Most organizations are ill equipped to select the most appropriate ERP solution, the task is daunting and if not given the appropriate attention can expose the organization to a significant risk. There is an almost infinite number of horror stories associated with the selection and implementation of ERP software; most organizations only go through this process once every 15 years and therefore have little or no experience in maximizing the effectiveness the process.

There are two major reasons why organizations find the process of selecting the proper ERP solution such a difficult challenge. The first has to do with the knowledge base within the organization. Unfortunately, organizations (and people) only “know what they know”; meaning that we are limited by our own experience and we are only able to evaluate ERP software within the context of our own collective experience which may be too limited maximize the benefits of this important decision. The second is that organizations have a difficult time choosing and implementing the best ERP solution is that everyone in the organization already has a 40 to 60 hour a week job. Companies are operating so lean in this environment; they have an insufficient number of resources to dedicate to the project. Additionally, the best people within the organization have the least available time and can only dedicate a limited number of hours to the project on a weekly basis.

Companies can either hire additional outside resources, which is difficult because requires a long lead time to learn the operational nuances of t5he company or identify an appropriate consultant that has experience implementing ERP solutions as well as knowledge of the requirements of the clients market.

In choosing an ERP software package and planning for the overall project, executives need to make decisions based on objective and unbiased information rather than gut feel. In particular, organizations should consider the following:

Why ERP?

This question is perhaps the toughest to ask once the company is already on the ERP bandwagon. Often, ERP will not solve organic business problems. If your business strategies or key business processes are ineffective or inefficient, even the most advanced ERP system is not going to help. Prior to making a decision as large as implementing a system that will cost millions and affect your entire company, it’s important to have a clear understanding of what you want to accomplish by taking on this challenge. There may be more cost-effective and lower-risk options such as improving processes, redesigning your organizational structure, consolidating your global supply chain, or implementing a performance management system. In these cases, maybe choosing not to implement ERP is the best solution. On the other hand, ERP may be the business tool that enables these improvements.

What are the Business Requirements?

If you have decided that ERP is the route you need to take, it is important to begin by looking at your desired operational model and using that as a starting point in determining what software to implement. The Executive Steering Committee should define and document key business requirements for any package they may select. This includes not only nice-to-haves, but also requirements that are “deal-breakers” if the software is unable to accommodate. In addition, and most importantly, executives should use ERP business requirements definition as an opportunity to improve current operations, efficiency, and effectiveness. The last thing a company should do is implement software to automate the same flawed business processes. Instead, it should be focused on achieving measurable business value for your organization, and you should choose the software the best enables you to do this. Generally, this requires a detailed process review with the company’s senior executives and managers to evaluate their level of comfort with the existing processes a well as a look to the future in terms of forecasted growth and market changes.

What ROI is required by your business case?

This is where many companies fall flat. Even if you complete the first two items discussed above, it is important to understand and document what your total costs will be for each ERP vendor under consideration, as well as your anticipated business benefits. This is important in gaining approval from other executives or your Board of Directors, and it is also helps ensure that you realize the potential benefits of implementing ERP. All costs, including hidden project costs such as internal project resources, data conversion, and lost productivity immediately following go-live, should be included in the business case and ROI calculation for each ERP vendor you evaluate. In addition, benefits should be reasonable and not overly aggressive. Ultimately, your business case should be a tool to manage business costs, benefits, and ROI going forward, not just as a sales tool to justify a decision that’s already been made. And if the resulting ROI for a particular ERP vendor does not make sense or meet minimum investment criteria for your company, then it’s probably not a good idea to undertake the project.

How will you manage the selection and implementation process?

Has the organization thoroughly assessed all of the options in evaluating potential external implementation teams? Software companies often are not always the best at implementing their software, and some are much more expensive than others. You can often find third-party vendors and consultants that can implement ERP more successfully or at a lower cost. It is also important to look at consulting firms that are capable of helping you manage the non-technical aspects of the project, such as organizational change management, training, and ERP benefits realization. Productivity Constructs, Inc. is an example of such a firm, which is technology neutral and specializes in providing project planning and business consulting for all types of ERP implementations.

If your organization is considering an ERP upgrade, Supply Chain Experts can help you design a program that delivers both immediate and long term benefits to your organization. The program will be designed to shift your organizations thinking, improve innovation, and implement a program that will optimize operational performance and satisfy the requirements of your customers.

Dr. Edward F. Knab
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs

Dr. Knab is an academic practitioner and seasoned supply chain expert whose company, Productivity Constructs, Inc., is focused improving global leadership and thereby creating more effective organizations and higher levels of job satisfaction. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at efk@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.

