Posted by Daniele Fresca on Wed, Jun 09, 2010 @ 02:48 PM
Purchasing and implementing a new Enterprise Resource Planning (ERP) system can be a daunting prospect for many. Even more so than the decision itself of WHY to purchase, many companies are confounded by the question of WHEN to purchase. The economy is still questionable. Some companies are seeing a rebound and others are merely seeing the hope of a rebound. If this is true then why should a company decide to purchase a new ERP system now, when there is no guarantee that a profitability rebound is on the horizon? Given that there is probably no perfect time to purchase ERP the question then is why should I buy now? Below are three of the top reasons why buying now is the right choice.
First, and most importantly, think about where you want to be in a year, two years, or more. If your business isn't at optimal capacity now but your plan is to get there within a year or even two, now is the time to buy. If you purchase now, you can strategically plan your implementation and take more time to be meticulous about data conversion, data transfer, and possible changes to processes or procedures. You can also allocate the proper resources and time to the implementation. Having the appropriate people involved from the beginning and with the ability to commit the time to the project is by far the biggest hurdle with any implementation - regardless of the chosen system. By the completion of "go live," chances are very good that the steps you took during the implementation will make your company more efficient and more aptly able to handle the increase in business that is anticipated.
Second is the fact that ERP companies are also still looking to make sales (read deals!) and are offering more tailored, industry-specific packages. The rapid consolidation of companies that we saw a couple of years ago has, for the most part, subsided. The result of the consolidation is that ERP system capabilities are more defined and it is easier to find ERP that more adeptly handles your company needs. While one company might have multiple packages to choose from, overall choices of ERP systems that truly match your company's manufacturing type have diminished. Thus, you have a field of less than 10 ERP systems, instead of 30 plus, from which to choose. While less options doesn't seem like an advantage, think of it as weeding out a significant number of systems that wouldn't have been close to a good fit anyway. The time saved in the beginning search process is significant.
Lastly, the information available, via a multitude of resources, is more abundant than ever before. From basic internet searches to social media sites (i.e. Facebook and Twitter) to non-biased ERP comparison sites - all avenues provide a vast amount of information for any ERP consumer. Never before has the power of the internet become such an ally for research and development. A quick search of ERP companies can yield a list of top award winners, top customer comments, valuable reviews, and priceless notifications of pending lawsuits. The information age has pushed the data available out of monthly print publications and into our daily lives. By utilizing the information available, consumers are better equipped to ask the right questions, compare the answers to known information, and gain knowledge via other users out there in the World Wide Web.
So when thinking about your company and how you will rebound, think about ERP as a foundation for everything you do and a springboard to make you stronger in the future. Your quality commitment, your goals for success, your ideas for strength as the economy rebounds - all of these can be achieved with a solid ERP system in place. If you don't have that solid foundation now, then perhaps you should be thinking about getting it in place now.
Posted by John Asi on Tue, Jun 01, 2010 @ 03:23 PM
Okay, so that is not how the line from Hamlet went (in more ways than one), but what is happening with traditional EDI in the industry these days. For a standard that has been around for quite some time without much change, is it still relevant in the modern day world of the Internet, Web 2.0, XML, Web Services, etc.
I was curious to see what the X12 Organization had to say about the future of EDI.
Interesting bit of reading, if we were in 1990. We are in 2010. This is the future. The day and age of ultimate connectivity to data, instantaneous communication, endless content, and more than enough blogs to numb the mind is here whether we like it or not. Not sure if you have heard, but there is so much data out there on so many websites that the IPV4 address space may be depleted as soon as September of 2011. And I was worried about the ozone layer. Traditional EDI must be dead.
Don't you believe it. The reported demise of traditional EDI has been floating around for over a decade. It seems that every time a new standard or protocol or buzz word appears, EDI is on the verge of being put to rest. Then it never happens. A perfect example of this was when the concept of Web services started to materialize. The thought was that EDI would be obsoleted in favor of the new method of passing data. XML was the standard that was adopted for passing messages through the web and it was thought that this format would at some point replace the "archaic" EDI formats currently in use. That was the thinking in 2001.
