Over the last few years, I’ve seen companies perform every possible inventory management tactic to mitigate the supply chain challenges that afflicted the nation as a function of the pandemic. Some strategies proved to be detrimental, with manufacturing and distribution companies burdened at times with massive quantities of low-turn product.
That is to say, if you are a distributor recovering from stressors due to the pandemic, optimally managing your Prophet 21 inventory levels is of utmost importance as you head into the new challenges of 2023. COVID-19 and other recent global events are testing the resilience and flexibility of supply chains.
How Can You Prepare Your Supply Chain for 2023?
Slimstock is one company that can show you how to be ready for the possible supply chain rollercoasters of the new year. Slimstock’s forecasting, planning, and purchasing solution integrates with the P21 application to bring you to the next level of P21 efficiency and P21 optimization.
Slimstock is the market leading AI-powered inventory optimization software. Slimstock helps companies using Epicor Prophet 21 by enabling the delivery of the right stock to the right place at the right time.
Slimstock does this by all-in-one P21 integration of Inventory Forecasting, Demand Planning and Purchase Optimization, with machine learning capabilities.
Over the last 25 years, Slimstock has helped thousands of companies to boost profitability and unlock working capital by improving availability, increasing efficiency, and eliminating waste with guarantee on ROI within a year.
Since their inception in 1993, they have worked in collaboration with business leaders, domain experts and academics and the P21 user community to develop their award-winning inventory optimization platform, Slim4.
Join Jeff Steinecker, Dennis Weir, and Ryan Shanks, on November 30th at 4:00 (Eastern), as they work to help Prophet 21 companies in supercharging their P21 supply chain strategies and practices.
Meet Slimstock at ESTES INTEGRATE 2022
Jeff Steinecker(Strategic Accounts Executive at Slimstock): Jeff has an extensive experience in helping customers realize gains in productivity, efficiency, and fun. He is a knowledge expert in supply chain and can align, lead, and grow supply chains with assured returns.
Dennis Weir (Business Development Executive at Slimstock): With a strong background in supply chain, Dennis is your Knowledge Partner for Demand Planning and Inventory Optimization. He is excited to represent Slimstock and answer any questions you may have.
Ryan Shanks (Pre-Sales Demonstrations & Solution Architect at Slimstock): Ryan has a background in Supply Chain, primarily focusing on Logistics, Distribution, and Sourcing. He enjoys sharing knowledge with others and thus is delighted to be a part of the webinar.
Eric Kimberling and the team at Third Stage Consulting serve as thought leaders in the digital transformation community, helping customers through software selection, change management, system implementation, and the integration of technology and business. Their “Transformation Ground Control” podcast series engages the larger business and technology communities to address various topics related to business strategy and digital transformation. Recently, I was able to sit down with Eric and discuss a topic that had become quite important to me in the field of ERP implementation — ERP culture.
What is ERP culture?
In our discussion, I defined “ERP Culture” as the set of attributes or characteristics of the company’s overall business culture that support or inhibit the successful implementation of an ERP system. Over the course of an hour, we covered several of these attributes and how they apply to a given implementation.
This topic formed organically enough — I had recently worked with two companies that had gone live on an ERP system within a similar timeframe. The two companies had a number of striking similarities:
The two companies were of similar size.
Both companies were privately-owned, family businesses, headquartered in the same state.
The firms both worked in roughly-analogous market environments, providing products of comparable complexity.
Both companies were coming from antiquated, 40-year-old business systems.
The companies had similar project budgets and similar core team contributions.
The two companies had so many similarities, and yet one implementation was a ringing success and the other was a frustrating mess. In trying to perform forensics to understand just why one implementation was successful and the other a failure, I began to wonder whether the differences between the two projects were due to the significant differences in the cultural makeup of the two companies.
Having once worked in the area of Lean Six Sigma, the idea of “Lean Culture” had been well documented — the notion that a successful implementation of Lean methodologies was highly contingent on the culture of the organization. I tend to think that the same applies to the ERP community: that the success of an ERP implementation rests heavily on the cultural foundation of the implementing organization. That said, what are the elements that comprise the company’s cultural foundation?
