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Posts Tagged ‘ERP in Manufacturing’

pssi_mfgIn our prior post we shared some of the results of a survey done last year by Crowe-Horwath with the American Metal Market that provided some worthwhile insights into the results of IT and ERP initiatives occurring among manufacturers these days.  In that post (found here) we covered plans for expansion, their thoughts on the importance of tech in their businesses, the top factors driving their IT budgets, their top concerns, where they look for new profitability and what sorts of items comprised their budgets.

Today we’ll look at their responses to questions about IT and ERP projects themselves.  Among these:

  • 35% upgraded an ERP system in the past 3 years and 20% implemented a new one.
  • When asked about current and planned IT projects…
    • 28% were planning ERP upgrades to existing ERP systems, and
    • 20% planned to implement a new ERP system
    • CRM and BI (business intelligence) initiatives also ranked as high priorities
  • As to cloud, or SaaS (Software as a Service), half of all respondents had no cloud solutions in any area of the business, and the most cloud-centric task among companies who had any cloud initiatives was for email (24%).
  • Most companies used a combination of both internal and external resources when implementing their major IT projects.
    • Training and ongoing support were the two key areas where external resources outweighed the use of internal resources.
  • When queried about their satisfaction with their ERP systems, the survey concluded that: “In general, respondents are satisfied because they had a new or recently updated system. Generally, respondents are unsatisfied because of outdated technology. Those in the middle have some dissatisfaction due to missing functionality or problems with implementation.”
  • 37% responded that they wanted or planned to move to a new ERP system (another 19% had already done so recently).
  • One important conclusion: 36% of respondents standardized business practices across locations to integrate process improvements into ERP implementation. About 40% engaged in a detailed process analysis or value stream mapping.
  • Companies are upgrading in large numbers today to “modern” ERP systems, and so it’s no surprise that among key findings were that “the most important issues when selecting new enterprise technology solutions were user interface and familiarity, total cost of ownership, and industry-specific functionality.”
  • As to their implementation partners and vendors, they indicated that Technical and Industry expertise were the two most important qualities sought.
  • When asked what were the most important new ERP requirements to meet the needs of changing workforce demographics, end-user reporting tools and a modern user-interface were ranked numbers one and two.

Today’s manufacturers are clearly looking to modern solutions, with feature-rich but usable interfaces that can be distributed broadly across a company.  Even more importantly, they’re realizing the importance of processes and people – well-analyzed in advance of any technology initiatives – to ensure that their tech applications and initiatives are being driven to serve the business purpose first, and not the other way around.

We couldn’t agree more.

 

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pssi_mfgIt’s always worthwhile hearing what the customers have to say about their technology goals and ambitions, so we’re happy to share results of a recent Crowe-Horwath survey of manufacturers (specifically, metals producers, though the results seem representative of manufacturers in general from what we’ve seen).  The 2016 survey was conducted in collaboration with the American Metal Market to examine the role of information technology and enterprise resource planning (ERP) systems in the global metals industry, and covered over 200 companies in the $50M to $1B markets, including producers, processors and some Tier 1 and 2 automotive suppliers.  As such, we feel the results are probably fairly representative of discrete manufacturers overall.

We think the questions and answers gleaned from their analysis will be informative and interesting to anyone involved in the manufacturing sector.  Among their key findings:

  • Plans for international expansion in the next five years are down about 10%, while plans for new downstream capabilities are up by the same percent, year over year. Almost 30% planned on domestic expansion and over 40% were considering M&A activities.
  • 75% of respondents said that technology was important or very important to their business strategy in the next 3-5 years. And yet, about half did not have a roadmap “that linked technology investments to business results.”
  • The top business factors driving today’s IT budgets were:
    • Customer service (51%)
    • Outdated technology (44%)
    • Outgrown their technology (33%)
    • New production capabilities or requirements (30%)
  • Data privacy and cybersecurity were cited as the number one IT business risk, followed by (among others) “obsolescence” and “losing business because systems can’t keep up.”
  • When asked where companies look for new profitability, 46% start with process improvement, 35% with Notably, and thankfully, only 19% cited technology first – a good indication that companies are learning the importance of analyzing their processes before seeking ways to improve them via technology.
  • Asked to rank the components of their IT budgets from greatest cost to lowest, they were:
    • Software (36%)
    • Hardware (25%)
    • Internal resources (22%)

