impossible to guarantee a future road map.  But they do a pretty good job nonetheless.  Dynamics 365 for Financial and Operations and 365 ‘Tenerife’ (a temporary name until the actual product is released) are the currently slated releases for late this year and early next year, and they are right on track.  The future NAV – available either on-premise or in the cloud – will follow this same roadmap.

Fact 4: On Premise is there to stay.  As long as there is business for On Premise, we will be able to do it with NAV. Microsoft’s focus is “cloud” for sure, but On Premise is there to stay.

Fact 5: Dynamics 365 will have full NAV capabilities.  Says Wauters:  “Rest assured – for whatever we will do in the cloud – we can do all! From Manufacturing to Jobs to Relationship Management to… Whatever! All a SMB wants to do – it will be there! With the power of the cloud!”

Fact 6: One Codebase.  We will have a slightly different experience in the cloud, but all will be one codebase.  Basically the design is somewhat different in Dynamics 365 (let’s call it the “Dynamics 365 Experience”), and a lot is “tuned” with Application Areas, but for all we do, the codebase is the same.

Fact 7: Extensibility with Extensions.  NAV has an extensibility model, aka “Extensions” or “Apps.”  This allows developers to create apps for Dynamics 365 and extensions for on-prem installations.  These can be built on customized databases, ensuring modifications unique to a client can be enabled.

And that’s only the half of it!  We’ll reveal the rest of Wauters’ thoughts – including the timing of the NAV 2018 release date – in our next post, so stay tuned…

 

 

In a recent article from Trends eMagazine entitled “China’s Day Never Came” editors there make the point that, despite a 2017 report from PwC projecting that China will become the world’s largest economy “by a significant margin” by 2050, it all depends on how you measure.

PwC uses a measure called “DGP at PPP,” or Gross Domestic Product at Purchasing Power Parity to adjust for price level differences across countries, thus providing what they believe to be a better measure of the volume of goods and services produced.  But Trends argues that according to a different measure that includes market exchange rates, the U.S. economy will still be twice as large as China’s by 2050.

Without drilling down into the economic arcana, and the abstruse nature of Chinese economic data to begin with, it’s interesting to note Trends’ very different conclusions about the growth of the U.S. vis a vis China and others.  In a nutshell, they point to the accelerated return of the U.S. manufacturing sector as among four critical reasons why the U.S. will hold its own in the decades ahead:

  • China’s key advantages – the size of its population and low cost of labor – will erode by the end of the next decade. Thanks in part to the one-child edict of the 1970s, population will begin to decline in 2030.  Meanwhile, wages will continue to rise, and China’s low-cost-leader position will become ever more difficult to maintain.  Already wages in China average about five times those in India, and more elsewhere, according to a recent report by CNBC.
  • Automation will accelerate the return of the U.S. manufacturing industry while causing the decline of China’s manufacturing. This is a big one, according to Trends’ editors.  Robotics and additive (or 3-D) manufacturing are making the U.S. competitive in high-value goods.  Lower costs of distribution from shorter transportation distances and cheap fuel means U.S. companies can now manufacture products for domestic consumption at prices competitive to imports.
  • China’s birth rate will fall while its elderly population will expand. By 2030, one-fifth of Chinese will be over 65.  Consumer spending will lack its expected potential given only one child to support both elderly parents as well as their own families, even with rising wages, putting increased competitive pressure on the Chinese economy.
  • The wealthiest Chinese won’t boost their homeland’s economy, but will move assets to other countries instead. It’s already happening.  In fact, The Wall Street Journal reported in 2014 that nearly two-thirds of ‘high net worth individuals’ polled were already emigrating or planning to do so.

These trends bode well for the strength of the U.S. economy and particularly our manufacturing sector in a global competitive environment.  Once again, automation is helping to lead the way, and if history is any guide, that will only open up still more jobs, not fewer, in the decades ahead.

Well then, I guess we know how everyone around the office will be thinking about you today…

Nonetheless, everyone at PSSI would like to urge you to forget about software today and have a very happy Halloween!

P.S.: Don’t scare anyone!

Given the sorry state of computer security these days (see: Equifax), we all know something’s gotta’ give.  And Apple, among others, may be on to it.  The firm’s new phone expected shortly, the iPhone X is slated to have the ability to unlock your home screen via its built-in face recognition – a first in the phone wars, and sure to be copied in time by others.  But as always, be careful what you wish for, as we’ll see in today’s post.

Face recognition itself is not new.  It’ used in security cameras around the world.  In China it’s used to verify the identity of ride-hailing drivers and allow tourists to enter attractions.  In the U.K. it’s been used to arrest a suspect outside a soccer (er, football) game.  The ability to “record, store and analyze images of faces cheaply, quickly and on a vast scale promises one day to bring about fundamental changes to notions of privacy, fairness and trust,” according to editors at The Economist in their lead editorial from Sept. 9th.

The reason for such high promise?  Faces work.  Other biometric data like fingerprints and irises require close proximity.  Anyone with a phone can take a picture for facial recognition purposes, which can work for identification at a distance, apparently with high accuracy.  A Russian app compares pictures of strangers with ones in a social network and already boasts a 70% accuracy rate.  Of course, as The Economist points out, this also means that Facebook could compare its database of images, which it keeps private, with those of, say, visitors to a car dealership, and later target auto ads to them.

China’s government is said to keep a permanent record of its citizens’ faces, and the about 50% of the U.S. population is already in the FBI’s photo database.  It’s a powerful new weapon for tracking criminals, as 1984-ish as it sounds given the potential cost to citizens’ privacy.

Faces contain a lot of information, and machines are quickly learning to read that.  Once again, there are upsides and down.  Some firms are using these data to identify rare genetic conditions far earlier than otherwise possible.  Systems that measure emotion might give autistic people a better grasp of otherwise elusive social signals.  On the downside, The Economist points out, are algorithms that do a better job of looking at pictures of gay and straight men, and then correctly identifying their sexuality (80%+ success rate for the software vs. only 60% for people).  This would be terrifying in places where homosexuality is still a crime.

For all the pros and cons, (read more in the Sept. 9th, 2017 issue’s article, “Nowhere to Hide”) the technology is not going back in the bottle.  Cameras will become even more common with the growth of wearable devices.  Sunglasses and make-up are no defense, as systems can out-game them, even reconstructing the facial structures of people in disguise according to researchers at Cambridge.

While Google has explicitly turned its back on facial identification for fear of misuse around the world, other tech firms are less picky.  The Economist notes that Amazon and Microsoft “are both using their cloud servers to offer face recognition.”  Governments will likely not want to pass up the benefits where laws can be constructed to allow them.  Change is coming, and your face along with millions of others, for better and for worse, is likely to be a big part of it.