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Posts Tagged ‘ERP’

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.

 

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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.

 

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There are any number of suggested approaches to implementing a business software system, but a few tips offered by frequent ERP blogger Eric Kimberling contain some key points that we think all software vendors could agree with.  We’ll share a few of those tips, with which we concur, here.  We could add a few more from our own experience, but these provide a great foundation in helping to avoid time and cost overruns.

  • Create your project management organizational structure. Your ERP provider will have a project manager, or project architect, or maybe both as we often do.  You need to have one on the client side too.  As well, remember (as should your provider) that there are a great many non-technical project aspects to attend to that involve work streams, people issues, organizational changes and the not-so-simple mechanics of having staff available for training and implementation when they already have their ‘real jobs’ to do!
  • Define project roles and responsibilities. No two projects are alike.  Your provider knows in advance (or should know) exactly who will be doing your training, your customizations, your technical work and writing your reports.  But ultimately, it’s your project, so be sure you have defined all the roles at your end, and that each person knows who they’ll be working with.  Strike a balance between your “internal competencies and your bandwidth” as Kimberling puts it.
  • Make key strategic decisions regarding your implementation.  Again, all projects have their unique challenges.  (We’ll get 90% of our side right and still beat ourselves up over how we could have done the other 10% better.)  So early in your project, work with your partners to realistically define project phases and timetables.  Hint: all clients and most implementers underestimate the actual time required, and the unplanned hiccups along the way.  Data conversion is typically one large problem area.  Another hint: the less data you absolutely have to transfer from old to new system, the easier (i.e., less costly) your project.  Remember, you can always turn on the old system on the few occasions where a missing piece of old data is critical.
  • Define your future state business.  Don’t fall into the trap of letting your software always drive your business process improvements.  The software should be made to fit the way you do business.  That’s why buying a ‘customizable’ system is so critically important.  Modifications and customizations exist for a reason: they support the business’ intrinsic competitive advantages.  Don’t settle for software or process flows that do not match up with your own best practices.  Defining your future state can often be accomplished in stage one, after you’ve mapped the current state and identified the gaps and technology touch points you need.
  • Think people. Many projects fail or succeed based on how well firms have handled the changes to the organization and to the workflows that a newer, better system require.  Remember that people are always on the critical path to project success.  And don’t wait until it’s time to get folks trained to bring them into the picture.  The time to involve your team is at the very start of your project.  But that’s a post for another time.

 

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Those in the I.T. and ERP arena who implement software and hardware solutions for a living have long known – or at least, should know – that speaking the language of business is as important as speaking the various languages of technology.  A recent article on the shortage of data scientists in the U.S. in the 21st century makes that point clear, noting that a McKinsey analysis recently predicted a shortage of 250,000 data scientists here by 2024.  Worth noting: Countries like Malaysia are busy building national programs as they seek to fill the gap by becoming a global hub of data science talent.

An article from information-management.com reinforces the point, noting that data is becoming more ubiquitous in every organization and data scientists are bound to grow in importance.  “Today’s students will be the first data-native employees of the future, and it’s critical that they understand data science, how data science is changing and how data science solves real world problems,” says Ashish Thusoo, CEO and chief data scientist at Qubole a “data-as-a-service” company in Santa Clara, California.

As the impact of AI (artificial intelligence), machine learning and big data all seep into the business world, it becomes more important than ever that tomorrow’s data scientists can optimize business processes, think in the language of business and apply human creativity to solving real-world business problems.  A lot of the tedious and manual data entry work is going to be performed by machines and algorithms, and the pace of change will only accelerate.  The critical question then becomes: Can we teach our students and employees to master the arcana of data while thinking like business people?

Mr. Thusoo puts it nicely in an article found here: “Data scientists will need to be able to think like MBAs and MBAs will need to think like data scientists. That requires an interdisciplinary approach to education.”

