You’ve heard the term Smart Manufacturing or Industry 4.0; but what does that really mean for your manufacturing company? Can a company be “Smart” and use basic software like Quickbooks or do you need to have a real Enterprise Resource Planning (ERP) system? The short answer is: yes, your company needs an ERP system to truly adopt Smart manufacturing and be ahead (or even keep pace) with the competition.
For those still wondering what Smart manufacturing or Industry 4.0 are, don’t worry, the terms are newer and only recently been used in a fairly regular manner. Smart Manufacturing is, simply put, the melding of operations technology (OT) and information technology (IT). Industry 4.0 and Smart Manufacturing are really the newest phase or a new Industrial Revolution if you will hitting manufacturing on a worldwide scale.
In order to remain competitive, manufacturers must invest in inter-connectivity, automation, machine learning, and real-time data analytics.
Holding together various systems needed to properly track and analyze the smart manufacturing data captured, is a strong ERP system, which can marry the shop-floor data with cost breakdowns, operational information, job details, and customer information, etc. I find it interesting how many manufacturers still run homegrown systems or rely on access database, excel, etc to track production, which is clunky, prone to data corruption, and does not collect all relevant data to provide a company with true business analytics.
One of our clients used a homegrown system before deploying Epicor ERP a few years ago. They noticed immediate improvements in inventory control, accurate cost measurements for their products, and better shop floor scheduling. Now, image if the same company deployed machine learning and automation married with real-time data analytic software? The potential to outpace the competition is dramatically increased.
So to get back to the second question, no, Quickbooks or other smaller software systems will not support manufacturers focused on growth since they lack the basic shop floor data collection and analytics needed to streamline your business. Manufacturers that wish to remain competitive, and have an optimized business require an ERP system.
Is your company looking to move away from small accounting systems and move to a manufacturing ERP system? Or do you have an ERP system and need to work on optimizing it? We would love to talk with you about how we can work together to make your business run better.
Internal Planning is Key to Forming ERP Search Questions
Let’s face it, many articles have been written about companies “Outgrowing QuickBooks” or “Signs you need an Enterprise Resource Planning (ERP) system”. But what those articles don’t usually talk about is what you can do to prep your team internally for an ERP software system; a comprehensive sales, finance, and operations system. Planning is one of those words that tends to make people groan because they know it means more work, lots of discussions, and often seems like a stalling tactic and time waster. But ultimately, asking detailed internal ERP search questions is paramount to a successful ERP evaluation and implementation.
If you ask any Military General or Combat Veteran if they would go to battle without some semblance of a plan, they would probably laugh or just walk away and say nothing in response. There is a reason that ERP implementation rooms are nicknamed “War Rooms” since heavy system testing is done and current company practices come into question.
What are some of the right internal ERP search questions to ask for planning purposes? Questions like system design, usability, industry specific functionality, cost, and implementation assistance are just some aspects to consider when looking for an ERP system. I look around on the web, and I find a lot of system questions written by software vendors, but not a lot of internal company questions to ask or considerations that need to be discussed. Having talked and worked with many, many companies over the years during their ERP searches, I wanted to give some examples of planning areas and questions for companies to prep internally.
10 Internal ERP Search Questions to Get the Project Planning Started:
- What does my company need and want to accomplish with an ERP System?
- Departments that need access
- Financial reporting
- Time frame for evaluation purchase, deployment phases/locations, and full usability
- What are the challenges of my company’s current business software? Why is it no longer meeting the needs of my company? Look at this from a department level:
- Production challenges?
- Services challenges?
- Finance challenges?
- Executive/Owner(s) challenges?
- Sales & Marketing challenges?
- Purchasing challenges?
- the Warehouse(s) challenges?
- Research & Development challenges (if applicable)?
- Human Resources challenges (if required as part of an ERP search)?
- Is my company fully utilizing current systems in place and/or is the current software potentially sufficient with added training? (I suggest talking with an expert consultant of that software if its an ERP system to see if the current software works but isn’t being used correctly)
- Does my company have specific compliance or auditing conditions that are of concern? Examples: Medical CFR, Aerospace & DoD DCAA, Medical Records HIPAA, Internal export FCPA, Electronic Underwriters UL, Federal Airlines FAA, Finance SOX etc.