Over the past two decades North American companies have significantly increased their outsourced manufacturing to Chinese vendors. This trend has amplified the number of partners in the supply chain, the interdependencies of subcontractors and raw material suppliers, and the distance that material and information must travel to close this gap. This trend has significantly increased the complexity and importance of accurately controlling supply chain signals.

The information gaps in the form of weak supply chain links are most often found at the outer edges of the supply chain. Any time that raw materials, production parts or finished goods change hands is a potential for communication breakdown which have traditionally been addressed through expensive internal enterprise resource planning system (ERP) rather than addressing them through collaboration with their trading partners. Of course, physical goods are not the only thing getting temporarily lost in the supply chain; financial flows and critical supply-chain data also contribute to organizations inability to manage their inventories.

Organizations need an information system that links disparate applications across multiple partners, languages, geographies and cultures. The emergence of the software-as-a-service (SaaS) model in the form of project management and collaboration tools is a positive step in the right direction because it gives everyone in the supply chain an opportunity to identify these weak links and take action to mitigate their impact. However, today there is a plethora of these tools all with different capabilities and degrees of difficulty, complexity, and cost in terms of implementation.

If you or your organization would like some help identifying weak links in your supply chain and identifying the appropriate collaboration tools necessary to fill those gaps contact a Supply Chain Expert, their motto is “you are only as good as your weakest link”. They can help you design a program that delivers both immediate and long term benefits to your organization. The program will be designed to shift your organizations thinking, improve innovation, and implement a program that will optimize operational performance and satisfy the requirements of your customers.

Dr. Edward F. Knab
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
Free Supply Chain Intelligence Reports

Dr. Knab is an academic practitioner and seasoned supply chain expert whose company, Productivity Constructs, Inc., is focused improving global leadership and thereby creating more effective organizations and higher levels of supply chain efficiency. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at ed@productivityconstructs.com, mailto:ed@ewardknab.com or www.edwardknab.com

All too often, though, the real reason a shipment to a customer arrived late, or a customer received the wrong or incomplete shipment, can be traced to operational processes in the warehouse that are poorly designed, lack of adequate training, systems that are not executed well, and Warehouse Management Software (WMS) that is incapable of supporting operations and the way the company wants to do business, not to ERP, CRM, or SCM software. Execution problems associated with picking orders, packing shipments, or cross-docking of receipts, can quickly lead to customer dissatisfaction.

Many organizations often pay too little attention or commit too little resources to this critical tool (WMS) and concentrate their time in the ERP, SCM, and CRM arenas according to Sandy Vosk of ATS (Advantage Technology Solutions, Inc.). In supply chain management the saying; “you are only as good as your weakest link” is not only true but is also the basis for everything else working correctly.

Getting WMS selection and implementation right the first time can go a long way toward ensuring a company has satisfied customers that are receiving accurate orders delivered on time. It is key that the WMS not only support business functions but in a way that supports how the company wants to run their business. Sandy Vosk refers to a survey that found that only about 40 percent of warehouse management systems result in satisfied customers. Sandy has determined and defined operational and business requirements for and helped numerous companies select and implement WMS systems over a wide range of business requirements and levels of sophistication.

Sandy Vosk cites seven key areas which, if overlooked or discounted, have the potential to negatively impact a WMS project and full benefits to be derived from the software. Many of these factors may also be critical to other types of systems such as ERP, SCM, and CRM because of the data passed on to them and cannot be ignored when implementing a WMS.

1. Ensure a good design

The objectives of a WMS must be clearly laid out and synchronized with all other systems to insure continuity and completeness. The stakeholders must agree in advance how the different systems will be configured and blended together to ensure seamless functionality and to maximize customer satisfaction. The goals of the project must be clearly stated in writing, incorporated into requests for proposals from vendors, and act as a guide to keep the project on track. There should be one implementation team that coordinates the efforts of the vendors, company, and implementation. Design continuity is paramount.

2. Ensure the project design team includes all of the stakeholders

The project design team should include representatives from every part of the organization including, finance, sales, marketing, customer service, operations, and most important the top executive’s and with their full support. Only by including everyone who is effected by the results can the organization ensure that the establish success criteria will meet the needs of the entire organization.