 

These future data masons will be working across multiple disciplines and communication skills will be of great importance.  They will need to be collaborators, understanding the various aspects of the business while being effective communicators.  They’ll require multi-disciplinary talents for sure, and be able to speak a bit of many ‘languages,’ like marketing, production, sales, accounting and leadership.

And of course, the learning never stops.  These workers will require social skills, data skills and overall learning skills to go with foundational hard technical skills.

In the end we are learning that data science is rapidly evolving into a profession that requires a whole suite of both soft and hard skills, and that we will need a whole lot more folks to fill these roles.  But then again, today’s best business analysts, software engineers and enterprise implementation teams have always known this.

The difference going forward is that we are going to need a whole more of us.

 

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At a recent “Digital Enterprise Boot Camp” in Toronto, a group of leading IT executives and project managers discussed their experiences with recent ERP implementations and digital transformations.  Some of the key takeaways included…

For starters, there’s budget.  ERP implementations are large and costly, and one takeaway was that you don’t have to buy every module.  Focus those capital expenditures on the key project areas and the fewest number of early feasible users.  That way, you can see some progress, and pitfalls, along the way, and only invest more deeply later as project objectives begin to prove out.

Think next about best practices that are not necessarily technical in nature.  There are very real differences between projects that succeed and projects that fail, and they often have little to do with technology.  Best operational practices add real value to an ERP implementation, and smart CIOs consider those workflows and the people who will manage them before evening thinking about specific software.

Recognize the need for strong internal discipline.  This was especially valid for companies who had grown both organically and via acquisition, as different cultures and business styles lead to different processes and different outcomes.  You’re looking for standardized and consistent operations, mapped out before you implement process changes and software to match.

ERP isn’t just about software, it’s about the business transformation.  Most of the best projects are more about people and processes than software.  Software alone is not an effective blueprint for running your business.  Effective change management and project management are the real keys.

20 years is too long to be on the same legacy system.  Businesses change a lot over twenty years – these days more than ever, and twenty year-old ERP systems simply don’t keep up.  Business today is more aligned with technology than ever, and your systems need to keep up.  Organizational change management and careful planning of processes and the people involved are the first steps.

Internal biases are alive and well entrenched.  Most organizations have internal biases, recognized or not.  The main thing is to mitigate the biases by understanding the changes and flows truly required to align your business with its best profit-making capabilities today, and then explore the solutions – from change management and process flow through software and implementation services customized to our unique circumstances – that will truly match your needs.  After all, there’s a good chance those choices will have to work for you for the next twenty years.

(Read the full article here.)

 

 

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Panorama Consulting does a nice job of summing up their view of the key questions companies should ask themselves before embarking on an ERP implementation.  We would concur with virtually all of them.  While a different ten could be just as valid, these are a good starting point for ensuring your implementation team has asked the right ‘big questions’ before the hard work begins.  We’ll reprise them here today from an original posting they did here, adding a few comments from our own experience as well.

 