- What are the key aspects of the compliance(s) in relation to software, i.e. what data needs to be captured?
- What do I need an ERP to do in order for my company to meet the compliance? Reporting?
- Do we need a SaaS (Cloud-based) solution, On-Premise (due to data security concerns), or a Hybrid / Hosted System (which combines Cloud & On-Premise in a way)?
- How do we plan to care for the ERP system? Do we have IT Staff in-house to support an On-premise solution or is there an Outsourced IT Firm we can work with to help?
- Do we need a system that will work for 3 years, 5 years, or 10 years?
- How important is “scalability”?
- Modular system to add on functions as a company grows?
- Multi-company or multi-site requirements?
- What are the key functions we need the system to do? Look at this on a department level:
- What does Production need?
- What does Services Need?
- What does Finance need?
- What does Executive/Owner(s) need?
- What does Sales & Marketing need?
- What does Purchasing need?
- What does the Warehouse(s) need?
- What does Research & Development need (if applicable)?
- What does Human Resources need (if required as part of an ERP search)?
- What are the “nice to have” or “wanted” functions, beyond the base needed requirements?
- What does Production want?
- What does Services want?
- What does Finance want?
- What does Executive/Owner(s) want?
- What does Sales & Marketing want?
- What does Purchasing want?
- What does the Warehouse(s) want?
- What does Research & Development want (if applicable)?
- What does Human Resources want (if required as part of an ERP search)?
- What is a realistic budget and ROI for a new ERP system?
- Licensing budget – per month spending (cloud) or fully purchased or financed system?
- Implementation budget (research firms say to estimate 1 to 2 times the licensing budget for implementation costs.
- Software Maintenance, etc. should also be factored into a budget
- Hardware Systems requirement budget (especially important for On-Premise software which basically requires a data center in-house)
- Additional personnel / staffing requirements to support a new system
- What time frame do we expect to see an ROI (Return On Investment)?
Do you have additional questions or looking for more information? Is your company looking for an ERP system? Want to chat with the author? Contact us and we’ll do our best to help.
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“When the evening is spread out against the sky like a patient etherized upon a table” – T.S. Eliot
When I first began dabbling in the field of Business Process Management, the terminology of this new and strange body of knowledge perplexed me greatly. The concept of elevation, for one thing, was utter babble to me. Or Babel, perhaps. My notion of “high level” carried with it certain ancient connotations—height was a luxury in the ancient world, and only the most powerful civilizations were able to get a view from above the tree tops: from a Babylonian ziggurat or an Egyptian pyramid, for instance. Height, therefore, implied greatness, or to use one of Aristotle’s favorite terms Eudaimonia, sometimes translated as “flourishing.” At the highest Olympian point, one breathes the rarest of airs, or so I thought. But I was breathing the ether of an entirely different allegory. Height, in this new world, dealt not with levels of greatness, but rather with levels of precision and abstraction. In the business world, for something to be “high level” inferred that it was at some level of aggregation and abstraction as to be disconnected from the tactical nuances of day-to-day operations. News to me.
Back in the day, it was common war room parlance to utter something to the degree of “we’re looking at this from thirty-thousand feet” at least once a day. It was not until my first airplane flight that I truly understood what it meant, to look at something from that kind of distance—beautiful, and a little terrifying. I’m more of a pavement-and-pothole kind of guy. The other day, I was skidding down the highway in another rental, that was fortunate enough to still have a CD player hidden amongst its many modern accoutrements. I had borrowed Jim Collins’ “Good to Great” in CD form the local lending library and spent the better part of my ride listening once again to his seminal work. It was a fun listen: Collins began by underscoring some of the key principles of successful companies, and then went on to expound on some examples of excellence, such as…Wells Fargo, and um, Circuit City, and well…Fannie Mae? My ride, all at once, seemed a little…dated. I thought to myself that Collins would do well to write a follow-up to his earlier work and title it “From Good to Great to God Awful.” Now that would keep me engaged while ripping down the interstate! So, maybe Lord Jim’s examples have not stood the test of time. But I believe that the good leadership qualities that underscore successful organizations have outlived their exemplars.
To that point, whenever I think of flashy and charismatic leaders in business process management, I smell pizza. Not because of any neurological condition that would make me a risk on the open road, but due, rather, to a story a man recounted on a flight from Minneapolis to Memphis, regarding the former executive of a large manufacturing company.