In our concluding post we’ll look at the types of projects manufacturers are planning to engage in (or already have), along with their thoughts on ERP satisfaction and working with their vendor-partners.  Stay tuned…

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manufacturing-vs-all-industriesERP consulting firm Panorama Consulting just released its 2015 Manufacturing ERP Report which includes a listing of “Top ERP Vendors” by market share.  While earlier reports showed SAP, Oracle, and Microsoft Dynamics leading the pack among ERP vendors in all industries, the new report shows Microsoft Dynamics holds the largest share in the manufacturing space.  The recent rankings are:

  • Microsoft Dynamics: 38% share of ERP manufacturing space
  • Epicor: 25% of that space
  • Oracle: 13%
  • SAP: 11%

The report also divulges that “unpredictability is more rampant among manufacturing ERP implementations,” and… “that manufacturers are just as likely to take longer to implement than expected, but when they do, they are more likely to extend their timelines by a greater amount than in other industries.”

The report also noted that “manufacturers implement at a lower total cost of ownership than those in other industries.”  They add that “when normalized to account for variation in company size by looking at total costs expressed as a percentage of annual revenue, manufacturers come out ahead with costs of 7.5% of annual revenue compared to 8.4% in all other industries.”

Manufacturers are also more likely to customize their ERP software than those in other industries.  Still, it’s interesting to note the report indicates that virtually every company, manufacturers or not, does some level of customization to their software.  Some 75% (of manufacturers) and 90% (overall) report “minor, some, or significant” modification.

And finally, one interesting note, which we’ll quote directly from Panorama’s report verbatim:

“Adoption of manufacturing-specific functionality is relatively weak. While most manufacturers adopt core modules such as sales and distribution, materials management and MRP, relatively few are actually implementing more advanced functionality in areas such as product lifecycle management, advanced planning or CRM. Many of these same companies actually paid to acquire the software, but didn’t acquire those modules for whatever reason. It is important to be cognizant of the propensity for manufacturers to invest significant money in shelfware and to make sure they are getting a good ROI from some of this advanced functionality offered by ERP vendors.”

Benchmarks, the report concludes, are key.  Everyone needs them to ensure goals are met during implementation and beyond.  You can view the Panorama report here.

 

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dms_logoThis post series begins here.  It’s based on a brand new white paper produced by our partners at DMS in Canada.  Learn more about them here.

In today’s final post in this series, we’ll look at DMS’s final two tips (No’s. 9 & 10):

9.    Set Realistic Expectations.  Manufacturers often have lofty expectations of their ERP system, as DMS points out – understandably, considering the money being spent.  But, they point out, “Having realistic expectations for the amount of time that is spent on the implementation, training and rollout is essential toward calculating the correct return on investment (ROI).  One thing that cannot be accounted for, but should be expected, is the inevitable bump in the road, or where things come to a halt.”  Be sure to align your expectations, DMS advises, with the unexpected, too.

Be sure as well that there is a link in place between your processes and your ERP.  (We advise this is best accomplished via a thorough Business Process Analysis at the outset of your project).  According to the Aberdeen Group, 55% of best-in-class manufacturing operations tie their processes and operations together, as the cost savings gained help them utilize their software more fully.

DMS’s white paper makes the following key point about your expectations:

“ERP is a system where CEOs and executives have to put aside certain measurements. Once it is well implemented and integrated into a business, there will likely be results that are not easily measured or analyzed through statistics, such as better communication, improved decision-making, and better performance from manufacturing employees.”

