My boss once said to me that nobody wakes up in the morning and cries “I’m going to implement an ERP system!”
It’s a fair point. Apart from a few business process masochists that I’ve met over the years, few people out there really go out of their way to implement an enterprise system. Enterprise systems are costly and they drain a lot of time and energy from key resources within a company. They can be generally…painful to implement. And yet I’ve seen so many companies make the move to enterprise systems and benefit greatly from the transition, in spite of the challenges. This raises a question that I’ve had more than a few prospects ask me: “Why on earth do I need an ERP system?”
Pundits have long noted that the “E” in “ERP” is the most important of the three letters. The value in an ERP system comes in its applicability to the entire enterprise and not just to a few selective functions within the organization. And while ERP has been around now for many decades, there continues to be ample opportunity for better enterprise-level integration among companies. Quite often, the “why” of ERP comes in a quick analysis of a Company’s current-state application architecture.
With many of the customers that I’ve helped migrate to Epicor’s ERP platform, I’ve observed a current state application map to include one or more of the following:
- The utilization of stand-alone financial modules such as QuickBooks for financial management. Such systems are good for counting waves, but not for making them.
- The use of manufacturing oriented work order systems for managing the shop floor. Job Shop-oriented systems can be effective in defining product structures and working them through the shop-floor, but are less effective in managing the selling and shipping of manufactured products and in comparing the resultant revenues to costs.
- 1980s-era ERP systems, with one or more bolt-ons for managing product configuration and/or the shop floor. First-generation ERP systems are generally solid when it comes to inventory management, and basic order-to-cash cycles, but are limited in many areas, and are a burden to maintain.
- Paper-based systems for inventory management & time card entry—some customers are still pounding the paper when it comes to basic warehouse and shop floor transactions.
- Varieties of macro-enhanced spreadsheets for doing one of many things. Spreadsheets are a great gap-filling tool, but their limitations quickly become apparent as multi-user capabilities and large data requirements become a necessity.
Based on the above, it is no surprise that companies come to us looking to implement Epicor because their current state is a drafty quilt of poorly-stitched and poorly-patched legacy applications, homegrown boondoggles, and siloed modules. Customers come to us believing that there must be a better answer, and in most cases there is. The problem is, most companies took a lifetime to grow into their patchy ponchos. At certain early stages in their relative existence, most companies can get away with the above scattershot array of systems and pseudo-systems. But these same systems become hindrances as the company looks to scale up, expand its offerings, ramp up its output, or better integrate with customers, suppliers or best-of-breed applications. As these challenges become clear, the “why” of ERP begins to take shape.
Our work as Epicor partners quite often has to do with explaining the “why” of ERP. My own “why” came to me many years ago. At the time, I was still a customer and still quite naive regarding the ERP space. Working on a process-improvement project with my company’s Vice President of IT, I asked him point blank whether our recent ERP implementation had been a success. “Yes!” he replied, emphatically. “Why?” I responded. I was a Lean Six Sigma Black Belt at the time and was practicing my “5-Whys” methodology. I only needed one of them, for his answer changed the way I’ve seen enterprise systems ever since. By implementing an ERP system, we were laying the foundation for everything that was to come. In our case it was configurability—we were an engineer-to-order company, living in an increasingly configure-to-order market, and needed to make moves toward configurability before our old methodologies priced us out of that market. By implementing an ERP system, we set in place the building blocks for product configurability, and our subsequent initiatives took these building blocks and reshaped the way the company did business. Fifteen years and an ERP system later, my old company is still successfully competing in its target markets, proffering configured products, and doing so profitably.
Now every company owns its own specific point in time, and faces its own set of unique challenges, as it tries to grow and thrive in changing markets. I’ve seen a lot of good reasons for moving away from a patchwork of solutions to a more integrated and comprehensive system. My own story may resonate with some, or there may be other stories that better answer the question as to why a company might make the move to an enterprise system. This is all to say that there are a lot of reasons for implementing an ERP system. And everyone here at the EstesGroup would love to hear your story. And if you don’t think you have a reason for implementing ERP, we’d love to talk to you about that as well.
Have a question for our consultants? Trying to determine if your company needs an ERP system?
Have you ever told a customer that you had product in stock – only to find that you couldn’t fulfill the order because the inventory was sold or used in production before you got to it? Or have you ever expedited-in material for an important customer or job, only to have that material used to fulfill a different order or produce a different job? Or maybe you resorted to hiding parts in your desk so that it doesn’t get used to “Rob Peter to Pay Paul”. Frustrating, isn’t it? That’s why Epicor ERP’s Fulfillment Workbench is a critical application for many of my clients.
It’s a common occurrence, in both the retail and manufacturing world, having too much demand for a limited supply and seemingly no way to manage the available inventory. Wouldn’t it be nice to “set-aside” material so that it’s available when it comes time to ship or produce the product?
Fortunately, Epicor’s Fulfillment Workbench has a great way to manage those times when demand exceeds supply. Using the concept of Reserve, Allocation, and Cross-Docking, the Fulfillment Workbench allows management to decide how to best utilize limited supplies in the face of current and future demand. The Fulfillment Workbench has the option to do “soft” and “hard” allocation. In Epicor Parlance, Reserve equates to “Soft Reserve”, and Allocate is equivalent to “Hard Reserve”. Cross-Docking in essence “Hard Reserves” material that is not yet received into inventory and keeps it from being used to satisfy demand other than what it is specifically allocated to.