Interesting thing is that the industry did not seem to buy into the Web Services concept as a replacement for EDI and businesses started looking for new ways to communicate EDI transactions with each other. Even though XML was the bright new child in the industry, not many companies were jumping on board. Big players such as Walmart, J.C. Penney, and Hallmark understood that XML existed as an option, yet they opted to continue using standard EDI transactions rather than take the plunge with the new technology right away. In addition, Walmart took the initiative to drive some change in the landscape by implementing the use of an Applicability Statement 2 (AS2) protocol for connecting directly between two trading partners and eliminating the value-added network (VAN). This would introduce savings for the businesses that would adopt this protocol and helped fuel the continued growth of EDI in the supply chain.
As much as it seems that EDI may not play well in new environments, part of its ability to survive is that fact that it is adaptable. Even though traditional EDI tools were not replaced by a new data interchange standard based on Web Services in the early 2000s, those same EDI tools were used as the framework to support new technology. As these technologies mature, some of the tools used for processing EDI may change, but the standard will still define the content.
To further prove how relevant traditional EDI is to the modern industry, there have been many companies from retail foods to high end automotive companies that continue to benefit from the use of EDI. Two examples of such are Natural Products Market Place and Mercedes-Benz US International. Both of these companies made the investment to use EDI to manage their supply chain and have found that they are in a better position to handle difficult economies and fully realize good market climates because of their choice.
IQMS, a leading ERP company, has put a significant amount of energy into building upon many technologies including Web Services and community driven portals to bring high levels of data visibility and collaboration to its user base. Traditional EDI continues to be a relevant component in the suite of tools that the company offers. Through the use of the eCommerce Module, IQMS has a large customer base that is realizing the benefit of an integrated EDI solution utilizing a combination of traditional, non-traditional, and XML based EDI. These customers are able to handle orders and shipment notices in a much more timely fashion than would be possible in a manual entry process. As IQMS moves further into 2010, the number of requests for new transactions and trading partners has picked up pace. More businesses in the supply chain are moving to leverage the power and efficiency of a standard that has been around for over 25 years.
Is EDI dead? Not by a long shot.
Posted by Shannon Holloway on Fri, May 21, 2010 @ 12:24 PM
I watched the new Alice in Wonderland movie a couple weeks back. It was very entertaining and, in a strange way, educational as well. (Spoiler warning - if you haven't seen it, I mention some details below that you may not want to know.) After the 3D excitement was over and I was driving the 7 miles home from the theater, it struck me how many similarities there are between Alice's journey and the journey of ERP software implementation. I know, a bizarre analogy, but this is how my mind works sometimes.
The parallel that stood out most was the mental voyage that Alice took within herself. She started completely in the dark with no understanding of why she was there or where she was going. If you are part of a newly appointed team who has been given the task to implement a new ERP software package, you may feel the same way and the quote, "If you don't know where you're going, any road will take you there" might come to mind. Just as Alice has the White Rabbit, the Mad Hatter, and many others to show her the way and help her along, it is the job of the software provider to be the guiding influence to ensure a successful implementation. From your sales person, to your implementation expert, along with trainers and technical support specialists, you should have a team of experts to help you along the way as well. This starts by providing a picture of where success will take you. Stephen R. Covey said it well when he advised us to "Begin with the end in mind". (The 7 Habits of Highly Effective People) It is important for everyone in the organization to see how a successful implementation will benefit the company, their customers, and themselves.
Once Alice understood why she had been brought back to Wonderland and the large task that lay in front her, she was a bit overwhelmed. Her exact words were, "This is impossible". To that, the Mad Hatter replied, "Only if you believe it is". Even with that advice and all of the other help she was given, Alice was still unsure. She continued to search for a "Plan B", a safety net that would prevent her from having to take the risk she was so determined to avoid. During an implementation, it is very easy to try and hold on to "what we've always done". It is important for everyone involved to understand why the status quo is no longer good enough and that going back is not an option. This leaves the only means of success to be moving forward.
It wasn't until Alice looked at all that was at stake that she realized that failure wasn't an option. It was then that she threw away her safety net and made the decision to be the champion that everyone else knew she was. Whether you are the implementation project leader, a member of the implementation team, or an end user learning the new software for the first time, decide to be the champion. Look back only to find the starting point where improvement begins. Look forward to find understanding, possibility, and ultimately success.
Posted by Glenn Nowak on Tue, May 04, 2010 @ 10:45 AM
If you can't measure it you can't improve it?! How many times have we heard that before? But when we go into manufacturing companies looking for ERP systems and ask some of the basic questions, like "what is your on-time shipment accuracy?" or "what is your machine efficiency?" or "what is your daily cost of scrap?" we get blank stares or answers like "it's over 90% I think" or "it's in the 70 to 80% range I think" or "we don't have that much scrap." That would be like an ERP software company responding to the question of "how many of your customers meet the target go live date" with the answer "most of them". "Most" can mean a lot of things - 95%, 75% or 51% which is a big difference in the bottom line.