Let’s call this former executive “Pep.” Now Pep came to his role of eminence in this company not as an internal promotion, but as an outside hire, touting a flashy resume from one of America’s well-known pizza chains. And his demeanor was more flashy than his letterhead, and greasier than the pizza he peddled. He’d bound down the hallway in a shiny suit, talking like a sailor and firing off one-liners, like the proverbial mouthy guy at the end of the local bar. One of his favorite lines was “yesterday’s news wraps today’s meat.” It was a line, with his delivery, that could drive a man to veganism. Another time, his personal assistant heard him cussing out his computer and rushed to his aide, not to discover that the company’s earnings report was unfavorable, but that he had just lost another game of solitaire. All of this from a guy with a Fortune-500 pedigree. It was his story, among others, that led me finally to realize that CVs are like statistics—they can be twisted to tell you whatever story you want to hear.
Of his many witticisms, one line stood out to me from the others. When commenting on the company’s long-standing issues with the accuracy of its outside sales staff, he exclaimed. “If they wanted you to be exact, they wouldn’t have called it estimating, they would have called it exactamating!”
Exactamating. As you might have guessed, Pep was a rather high-level guy. He sounded like such a high-level, that I imagined him bantering about exactamating in the first-class section of a transatlantic flight, sucking down a gin & tonic, while eating a big greasy slice of pizza, all at thirty-thousand feet.
As you might imagine, he was also afflicted with many of the ailments that bother high-level fellows of his ilk. For one, he didn’t sweat the details—he liked to make big decisions, make them fast, and then walk out of the room and have someone else fill in the finer points. If you locked him in a board room with the VP of engineering, he’d find a way to slip out the ventilation shaft for a smoke before the hour was quartered. To the folks in the trenches, it seemed like simple impatience—he seemed too impatient to be bothered with the details, and similarly too impatient or just incapable of holding any of his people accountable at any kind of detailed manner. But at any level, the company’s failing business results empowered the CEO to request that this high-flyer to take the next flight out of town.
Back to Good-to-Great, one of Collins’ key observations from the book has to do with the demeanor of those with good leadership qualities. Good leadership qualities for business process management, according to Collins, tend not to be of the flashy variety, full of id and ego. Rather, they tend to be soft spoken, less interested in their own presentation than in the success of their company. Interestingly enough, this same company, who sent Pep the Pizza Man packing opted to replace him with a leader who fit Collins’ model. For one, the new executive was a hire from within the company, and not a fly-in, as had been his predecessor. Moreover, the new leader was much less of a showman. Most importantly, the new leader’s obsession with the company’s success drove him to understand the company’s inner-workings at all levels. Don’t get me wrong—he was never going to replace any of the data entry clerks, but his willingness to engage the organization, and its members at all levels was one important part of the success that the company went on to have under his leadership.
I’ll admit it: one of my guilty pleasures is the legalized blood-sport commonly referred to as mixed martial arts, or MMA. As you may be aware, MMA involves the combination of multiple fighting arts, and they best fighters are often the ones who excel in combining these disparate arts into one integrate skillset. One related skill in this field is the ability to “change levels”—to convince your combatant that you are going to attempt a strike, and then drop down for a wrestling takedown and quickly haul your opponent to the mat. In my work as a consultant, I have had the good fortune to meet and work with many different managers and leaders, each with differing motives, differing personalities and differing intensities. I find that the most successful leaders are those who similarly have the ability to change levels as needed—to move from high-level strategic thinking, down to tactical or operational problems, and then back up again. The high-level folks often struggle with this: they are the proverbial kick boxer in a wrestling match—great when they’re on their feed, but hopeless at the ground-level. All that being said, the next time that I have to take a flight, I think I might sneak a New York slice in with me, before I leave the ground.
Ask us any question you many have about good leadership qualities for business process management and ERP Software Implementations, we would love to chat.