ERP Culture & Digital Transformation
Clarity of Focus
Successful companies are constantly separating wheat from chaff — separating key initiatives from tertiary activities. They tend to be good at taking initiatives to their successful conclusion. They are good at avoiding distractions. In the words of Jack Welsh, they “pick a direction and implement like hell.” And when and ERP project occurs, they becomes the primary focus of the organization, and other initiatives get put on hold. Unsuccessful companies tend to be distracted by shiny objects and this distractibility infects their implementation projects.
Attention to Detail
Successful companies are process-oriented — they understand the importance of specific activities and are not prone to “skipping steps.” At times they are methodical to a fault. This is especially the case when you compare them to “cowboy companies” — companies that play it “fast and loose” in their daily business lives. In the execution of an ERP system, these tendencies quickly become evident, especially when implementing ERP functionality such as labor time entry and inventory management. Successful companies take great pride in the cleanliness of the data involved in these processes. Less successful companies tend to let their data devolve into chaos. And you can never successfully implement ERP from a foundation of chaotic data.
Initiatives such as an ERP implementation are not unfamiliar to successful companies, as such companies tend to plan out initiatives before they do them. They understand the value of a plan and its execution. Unsuccessful companies operate like a headless chicken — lots of activity, but very little direction. The value of such a tendency is self-evident: companies that don’t plan to get to a certain point rarely get there.
The term “empowerment” generally elicits eye rolls in the manufacturing community, as it sounds like something you’d hear in a mandatory diversity training seminar. If I were to give the term a more rigorous operational definition, I would describe it as the tendency to clearly define individuals’ areas of responsibility, making them accountable for clear outcomes in those areas, and providing them the resources and autonomy to achieve those outcomes. Unsuccessful companies tend to have a domineering management style, where a few “alpha dogs” fight over decisions, while the rest of the organization resembles an army of chronically depressed lemmings. A fundamental tenant of implementing Lean is the ability for teams to define the processes in their areas of responsibility. Such is the same in an ERP system, where configuration decisions can greatly impact process performance. Such a monumental task requires a team of individuals that have the responsibility, accountability, and support to see it though.
By nature, successful companies are proactive — they are perpetually looking to understand how the chess game plays out. The tendency to look ahead imbues the sometimes tedious steps of an ERP project with a degree of value that is easy to neglect. Such companies tend to be quick to solicit and receive feedback. Proactive cultures also tend to be quick to have honest conversations of the state of a project, when things are not going as planned. Such candor is not a mere complaining — it is the willingness to be accountable for uncomfortable circumstances. The opposite of these tendencies is passivity. In a passive organization, individuals might have trepidation or concerns about a given issue, but lack the proactive tendencies to get ahead of these concerns and bring them to the surface
Sense of Ownership
Ownership is the flipside of empowerment. Highly-empowered employees tend to develop a strong sense of ownership. They are not looking to have things done for them — they’re looking to understand the intended outcomes of a given task and take ownership of them. These are the best kinds of team members to have on an ERP project, as they are self-motivated and are constantly looking to move the ball forward. It’s a question of push vs pull: I’ve had project managers on projects where the team had a lack of ownership, describe the initiative as “pulling teeth” — they were perpetually having to drag the team along. This is generally an indication of ownership issues.
Companies vary considerably in the degree to which they encourage their employees to understand the overall company processes, outside of their individual silos. Successful companies tend to have a greater degree of cross-functionality then their unsuccessful counterparts. They recognize the value of understanding an organization from front to back. As a result, their team members are not content to just understand their own small areas of the map — they want to know the whole thing. One of the great outcomes of an ERP project is the level of cross-functionality that it affords.
Cultural Tendencies & ERP Success
An early mentor of mine once told me that an implementation is equal parts technical and cultural, and if you neglect the cultural, you’ll never achieve the technical endpoint that you desire. My life in ERP has proven this maxim time and again. ERP projects are never easy. But if a company lacks some basic cultural tendencies to support a successful implementation, they will find themselves struggling to achieve their lofty goals.
One cyber world story that captivated me as a youth was the character of “Ultron,” as depicted in comic books and in the movie adaptation of The Avengers. The character was a breed of artificial intelligence created with the intent of protecting the earth. But he turned against his creators, and against the earth itself, becoming a cyber super villain in the process. Origin story complete. Now queue the good guys.
