In the last e-bulletin we looked at the symptoms of operational problems. Many of these problems are centered on the dissemination and collection of operations data. A computer system can be a major asset in data management and conducting repetitive tasks. However, we must stress, again, that an ERP (Enterprise Resource Planning) system will not solve your problems. It can only automate your processes; it will not magically fix business processes or operating procedures that are not good to begin with. You must rely on human intelligence to set up good business practices. For just about every operational procedure in manufacturing there is a “best practice”. APICS is an excellent source of information on best practices in many industries. Utilizing APICS certified employees will enable you to identify those procedures that are not working to their best and make changes to become more efficient.
The implementation of an ERP system is one of the most difficult and risk prone tasks in the manufacturing management world. The business management literature is full of disaster stories of implementations gone bad. The risk of not getting the full potential out of an ERP implementation is above 90%.
In order to minimize the risk of an implementation failure, or a partial implementation, many companies conduct a complete evaluation of their operations and information flow before considering an ERP system. This evaluation is performed not so much to help select a new system; but to identify the major problems in their operations that must be brought up to “Best Practices” level before implementing a computer system. This evaluation will be the most important factor in the successful implementation of any computer system. If you are not operating to best practices you will not properly utilize the new system.
Although computer software companies design their systems to best practices, you shouldn’t rely on the implementation of the computer system to change your organization to a best practices model. To install a new computer system and, at the same time, change operations to best practices is asking too much from employees. Many companies fail at ERP systems implementation because they don’t recognize that risk.
Before you start the implementation process for a new ERP system, you should reorganize and retrain to incorporate best practices. If you can’t do it right with a manual system, then overlaying a computer system will only enable you to make more mistakes in less time. Take the time to set up a best practices manual system. Get everyone trained in the procedures and protocol of the new operating system. Once they understand their new jobs and you have a base line measurement of performance, you can introduce the ERP module for that process. The implementation will be faster, less stressful and yield a better return on your ERP investment.
An ERP preliminary evaluation should look at the current operating systems of the company; any future plans for new operations or product lines; the state of the existing hardware; the strategic plans and objectives of the company; the state of the current computer system, its upgrade status, failures or successes; any justifications for changing the current systems; the level of expertise in the planned operations; and the budget for a new ERP system.
With this information, senior management can better evaluate the need for changes to operating practices. Once the new operating practices have been implemented and the company is operating to “best practices”, it can start the process of selecting a new ERP system or upgrading its current system.
Remember, the goal is not necessarily a new ERP system. It is the improvement of operating practices, the efficient production of a product for the customer, and improved operating margins.
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