10.    Listen To Your Staff.  As DMS notes, “End-users are the lifeblood of ERP implementation at manufacturing organizations.”  They are your best resource for measuring the success of your deployment.  We always advise: listen to them early and often.  Aberdeen Research has noted that the 20% of manufacturers who see the best performance in ERP are 75% more likely to measure performance and software analytics.  Often, it’s your users’ comments that help fine-tune these measurements.

Finally, don’t necessarily assume all is well with your new ERP system.  Talking to users is one of the best ways to determine if that is true.  Test and talk.  As DMS concludes, employees will be more willing to provide feedback if your organization is sharing news about what is happening during the ERP implementation and rollout.  As in most things in business, keep the lines of communication always open.

We hope you’ve benefited from our highlights – and our own commentary – of Dynamics Manufacturing Solutions’ implementation tips. They mesh well with our own advice of many years.  But, we believe, it’s always good to hear it from someone else.  For more info about DMS’s NAV solutions, contact us directly for guidance.  You can also visit DMS’s website here.

 

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dms_logoThis post series begins here.  It’s based on a brand new white paper produced by our partners at DMS in Canada.  Learn more about them here.

In today’s post, we’ll look at DMS’s next 3 tips (No’s. 6, 7, 8):

6.    Ensure that Laptops, Desktops, Servers and Networks are Solid.  It’s important to have a good hardware infrastructure in place.  Test all your hardware.  Figure out how the hardware you now have in place will fit with your new software.  (We’ve found that relatively newer hardware can usually be repurposed with upgrades in RAM, disk drives or perhaps network controller cards to accommodate new software.)  Be sure your provider gives you a current spec sheet on both “minimum” and “optimal” hardware configurations.  And most important of all, pay close attention to your server needs.  It will be the workhorse of most systems, and the item(s) most likely to need upgrading.

7.    Identify Super-Users.  One way to smooth the path for your users is to engage a group of super-users to learn the software’s ins and outs first.  The client project manager should determine the key system advocates, and give them first shot with the new software.  (As noted earlier, we often do this in the context of a conference room pilot.)  End user system acceptance doesn’t happen automatically.  But if you can develop a few power users into system evangelists, those early victories can pay long-term team dividends.

Meanwhile, as DMS points out, keeping up communications across the team is essential.  You have to sell change as part of the new system.  Your firm won’t see benefit from the new system unless your team embraces those changes.  Your super-users can lead that charge and build momentum across the organization.  They have to be dedicated to organizational change and communication.  If that change is seen coming only from the IT team, it’s not likely to stick.

8.    Don’t Skimp on Training.  No surprise here, especially in view of our earlier comments.  But the training isn’t just for going live.  It should continue with refresher courses afterwards.  When you train… make the training role-based by user… make attendance mandatory… let employees know during training where it makes sense for them to come together as a team… engage your employees and try to make the sessions engaging, a little humorous, even exciting… give some thought to what else you can do to further each employee’s understanding of the system.

Finally, remember: this is about change, not just technology.  It’s a culture shift.  Understanding the importance of training – and communication – before, during and after, will be the differentiator that determines your level of ERP success.

In our next and final post, we’ll look at what the DMS e-book says about setting expectations and listening to your staff.  Stay tuned…

 

 

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dms_logoThis post series begins here.  It’s based on a brand new white paper produced by our partners at DMS in Canada.  Learn more about them here.

In today’s post, we’ll look at DMS’s next 3 tips (actually, no’s 3, 4, 5):

3.    Be Open to Change.  Manufacturers with legacy ERP systems are used to doing things a certain way.  But with new ERP systems come new ways of thinking.  Taking advantage of changes in software, changing old system processes and procedures, planning for change… all of these require an open mind.  As Panorama Consulting points out from a recent survey on ERP deployment, about two-thirds of companies find it hard, and only about 30% believed this stuff was easy.  But as DMS notes, there are very few things worth doing that are truly simple.  Their advice: adapt for success and plan for change.  ERP is not just a capital expense, it’s a change management tool.