Such is the nexus of superhero narratives. A good intention turns violently wrong, necessitating radical intervention. Movies and comic books love to prey on fears of killer robots and cyber intelligence. It’s an archetype as old as the myth of Daedalus and Icarus: technology going too far and humanity in its arrogance flying too close to the sun, then landing on those old Led Zeppelin t-shirts instead.
This amounts to a technical placebo. The cybersecurity plan once implemented gives the impression of the cure without any real medicine provided. And while the attempt to paint over one’s data security problems is not itself an act of malice, it can nevertheless have deleterious effects to the organization in question.
My own experience in the business world tells me that user oblivion is as dangerous as malice when it comes to cyber vulnerability. A corporate network with rudimentary cybersecurity and normal online hacking attempts, such as phishing scams or malvertising, can be more problematic than a secured network under a heavy cyber attack, such as ransomware.
A Cyber Attack from an ERP Perspective
While the tale of Ultron and the Avengers had itself a happy ending, the story of many businesses is not so optimistic. I once worked for a manufacturing organization that was on the cusp of an ERP (Enterprise Resource Planning) cutover. Painstaking work had been done to ensure that all steps were accomplished and that everyone was ready for a successful go-live.
Training, communication, data conversion—all of the pieces were in place. Cutover weekend went without a hitch; the steps in the go-live plan were executed without issue. The first day live went off without major problems. The normal hiccups associated with a new system surfaced, but nothing unexpected came the way of the ERP implementation team.
On the second day after the ERP go-live, users quite suddenly lost access to shared network drives. Soon after, they began receiving errors when trying to save ERP transactions to the database. Then they abruptly lost access to the application entirely. Amongst all of the communication, they hadn’t even realized yet that their email server had gone down and that they were therefore no longer sending nor receiving communication. Their network had been completely compromised. Chaos ensued.
When people think of the most common reasons for an ERP failure, they normally speak of over-customization, or a lack of management support. They rarely think of ransomware. But for the company in question, getting ransomed over cutover weekend was the first step to a cascading number of failures. In a panic, the company reached for paper-based manual processes while communicating to customers and suppliers over hotspot connections, using the employees’ own private email accounts. It was a cyber mess on all ends and resulted in late shipments, efficiency issues, unhappy customers, and months of work to resolve. Time and talents could have been spent on things other than cyber attack recovery—if only the company had been prepared through preventive measures.
Companies Running ERP Systems Can Avoid Ransomware
The moral of this story is less than heroic: there are no super powers that can save a network that is unprepared, or insufficiently prepared, for an attack. And there are no super heroes to jump in and avenge the wrongdoing.
Avoiding a cyber attack entirely is always preferable to avenging it after it’s happened. Many companies believe they’ve taken the steps necessary to mitigate a cyber attack. Enterprise risk management needs to be an ongoing activity, however, with business owners and executives involved in designing, understanding, and implementing a cybersecurity plan customized to the vulnerabilities of the industry under attack—because every industry is ALWAYS under attack.
A company’s greatest vulnerabilities are often the ones that they never realized they had. The greatest risks are the ones they believe they’ve already mitigated. The company in this tale of ERP implementation security chaos thought they had done everything internally to secure their network. But their efforts were done in a vacuum, without any impartial opinions or outside analysis. They weren’t out to create a monster, but their vulnerabilities created a monstrous problem. They didn’t feel they were walking on enemy ground because the villians were hidden and undetected by current cybersecurity measures.
The lesson to be learned here is that malice often masquerades as magnanimity. The most significant threats to an organization are often clothed in good intentions.
Are you feeling the cyber risk and wondering what you can do to protect your business? Don’t avenge your problems—prevent them before they’ve occurred. Get a security assessment, identify your vulnerabilities, and assemble your future. Know the problems you had yesterday and predict the ones you might face in the future of cybercrime.
Longtime NHL coach and living legend Scotty Bowman once famously claimed that “statistics are for losers.” For a game filled with numbers, that was a pretty bold statement. Around the same time, business author Peter Drucker, a legend in his own right, argued the opposite point, saying “if you can’t measure it, you can’t improve it.” There is certainly something to be said for “the bottom line” — the final score of a game is ultimately the most important number.