For most businesses today the difference in a couple of percentage points on machine efficiencies, OEE, or scrap rates can mean thousands of dollars per day. IQMS customer Plastic Components Inc. has detailed their costs to the point of knowing exactly how much profit they make - on every product they make - and conversely how much it costs for every piece of scrap they make. This information is published to the employees so that they can know and take ownership of exactly how much it costs when they make bad product. So instead of saying "this scrap is costing us money" they go to the chart and say this scrap cost us "x" number of dollars and we have to make "y" number of extra product to just break even. This type of accuracy is not only something that their employees understand but provides a more tangible target for success.
The PCI example is just one example of how a company can define their business metrics. The first step in the process is to determine which metrics are important to you as a manufacturer. Companies usually know what they want to measure already and most ERP software companies will have published sets of key performance indicators (KPIs) that you can use to select the most important metrics for your business.
Once you have selected the metrics you want to measure for your business, you need to set your benchmarks of where you are today. Unfortunately, in many cases the data may not be readily available in most ERP systems and therefore it becomes cumbersome and time consuming to gather the data. If you have an ERP system with the built in KPIs the process becomes simpler than if you have to gather the data from spreadsheets or other sources within your operations.
The next step is to make the objectives and results available to your team. In the case of PCI they published the metrics on bulletin boards on the shop floor so all their employees can see how well they are doing against their goals and how their contributions are affecting the bottom line of the company. Once your employees can see how their efforts make a difference within the company and the rewards of profitability - whether they are job security or performance bonuses - then you have truly achieved the goal of measuring for improvement.
For more information on PCI, please review their case study.
Posted by Daniele Fresca on Thu, Apr 29, 2010 @ 01:02 PM
We have all done it. We've all said something was "good enough." It isn't great, it isn't bad; it's just okay. Whether it is your house, your car, your job, etc.... we often find that settling for things is easier than pursuing another option. And we are right, it is often easier. But is it the best way to go about evaluation and decision making. No it isn't.
The same holds true with ERP software. When asked, leaders of many manufacturing companies I recently talked with tell me that their ERP software is "just okay." They know that it doesn't meet a majority of their needs but they aren't compelled enough to change. The reasons vary as infinitely as the companies themselves. For some, not changing is due to cash flow - or lack there of. For others, business is slowing down and committing to a new ERP system isn't a top priority. For a different group, the opposite is true; business is picking up speed again and now there is no time to put effort into a change. Still others feel the pain from their last ERP implementation many years ago and assume that doing nothing is simply easier than changing.
Whatever your reason is to settle for "just okay" think of this: in other aspects of your manufacturing facility is settling an option? If product rolled off your machines, conveyors, or assembly tables that was obviously flawed, would you still send them to your client? If an employee was consistently late or offered little value would you still employ them? The truth is we put more stock in the quality of our products and employees than we do in investing in the proper tools to assist in the process. ERP is one of those important tools that is often neglected and it shouldn't be.
ERP systems should make the job of running a manufacturing company easier by accurately meeting your business process and manufacturing needs. Your ERP system should allow you to do more with less! It should help identify areas within your processes where time and money can be saved. It should increase communication across all departments within the company. A great ERP should also automate information obtained from the shop floor and eliminate redundant data entry.
But it is more than just basic ERP functionality. An ERP system should also be able to provide relevant information to its users in a timely manner, with valid data. If a facility manager can't get information like "total down time and its main reason for the last 30 days" or "most profitable and least profitable produced part - based on actual costing - within the last 2 weeks" then the ERP system isn't doing enough for you. Your ERP system should tell you when tools/dies/machines are up for maintenance based on actual usage before they require repair, rather than after they fail. A good ERP system should be an enhancement to the manufacturing process, not a hindrance. By obtaining valuable and accurate information in a timely manner, ERP should help manufacturers produce better product because it identifies areas of improvement or success.
So, I invite you to take a few minutes and think about how your ERP system is helping your company and how it might help your become more competitive. Evaluate your ERP and ask is it "good enough" and then decide to demand great!