4.    Get User Buy In.  DMS says this is likely the most important part of the entire ERP process.  Communicating changes early and often is critical.  People don’t like change, so keep your employees involved.  Praise from supervisors and regular discussions with managers can keep employees motivated.  Identify the right metrics then track them to drive accountability home.  As DMS concludes, “No matter what a company does with its ERP implementation, it is essential to ensure employees are interested and involved. Without them, failure could be imminent.”

5.    Prepare Your Staff.  Too often, as DMS points, manufacturing firms underrate the importance of training.  Often, new or added computer skills are required.  Processes change.  Staff needs to be educated.  As one software consultant DMS quotes has noted: “Technology is easy.  People are complex.  Organizational dynamics are even more complex.” 

Thus, companies must plan for what is changing, determine which areas need training and what methods will be used.  Training needs to be targeted, and developed for the specific needs of the target.  This is not about classroom style training any more.  It must be tailored to the working needs of your individual users.  (In our own firm, we often start with initial training and testing during conference room pilots among select department heads or super-users, to smooth out the rough edges, before starting to train users downstream.)  The bottom line: have a training plan.

 In our next post, we’ll look at infrastructure, super-users and training.  Stay tuned…

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dms_logoWe begin April with a series of 4 informative posts derived in part from a white paper from our friends at Dynamics Manufacturing Solutions.  We think the points they make, and that we enhance from our own experience in the series that follows, will be useful to manufacturers.

Recently, a company we partner with called Dynamics Manufacturing Solutions released a very good e-book entitled “10 Steps to Successfully Deploying ERP in Manufacturing Shops.”  DMS is an Alberta, Canada based provider of manufacturing software solutions designed to be integrated with Microsoft Dynamics NAV.  (Disclosure: PSSI partners with and sells DMS solutions to our manufacturing customers.  That said, their e-book strikes us as balanced, unbiased and very representative of our own advice to customers.  We think their advice is worth parsing and passing on in this blog.)

For the record, DMS can be reached here.  Their e-book can be found here though you may need to register first.

In our next few posts, we’d like to highlight some of DMS’s conclusions as put forth in their “10 Steps…” document, as we’ve found each step to be valid and worth the attention of anyone involved in an ERP project.

We’ll begin today with their first two steps, which cover project management and selecting and empowering your team.

1.    Professional Project Management. DMS begins by quoting accounting and advisory services firm Pricewaterhouse Coopers who note that “the leader of any project team is pivotal in forming the goals of an ERP solution.”  All companies have project goals for their ERP.  It’s the Project Manager’s job to figure out (along with their ERP provider) the timeline over the course of the project at which the various components will be functional.  Implementing, converting data, training employees and going live should all be benchmarks to a project’s success.  Project managers need to get to know their new software at a pretty granular level, and lead the team in testing, before releasing it company-wide.

PwC suggests appointing team members who are trusted and have experience in similar projects.  They recommend role-based training to employees in each area of the company.  It’s also the PM’s job to ensure the project stays on budget.  And while cost overruns can’t be eliminated in these sorts of projects, “they can be managed with the right tools and tactics,” DMS points out, quoting a Management Professor at Cal State Univ.

2.    Select Your Team and Empower Your Leaders.  DMS points out that more than just good intentions are required when deploying ERP in the manufacturing environment.  “There must be a proactive, intelligent leader who works to make the project successful from start to finish. Good leadership helps plan the adoption process, implement the software, train workers, and ensure everything runs smoothly.”

Your projects need a sponsor, and the sponsor must have a plan.  The sponsor must show interest, be trustworthy, smart, experienced and work well with their team.  It’s a manageable task, provided you think it through from the start.

In our next post highlighting DMS’s findings, we’ll look at the roles of change, user buy-in and preparing your staff.  Stay tuned…

 

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