But a compelling case can be made that a winning game, a winning team, or a winning organization is comprised of many discrete elements, and that by seeking to measure and improve these key elements, the overall system will benefit accordingly. Our contemporary Moneyball sports world rendered Bowman’s statement a quant anachronism. Similarly, in the business world, managers and executives increasingly look for metrics that help them understand their areas of responsibility.
“Running the numbers” is not a substitute for successful management, but can be a valuable tool in its execution.
On that note, the National Institute of Standards and Technology (NIST) published a list of “20 Cybersecurity Statistics Manufacturers Can’t Ignore” which details some of the critical numbers that separate winning companies and organizations lost to the nefarious designs of malware, hackers, ransomware and the varying forms of cybercrime. From this list, a few highlights immediately come to the fore. By listening to the information embedded in the data, organizations can act quickly to mitigate the biggest threats that they didn’t know they had. A good manufacturing cybersecurity strategy can address old problems, predict new ones, and keep all operations cyber safe.
Ransomware Remains a Primary Threat to Manufacturers
The impact of ransomware on businesses has been monumental. According to NIST, 1 in 5 small or medium-sized businesses (SMBs) report that they have fallen victim to a ransomware attack. This makes ransomware the number one threat to organizations. Ransomware is unique among attacks in that it does not seek merely to damage the resources within a network. Rather, a ransomware attack encrypts company files, making them inaccessible to the organization and its users. Access to the decrypted files is only provided once payment to the assailant has been made.
The effects of ransomware are immediate. When a company gets ransomed, all operations affected by the encrypted files come to a grinding halt. This has a cascading effect across the organization as it struggles to stay open during the crisis. This often results in delayed production, late shipments, confused inventory levels, and frustrated customers. To cope with the outage, the company normally resorts to a handful of painful workarounds that are difficult to unravel and clean up once the ransom has been paid.
Ransomers Attack & Manufacturing Cybersecurity Teams Rally
In DoD environments where data cyber security is key, the impact to a company’s reputation can be detrimental. As such, it is no surprise that a ransom situation can cause an organization to go out of business entirely. Worse still, the costs are increasing. According to NIST, over the course of a single quarter in 2019, the average ransomware payment went up by 13% to $41,198. The impact on an SMB’s cash flow should be self-evident. Hackers know no limit when it comes to ransomware targets, attacking companies of all sizes. For that reason, there is no reason to believe that your organization can hide under the hacker’s radar. Therefore, manufacturers across the nation are increasing their investments in enterprise risk management and security solutions.
Microsoft Office is a Primary Vehicle for Malware
Microsoft Office has been a mainstay of organizations large and small. But the security risks of Microsoft files in an unmanaged environment are considerable. According to NIST, 38% of malicious file extensions come from Microsoft Office formats such as Word, PowerPoint and Excel, making this the most common set of file extensions. Microsoft’s Office suite has long been entrenched in the daily life of SMBs and manufacturers. Shop schedulers frequently define and redefine priorities using spreadsheets, SOPs utilize document formats for process control, and presentations to a company’s staff routinely take the form of a PowerPoint presentation.
While these file formats are common, they are far from invulnerable, and the robust capabilities that Microsoft created within each format provides opportunities to embed hostile code that can detonate once the files are saved within the network parameters of an organization. And file sharing across the manufacturing community is widespread. It is common, for instance, for vendors and presenters at manufacturing conferences and trade shows to hand out flash drives containing promotional materials. Manufacturing cybersecurity policies need to include these activities because should these files be infected, the consequences of introducing them to an unprotected company network could be catastrophic. As such, companies need to take care in managing the devices that connect to network, and the safety of the files they contain.
Social Media Accounts Become a New Target
Social media is widespread, and manufacturers are increasing playing along in order to get more visibility for their products and more interactions with their customer base. But with the proliferation of online social interactions comes increasing risk. In fact, 63% of MSPs anticipate that hackers will increasingly target social media accounts, according to NIST. Similar to Microsoft Office, social media toolsets have increasingly found their way into organizations. Initially thought of as a distraction, these toolsets have become embedded in many organizations, allowing for more collaborative communication between suppliers, customers, individuals, and groups.