3. Clearly Articulate the Performance Criteria

The company must have a strong project manager, (often this can be an experienced consultant with a track record of successful implementations), that is able to articulate the performance criteria keeping the vendors and other stakeholders on track, and ensure that the request for proposal is complete and accurate in every aspect. The company must be cautious not to let unrelated “scope creep” change the goals and objectives that were articulated in the performance criteria. The company project manager must take the lead role in keeping the project on track. Vosk says selecting the proper project manager is one of the most important decisions made throughout the entire project.

4. Build Clear Performance Metrics into the System Design

Performance metrics are critical to a successful selection, acquisition, and implementation, The project manager should ensure that each area of the WMS implementation is is done in the context of an appropriate set of metrics. These should include the areas of unloading, receiving and put away, replenishment, order processing, order picking, order packing, outbound staging, data flow, and other critical operational areas. Vosk says that these operational metrics are critical to ensuring the software has provided the appropriate functionality and performance to the organization.

5. Create a detailed Data Map

These are automated tools that let you map one type of data to another. This is essential for companies trying to deal with different shipping data formats, such as advanced ship notices that can come in XML, EDI, spreadsheets, or other formats. Companies should leverage these to the max, using them in dealing with suppliers, customers, shipping carriers, banks, etc.

6. Design sufficient Stress tests into the system

Sufficient testing is the best way to avoid a meltdown when you go live with a new WMS. As part of implementation, one should run simulated tests with non-live data and do parallel testing. Strauss has observed that often testing is the first thing to go if the project is delayed or has incurred financial overruns. “It has to be right every time”, says Vosk. Warehouses need to process-test each work flow, including inbound, outbound, cross-dock, cycle count, etc. and the resulting data flow to all key departments.

7. Senior level support is a critical Success Factor

“You must have “C” level project support from executives that buy into and demonstrate support for the project, including the software selection process,” Vosk suggests. Additionally, too often, companies purchase software with little input from the employees who are the ultimate users as opposed to making them part of the team. Involve warehouse managers, key workers and supervisors in the software selection process, once they’ve sat through four or five software company presentations, they can identify which package best supports their operational requirements, says Vosk. Getting staff to participate is critical and why senior requirements. It helps to dissipate any fear that staff may have over whether they may lose their jobs. Instead, they can see how the system is designed to make them more efficient and their jobs smarter and easier. Mr Vosk recommends training workers to use the new system at least four weeks before the go-live date, so they get used to the system and become part of the implementation team.

If your company is considering the implementation of a WMS system, I would suggest you contact Sandy Vosk of ATS or the Supply Chain Experts can help you with present and future needs analysis, writing request for proposal, software design and/or selection, and an implementation program that will optimize operational performance and satisfy the requirements of your customers.

Dr. Edward F. Knab

Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs

Dr. Knab is an academic practitioner and seasoned Global Supply Chain expert whose company,Productivity Constructs, is focused on driving cost and inefficiency out of the Global Supply Chain. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at ed@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.

While there is little wrong with prudent cutting costs, the companies who emerge from economic downturns quickest and gain the most market share are those who applied innovation during the downturn to add value to their business and their customers. It is during these challenging times that companies often separate themselves from mediocrity by integrating high degrees of innovation.

Generally, in time of economic uncertainty, the concept of innovation is not even up for discussion, whereas it should be the basis for all ‘going forward’ decisions. Traditional supply chain issues such using innovative means to get products people want to buy to them faster and cheaper is the foundation for improving the value equation we bring to the table. Our focus should be on adding value to the customer rather than cutting costs. All of our focus as innovators should be directed at “added value”; even the act of cutting cost is in reality adding value.

Supply Chain innovators provide value to their customers by improving systems which result in improving profits. The great majority of all improvements are of an incremental nature rather than a single “big bang”, they are a result of constant and never ending improvements (CANI). Companies that can integrate some simple philosophic approaches into the customer relationships can create greater value for their customers and themselves, and will gain competitive advantage in the marketplace, especially as the economy improves.

Listen to your Customers.
Get to really know them, live with them, understand their opportunities and support them. Most companies will tell you they know their customers but it reality they know the statistics of what and when they buy but do not know what their customers’ problems and challenges are. Often, the answer is Supply Chain related, businesses need to be asking their customers; what worked? what didn’t? and what next? and often the result is technology-assisted collaboration which creates a foundation for a new and improved relationship. It starts with demand signals – knowing what quantities and mix of products are selling in each store or region for you, your customer, or your customer’s customer. Supply chain integration and visibility applications can be the conduit making channel collaboration possible.