The “Reserve” function places a “soft-hold” on available material and keeps it from being used to satisfy other demand. However, this “reserve” status is easily removed if that material is needed to satisfy other demand. Whereas material that is “Hard Allocated” needs management permission to be remove that status so it can satisfy a different demand.
Using the Fulfillment Workbench, you can manage inventory for all three sources of demand: Sales Orders, Jobs, and Transfer Orders (inventory coming from another inter-company location). The Fulfillment Workbench provides additional functionality, like Cross-Docking, sorting by priorities, allocation templates, and many more. By utilizing this incredibly useful tool, managing your inventory supply becomes a much less complicated task, and helps make for satisfied customers and efficient manufacturing personnel.
Do you have more questions on Epicor’s Fulfillment Workbench or want to learn more about the product?
What is Electronic Data Interchange (EDI)? In a much simpler five words or less definition, it means “data in, data out”. EDI is a toolset that interacts with an Enterprise Resource Planning (ERP) business software system that takes data coming into the EDI system, processes that data in the ERP, and sends that data back out to the originator (like a customer). You would think that a process which can be explained in only four words would be pretty simple, right? And it can be, if the proper care and attention is given to the EDI’s initial setup and further EDI strategy.
If a customer’s purchase order sent via EDI is being processed and has an incorrect date, or is completely missing a cell’s data, a simple mapping adjustment can be made to correct these sorts of issues. How can you ensure that your customer’s purchase orders are processed into your system correctly, if that attention to detail is not done? How can you be sure the pricing on your sales orders and the invoices that are generated are correct if your price lists are not correctly setup in your ERP system?
The EDI strategy and process is a digital mirror of how your system is currently setup and will reflect your strengths and faults back to your customers and suppliers. Think of EDI as a linked chain and your business is a boat being pulled along by a truck, which represents your customers or suppliers. If all the links are solid, that truck will pull that boat forever always getting to the desired destination, but if there is a broken link, the chain will start to fail and eventually break, allowing that truck to continue driving but it leaves the boat behind stranded in the middle of nowhere. To avoid being stranded and left behind, make sure that your chain is strong and durable by taking time setting up the ERP data properly, the EDI mapping, and running many tests before going live with customers. With the proper care and attention to your EDI solution it will not matter how large that boat or truck gets. Your chain will not break, it can handle it. Now ask yourself this, is your chain strong and durable enough? Or could there be some broken links you may or may not even know about?
Still not clear on the question “what is electronic data interchange?” Ask us anything, we would love to chat.
“So long as a man’s eyes are open in the light, the act of seeing is involuntary.” – Herman Melville.
The idea of vision is a pregnant metaphor, full of intimations and implications. In its verbal sense, vision refers to the act of seeing, of perceiving the world around us. As a noun, one’s vision has more to do with a sight into the future, to a place where one wishes, eventually, to reside.
The idea of vision, in both senses, tends to suffuse the jargon of everyday business. When customers come to us, they are not just in search of the domain knowledge related to a given enterprise system. They come to us looking to understand how to best integrate the use of a system with their particular business climate, such that they can best achieve their strategic goals, their vision. Customers tend to be strong in understanding the opportunities available to them. That is, they are able to formulate a vision for the future. Customers often struggle to put into place the processes, practices and procedures that allow them to achieve the vision that they’ve formulated.
After a losing year, the CEO of a company for whom I once worked, remarked (only half-sarcastically) that our company was “perfectly structured to achieve the results we’ve achieved.” That is, our company had a strategic vision, but our actions failed to achieve it. Our actions had achieved a different (and less profitable) vision. And I would offer that the reason for our failure to achieve our vision was in our inability to remove the paradigmatic lenses that colored everything we perceived, and ultimately drove our actions.
Einstein famously described insanity as the expectation that the repetition of same behavior will yield different results. In that light, I have worked for and worked with a few companies over the years that have gone insane at one point or another, seeking to achieve new strategic goals using the old methods that had worked in previous generations. The logic behind such an approach has some justification – if it ain’t broke, don’t fix it, right? Such a an approach seems fine until a losing year leaves the CEO glowering down at you, over his horn-rimmed spectacles. The problem here is not one of vision, but of lenses. A company’s lenses serve as the paradigms that cement the company’s habits, culture and means of solving problems. As time goes by, and circumstances change, these lenses may begin to skew reality. In the most dysfunctional of environments, these lenses may even warp perceptions as to encourage the most maladaptive of business behaviors.
As ERP implementation consultants, it is of necessity that we come into a business from the outside, unaware and unaccustomed to the perspectives that shape the business in question. As consultants, we also have the good fortune of being exposed to many companies, in different industries, working with various products, catering to disparate markets. The expectation here is that our ERP implementation strategies across such environments gives us a cadre of different perspectives to use, and that we should be able to use these to the benefit of our client when they develop a vision and strategy. Because of the natural ignorance to a customer’s cultural worldview, and the access to alternative perspectives, the goal of a consultation effort has less to do with the use of an enterprise system than it does with the opportunities for a fresh perspective. The implementation of a new system becomes a means of surfacing and understanding the customer’s existing lenses and the consulting effort becomes an opportunity to try out new lenses, lenses that can be leveraged to formulate new processes and practices, that address changing business landscapes, and help companies achieve their respective strategic visions, in so doing.
So what is your vision? Come talk to us at the Estes Group, and see if we can help develop a vision and strategy to make them into a reality.