Want more information on how a great ERP can help your facility? Download our whitepaper "How The Small Get Mighty"
Posted by Diane Ramaglia on Mon, Apr 12, 2010 @ 09:22 AM
When a company purchases a new Enterprise Resource Planning (ERP) system there are any number of reasons why they have made that decision. A company would normally have a project team that will implement the system and they are considered the in-house experts for their functional areas. They go down the path of implementing specific modules and during that time they might hold off on improving or implementing other modules that might streamline their business processes. They might say, let's do this at a later date and focus on what is critical at that time.
A common theme is that they are live on the system and they never seem to go back and look at what they can still improve. They get busy with their day-to-day activities or employees that were on the implementation team leave and no one takes over that expertise. So there is minimum improvement while they are using the system.
When a company spends that much money on software and consulting services, I would think that they would want to improve and streamline their business processes because, in the end, it would be a cost savings. You could possibly remove staff that is no longer needed or you may have an increase in business and not have to add more staffing.
As a manager of a Professional Service department for an ERP system, I am starting to see an increase in companies that are re-implementing because they see the benefit. Is this something your company would be interested in doing?
Posted by Daniele Fresca on Thu, Apr 08, 2010 @ 06:41 AM
This is the year! You have decided you are going to evaluate your existing Enterprise Resource Planning (ERP) system or make the leap to buy a new one. Congratulations.
Now where do you begin? There are many tools available to help (internet sites, downloadable ERP questionaires, consultants) to evaluate and narrow the field of suitable suppliers. However, I would suggest that one of the best decisions will be to make "industry specific" a key determining factor in the overall evaluation.
In the first stages of vendor selection, often times immediate features, functions, databases, and cost are on the top of the list for review. They should be. But whether or not an ERP system is designed with your company business and manufacturing processes in mind should also be among your top criteria. Why? Because a highly effective ERP system cannot be eveything to everybody and still have the depth to meet the needs of specific industries. An ERP system that speaks the same language as your processes, your employees, and your business culture provide a competitive edge over ERP systems that don't. This criteria also gives you insight into what other companies in your industry are using their systems for. By this I mean that ERP systems that are industry specific have development driven by other companies in the same industry.
For example, in the medical industry does the ERP understand and handle complaint tracking? Do the ERP salespeople say "yes" because you can pick up the phone, take a complaint, and type it as a note somewhere in the software or is there a specific module for complaint tracking? What about the automotive industry? Does part of their electronic data interchange (EDI) process include any manual entry or is it completely automated? How about plastic injection molding? Does a family tool bill of material (BOM) require more than one BOM or more than one machine to schedule?
Industry specificity also translates to quicker ROI because implementation and training times are reduced. Choosing an ERP system that understands the industry you are part of makes it easier when comparing your needs to the software. The ability of a software to identify the subtle nuances associated to your industry make data transfer, data import, and the roadmap of implementation more concise. In addition, customer driven requirements that are inherent in your industry are known and therefore manufacturers don't have to hassle with "workarounds." Instead of modifying all the manufacturing processes to fit the software, it is simply the other way around.
So when you decide to evaluate whether your existing software fits your needs or an upcoming purchase, looking at industry specific ERP will give you a competitive edge.
Posted by Randy Flamm on Wed, Feb 24, 2010 @ 03:39 PM
There's no argument that fully integrated manufacturing ERP system is the way to go. It is very interesting that so many of the top ERP systems advertise that functionality such as Electronic Data Interchange (EDI), Warehouse Management (WMS), Manufacturing Execution System (MES), Preventative Maintenance (PM), Quality Statistical Process Control (SPC), to name a few, are "integrated" into their ERP system. When you get under the covers you might find that "integration" means another company's products running on a different database with periodic batch transfer or no data sharing at all. They then fall back on the "Best of Breed" argument that allows them to point to a different solution that can "integrate" to theirs with hardly any work; after all they support Service-Oriented Architecture (SOA) which allows any system to be integrated to our system. Not so fast.
The reality is that there are big costs involved to integrate and support a multi-vendor manufacturing system. SOA technology does nothing to address the costs to maintain the integration through the many updates to the best of breed and ERP software that will take place over time. Many times these software vendors will fall back on the promise of SOA as a way to disguise the fact that their product offering is limited and will not handle all of the requirements of the manufacturer.
You should be looking for an extended ERP system on a single database with user interfaces that have a common look and feel. The data synergy that can be achieved with an ERP system that has all of the above functionality built into the foundation of the product is the largest advantage over the best of breed model.