A colleague recently recounted a story to me from his own past. It had to do with a failing business. The company had numerous issues, in the areas of acquisition and execution, of revenue and of profit. The issues had gotten so out of hand that the company was on the verge of closing its operations entirely. In a last ditch effort to turn the company around, the company’s president initiated a series of process-improvement projects. The hope was that the results of these projects would provide the necessary impetus to pull the company out of its tailspin and provide a foundation for its revitalization. Moreover, the president had democratically distributed the projects across the organization–one for each department. As we all know, projects consume resources, and not all of the selected projects were of the same potential impact to the company. As such, lower-impact projects ended up pulling away resources from some of the mission-critical areas of the business, areas that had been suffering the most. Ironically, the attempted intervention had made things worse.
In one telling instance, the HR department had been tasked with implementing a new HR management system. The HR and IT staff dutifully went through the implementation cycle, soliciting requirements, selecting software, configuring the application and converting data. Leads, supervisors, and managers spent their free time logging employee metadata into the new system. And all of this occurred while the company missed shipments, struggled with quality issues, and scrambled to get new orders, while key employees fled to their competitors. The HR department rolled out its new system shortly before the announcement that the company’s assets were being dissolved. While the company overall was a disaster, the HR project was a ringing success, and when it came time to terminate the company’s staff, they were able to use the new HR system to efficiently and effectively carry the task through to its macabre conclusion.
That is, the HR department had won the proverbial shuffleboard game on the deck of the Titanic.
In my own career, I’ve encountered a few folks who were winning deck games on a sinking ship. And like my friend’s story, the game they were winning had nothing to do with the water that the ship was taking on. This seems to be a common failing business mistake, in general. During good times or bad, failing businesses more often focus their efforts on the wrong areas, and because of this, the efforts of their best employees go underutilized. Failing businesses also make the mistake of democratic project selection. Instead of business planning strategies involving a hard analysis of the key pain points in the business, management adopts generic strategies that try to support the general betterment of the company, while in truth, they are diluting their efforts with low-impact initiatives. Other times, failing companies exhibit the tendency to chase random rabbits down their burrows, mistaking the thrill of the chase for the value of the bounty. Quite often the least successful companies are also the nicest–they avert stepping on toes and pointing out obvious issues. Had they been on the Titanic, they would have been the ones to reclassify the iceberg as an upright collection of water molecules, the gaping breech in the hull as an additional sprinkler system, and would have continued with their polite game on the upper deck while the water levels rose.
In looking back at these situations, it is hard not to see this as a failure of leadership. The leaders of the company are the ones who truly have the ability to steer a company in one direction or another. Often, the direction is as simple as the projects that the company chooses to execute over a given year. But the projects selected quite often serve to have the most impact on the company’s ultimate destination.
But one might ask just what kind of business planning strategies separate leaders who safely pull their ships into harbor from the ones that send them to Davy Jones’ locker. While there are probably a number of reasonable answers to the above question, I would contend that the most successful managers from my own past were buoyant due, among other things, to their knowledge of their industry. The best managers obsess about the workings of their business, and the industry in which it resides, and base their business planning strategies and a vast and well-integrated understating of the dynamics of the environment in which their company competes.
To put it simply, there is no replacement for domain-knowledge. The best leaders I have worked with understand this principle. No leader is an expert in all areas, but when good leaders assume leadership of a company, they immediately dive into a phase of learning–about the business, its culture, its business climate, the market conditions, and whatever additional factors are required to allow the leader to be able to make good decisions. And once this knowledge has been amassed, the leaders go about applying their knowledge to their business planning strategies. They make an honest assessment of the company, its opportunities, and its issues. And in response, they make decisions that drive how the company’s limited resources are to be sequestered, to address issues or take advantage of opportunities.
And their decisions tend to be the better ones. Far away from the shuffleboard deck, they are at the helm, altering course to avoid the bergs and burglars that would threaten their business. The worst managers I’ve encountered take the opposite approach–they tout the importance of surrounding themselves with good people, while they themselves are often missing in action, preferring instead to galivant about town, wining and dining the city’s elite, seeking to impress, when they should be impressive, seeking to woo when they should be working. While I certainly do not question the importance of a manager building a first-rate team, it takes leadership and involvement to collect, engage, and focus the individual talent in the right direction. And the inability to make good directional decisions, to guide these good people, generally results from the leaders’ inadequate preparation and/or dedication to his or her craft.
To return to the title of this post–if the captain of the ship is wasting his time winning games of shuffleboard, the crew will flounder, and ultimately, the ship will founder. So contact the EstesGroup today, and take advantage of our business process review, management, and improvement services.