Like the Microsoft Office suite, social media platforms have been enhanced and expanded, with new capabilities added on a routine basis. But a single compromised account can compromise an entire network when accessed from within the network’s parameters. Worse still, given the continually evolving nature of social media platforms, the threats are similarly evolving. Business owners need to understand what role social media will play in their organizations, and how these platforms can be leveraged without excessive risk. Manufacturing cybersecurity measures should take into account all accounts, including those on Twitter, Facebook, and similar online social meeting grounds.
When it comes to cybersecurity for manufacturers, the numbers don’t lie.
Cyber security solutions are technological processes and practices designed to protect networks, computers, programs and data from attack, damage or unauthorized access. Over the years, they have become a necessity in order for industrial firms to succeed. Manufacturing supply chains are often interdependent and integrated. Security within the entire supply chain will lessen any vulnerabilities that could impact the company as a whole. Manufacturers must prepare for a cyber security breach by way of proactive measures.
Has a hacker already gained access to your sensitive data?
All companies have private data that ranges from non-secure to highly secure information. This applies if you have one user, a million users, a million customers, or a supply chain with 500 million endpoints. This applies if your data is exclusive to networks outside of the United States or if you are global in reach.
Regardless of the size of the company, all companies include the following data within their protected systems, and this is the type of data that needs the highest level of endpoint security:
Social Security Numbers / Information
Bank Account Information
Is your supply chain or customer data on the dark web?
If you have suffered a data breach in the past, the data included personal information, such as phone numbers or other personally identifiable information (PII). Leakage of such information could be fatal towards the growth of a company and its workers. Such sensitive information needs to be secured with proper cybersecurity measures. For companies that do not ensure these measures, the chances of survival within the digital world are slim. The only practical solution is developing ways to combat or prevent cyber risks.
Understanding Manufacturing Cyber Security
In order to stay safe in a world where digitization is key to success, manufacturing companies have to stay prepared. The best way to prepare, understand and manage cybersecurity risks is by considering all areas that could be breached by an attack. By looking at such risks in a business, and from a legal standpoint, owners may aim to formulate regulatory procedures in order to avoid the damage that a cybersecurity attack can impose on their company. In order for a manufacturing company to not only exist but thrive, they must first UNDERSTAND:
Understanding the risk: First, one must understand that hackers aim to steal, exploit and disrupt the company’s work. This may not necessarily be a personal attack and therefore it must not be treated as one.
Narrowing down risks: Manufacturing companies utilize technology for a multitude of sectors within the company. Therefore, narrowing down where the weakest aspects of cybersecurity are would help avoid data loss or operational risk significantly. If an attack is successful, it is also helpful to know where the root of the problem may have begun in order to stop it.
Data access control: Data is one of the most important factors in cybersecurity. The reliance on a single password, as security for data information, leaves manufacturing companies unshielded from hackers. Implementing a series of security measures by ranking importance of data can establish a hierarchy that prioritizes confidential data. Making sure only limited personnel has access to the data will lower the risk as well.
Enterprising the risks: Since cybersecurity risk is such a prevalent aspect in technology, manufacturing companies must include a prevention plan in their enterprise. This includes spending the necessary funds to prevent any harm towards the company’s technology.
Readying for the worst: Another tactic is assuming that every cybersecurity breach will be crippling towards the company. This prepares staff through proactive methodology and technology.
Setting key roles in an incident plan: Defining roles in advance with a detailed plan will enable everyone to know exactly what is required of them in case of an attack. This will help in a time when it is necessary to move quickly. Everyone will remain organized and on task.
Training all employees: Manufacturing companies need to train all employees to know how to avoid human error, which is one of the highest risk factors within cyber attacks. Through training, proper communication can be established between IT (Information Technology) and OT (Operational Technology) workers. The creation of a community culture will enable proper guidance and action on security shortfalls.
Administering the company’s policies wisely: Cyber attacks in manufacturing companies range from light breaches to severe damages that shut down operations. Therefore, ensuring that effective policies are in place is essential. The entire company needs to understand the severity of even a small breach. Policies should be updated as new threats emerge. Staff should be informed of any backup strategies in place and also of planned disaster recovery steps.
Never forget the basics: Manufacturing companies should have a basic response plan in order to outline expected and anticipated actions. Routinely changing user passwords and checking all systems for vulnerabilities should be common occurrences.