Reduce Transportation Time and Cost
Fluctuating energy cost are an underlying cause of our current economic turbulence, with supply chains lengthening and fuel costs on a roller coaster ride, transportation costs and risks are areas that must be stabilized first. Some of the strategies that can help in the long term are network design, near-shoring, and local production and distribution. In the short term Transportation Management Systems can help reduce cost and optimize efficiency. The concept of shippers co-operatives are gaining new traction as volumes decrease and in stock inventory is a mandate. Eliminating empty miles through arranging back-hauls and continuous moves, automating yard movements and appointment scheduling, and providing portals for carrier and customer communication can significantly improve efficiency.

Optimize Working Capital and Reduce Cost
The economic challenges should result in a good long look in how we are leveraging out capital and help us identify area where we may improve our utilization. Cost reduction programs that mandate cost cutting percentages across all departments only reward those who ran too fat in the first place. More importantly, they are not geared to adding value to the customer. In fact, the opposite is usually true. The right way to reduce cost is to start with customer demand signals. Follow the demand signal up through the demand chain to manufacturing and suppliers, then down through distribution to the customer or the store shelf. Examine each point along this journey to see what adds value and what doesn’t. Cut everything that does not add value. That is the principle of lean supply chains.

Streamline Processes
Innovation requires improving processes by leveraging best practices and technology to create better flows of product, people and information. Look at order management, manufacturing and procurement, distribution and transportation. There are significant new developments in technology supporting these areas. For example, using a single system to track raw materials and purchased components, sequence them into and through production, and then tracking the combined output through distribution improves manufacturing and distribution efficiency, and has huge traceability benefits in case of recall.

Make Good Decisions based on Good Data:
Often ERP systems have failed to live up to their promise of integrated and assessable supply chain data and management has been hard pressed to make good decisions. Management needs real-time access to accurate, meaningful information which was supposed to be the promise of ERP. However, the batch nature of ERP and its lack of supply chain detail have shown the reality to be less than optimal. What are needed are business intelligence tools that link, sort and analyze data from all the supply chain systems and trading partners to present meaningful, personalized information to executives in real-time. This information is displayed on graphic dashboards that are easy to comprehend and act upon, yet can be used to drill down to get to the root cause of problems. The good news is these business intelligence systems are available today. They give supply chain management the tools they need to respond with agility to the ever-increasing variability of demand and take advantage of new market opportunities before the competition.

After years of down-sizing, right-sizing and lean, most companies are already running full out. Cutting heads may cut costs, but it also cuts customer service while raising overtime expense and blood pressures. Go from survival mode to competitive advantage by empowering your employees through a performance-focused culture. Look to innovate, everywhere! It won’t all work but your organization will learn from it, they will learn that controlled failure is acceptable providing there is a plan with predefined outcomes and a method of coordination. Promote learning to insure your organization is in tune with the latest supply chain innovation in the market. Challenge the organization to get closer to the customer at every touch point; senior management, buyer/seller, AP/AR, SCM/Customer Service and others.
If your company is attempting to cope with turbulence in your supply chain the Supply Chain Experts can help you design a program that satisfies the requirements of your customers while insuring the optimal data flows to accurately control your global supply chain.

Dr. Edward F. Knab
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
edwardknab.com

Dr. Knab is an academic practitioner and seasoned supply chain expert whose company, Productivity Constructs, Inc., is focused improving global leadership and thereby creating more effective organizations and higher levels of job satisfaction. Dr. Knab can be contacted for speaking engagements, coaching, or consultation at ed@productivityconstructs.com, ed@ewardknab.com or www.edwardknab.com.

Responding to Uncertainty?
Leverage Your Competitive Advantage:

Increased market uncertainty and concerns about the global economy have created a new set of challenges. Consumers confidence is in a freefall and certain to impact your market. Unstable commodities will impact your costs and your revenues will be at risk. What steps should you take today to protect your profits and insure business continuity.

Business owners and leaders are once again under tremendous pressure. In the midst of significant ambiguity, defining strategic direction and managing execution become more important-and even more difficult.

Call Productivity Constructs for an assessment of how you can minimize the impact of global uncertainty through specific planning and management techniques that can allow your business to execute flawlessly. We will:

Examine underlying macro-economic and market conditions.
Review up to the minute data as it relates to revenue, investment, and hiring.
Identify strategies to improve the productivity and performance of your teams.

Call us for a free evaluation of your organizations opportunity to improve during times of uncertainty.

Dr. Edward F. Knab
Productivity Constructs, Inc.
800 660 8718 office
949 413 7333 mobile
ed@edwardknab.com
www.productivityconstructs.com
More Supply Chain Experts Blogs
edwardknab.com