  1. Do you have the right team? You want the A Team, freed up when necessary to put serious attention to the new plans.  Add to that your vendor team implementation lead consultant, and project managers from both teams.  They should be in on all key planning meetings.
  2. What will the project’s org chart look like? Project roles need to be clearly defined.  Include project management, the core team, functional and technical resources, and key managers who will be involved in the business process analysis.
  3. What will the total cost of ownership (TCO) of the project be? Remember that project estimates are just that – estimates.  Leave margin for error for things not considered, discussed or discovered initially.  Don’t forget hardware, lost productivity or hidden costs beyond your vendor’s purview.
  4. What is the business case (cost justification)? There is always a projected ROI (Return on Investment), or you wouldn’t be doing the project, right?  Beyond the immediate exigencies, be sure you’ve identified the long-term cost benefits – they are often huge, and easily can justify a project.  Establish benchmarks or metrics early on, while understanding that it may take longer to reach them than originally projected (it’s the nature of the beast).  Each company will have its own business case, but yours should be widely shared and understood.
  5. What is your overarching implementation plan? Be sure you’ve worked out things like data migrations (there may be more than one), conference room pilots, necessary modifications and a user training schedule with your vendor.
  6. How will you handle third-party or external program integration? ERP systems don’t typically handle every single aspect of your business – and even if they could, that doesn’t mean that their approach would be your best choice.  Third party applications enable users to choose among best-of-breed solutions to narrower project requirements like shipping modes, EDI, e-commerce and other needs.
  7. What organizational change management strategies and tactics will you deploy? Roles, processes and sometimes even people will change, post-implementation.  Make sure you’ve thought about that ahead of time, so a clear transition strategy can be embraced.
  8. What project governance and controls will you put in place? Poor project management can, as Panorama notes, run a project off the rails.  Be clear ahead of time about who makes what decisions, how they will be made, what controls you will have in place and what issues or decisions will need to be made by the project steering committee.
  9. What milestones will you use to evaluate progress? Take time to evaluate your project at regular intervals, and identify key project criteria that you will compare to with each one.  Don’t be afraid to pull the cord to temporarily stop a project when things go off-track mid-course.
  10. How will you define success? Or as we like to say: What does ‘done’ look like?  This might be the hardest one of all, since continuous improvement – and ERP is simply a tool for continuous improvement – is never ‘done.’  It might be as vague as being better off than before, or as concrete as adherence to a fixed ROI figure.  Each company is unique.  Just be certain in the early going to have some frank internal discussions about what the right success metrics will be for your unique project, and its corresponding investment.

 

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It doesn’t get much clearer than that.  When the world’s leading information technology research company says in effect “be very careful” it might be time to pay attention.

In fact, it was last year when the giant research firm warned those considering “post-modern ERP” that they will not be immune to the “traditional ERP headaches of higher costs, greater complexity and failed integration by 2018.”

The “Achilles Hill,” suggests Gartner, will be the lack of a cloud application integration strategy and related skills.

Carol Hardcastle, Gartner research vice president, said in a statement: “This new environment promises more business agility, but only if the increased complexity is recognized and addressed. Twenty five or more years after ERP solutions entered the applications market, many ERP projects are still compromised in time, cost and more insidiously in business outcomes.”

These so-called post-modern ERP solutions are simply not the “Nirvana” that their cloud publishers want buyers to think they are.  What’s lacking is integration of all the parts, not to mention the skills to pull them altogether.

On-premise providers have had years, decades even, to launch all the necessary software ERP components to comprise a completely integrated suite of applications.  Even those who haven’t will usually have ecosystems of third party providers to provide the key components of those applications, things like accounting, workflows, production management, kitting, manufacturing, planning, purchasing, warehouse management or CRM.

Simply throwing software up onto a cloud service provider does not automatically make these things happen.  Even top tier players in the space we happen to work and live in – the small to midsize business – have mostly only managed to cobble together partial or incomplete ERP cloud versions of their systems, often lacking the full-featured capabilities of their earth-bound brethren.

An article in the UK’s “The Register” (byline: ‘Biting the hand that feeds IT’) noted last year, “Nobody was singled out by Gartner, but it’s been the iPad toting, cloud-friendly sales and executive classes who have driven uptake of business software providers such as Salesforce, side-lining the more considered counsel of those in IT who could have taken a more measured approach.  However, according to Gartner, vendors are also guilty, putting self-interest ahead of their customers.”

Ms. Hardcastle concludes… “The blame for this does not lie solely with end-user organizations that lack the experience and expertise to avoid many of the pitfalls. System integrators and ERP vendors have to be accountable to their customers in this respect.”

The solution, as always, includes the important precepts: Starting with a solid ERP plan… having full management buy-in… analyzing your processes before your begin… aligning people, processes and systems… planning your integrations carefully… and keeping your eyes on the big prize – that is, what you need to do to take your company to the level you dreamed and planned for in the first place.

A dream, Gartner Research might well add, that may not yet include any clouds.

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