Decoys for intelligence gathering: Deploying white collar hackers is another method that could prevent vulnerability to cyber attacks. Companies should place themselves in the mind of the attacker in order to gain more knowledge on how one may think. Therefore the company can counter the attack before a breach is successful. Using decoys allows manufacturers to actively identify and analyze trends in their system that need to be addressed.
The latest technology, including managed application hosting in the cloud, provides new openings for risk and reveals a general lack of effective security in companies of all sizes, across all industries. The manufacturing industry is particularly vulnerable due to complex applications and third-party software integrations. Manufacturers also have challenging compliance regulations that require intensive documentation and reporting. Small business IT solutions help manufacturers looking for partners who will help them grow without the burden of cyber risk.
Cyber security incidents put manufacturing companies at risk of shutdown
Zero-trust cybersecurity policies have become the most essential risk management strategy. The only way manufacturing companies can stay safe is by making sure they are secure on all ends. The first step is understanding the risks, then making the effort to make sure a security breach does not occur. This process utilizes security audits and penetration testing to gain full vision of all system vulnerabilities. In the chance that a data breach does occur, cyber protection and cyber insurance are critical for survival.
Prevent a Cyber Security Breach with Best Practices
Chat with us now to schedule a penetration test to see if your data is secure.
cGMP stands for current Good Manufacturing Practice and, more than just initials, it is at the center of the US Food and Drug Administration’s efforts to protect citizens from potential hazards related to food and beverages, cosmetics, pharmaceuticals, and medical devices. ERP is the system used by businesses for accounting, inventory management, sales order processing and many other processes central to maintaining management control. ERP is where businesses keep the records that show they are complying with good manufacturing practice.
What does cGMP look like for manufacturers?
Process control is critical in these controlled industries. We need to define exactly how our product flows through manufacture. Who will perform the necessary manufacturing steps? What ingredients or component parts are required? When does each step take place related to the previous and following steps? Where will we manufacture our products – in which facility and using which equipment? Why are we taking these measures to control our process? How will we document exactly what we did and compare it to what we said we would do?
An ERP system has a record of each employee. That record goes well beyond payroll and human resources. If we add the training each person has had and their current work qualifications, we can use ERP to work with our cGMP process. We can now schedule specific people within our overall production schedule. The people scheduled are limited to only those who have required training and certification based on the rules we established within our business. Next we can use ERP to track exactly who worked on each manufacturing step. This enables us to pass any audits. We also now can know who might have made any error or failed to precisely follow our defined process.
Our cGMP includes a specific list of ingredients or component materials required to produce our product. Our list can further limit the materials used to those from specific suppliers or items commonly available from multiple sources. ERP helps us track each item by lot number so that we never inadvertently mix a lot in the same batch. Lot tracking sets up our ability to manage any potential recall. We know which output batch had an issue and know exactly which ingredient lots we used in that batch. We can also use ERP to avoid any chance of using an item beyond its shelf life.
Recipe or Routing
ERP provides us with the manufacturing path that we know meets cGMP. Step one is performed on certain equipment and specified operations must take place then. We can measure the outcome of step one and ensure production is ready for step two. Since we know the duration of every step, we can schedule equipment and personnel and provide the completion date and time for our customer.
Facilities and Equipment
Our cGMP specifies that products must be made only in approved manufacturing facilities and then only using specifically approved equipment within those facilities. The production schedules we use from ERP will use those limits and help us manage capacity requirements now and in the future. Manufacturers must identify what hazards might exist and establish control points best suited to capture and control those hazards. This requirement is known as HACCP or Hazard And Critical Control Points.
Testing and Measurement
Throughout the cycle of production, we will test and measure the product using values stored in the quality module of our ERP system. The tools we use are maintained and recalibrated as we define in cGMP and our test results include the specific tools used as well as the results. Testing and measurement looks for statistically significant variances and enables us to determine corrective and preventative actions and track those to completion all within our ERP.
Quality Management System
cGMP requires that we have an active quality management system that is fully documented. ERP is one of our primary record keeping tools and supports cGMP fully. Any business whose activities fall under the cGMP rules of the FDA should ensure their ERP fully supports their required control systems.