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ERP the Curse or Enabler in a Lean Enterprise?

Recently I have been hearing from clients that their ERP system is no longer capable of supporting their business and it needs to be replaced. This is a very strong statement and commitment by the Leadership and I think that perhaps they do not fully understand the implications and ramifications that will tag along with that statement.

Case in point we recently were working with a client who complained about their ERP system telling us it was pretty good for accounting but did nothing in regard to Inventory control. They were on the brink of throwing it out and seeking a better alternative. With their permission we asked to peek under the hood and found that they actually had a marvelous system that they had just failed to properly use.

We scheduled a meeting with their Software provider and after a couple of sessions doing a "Solutions Walk-Through" we were able to have their system perform all of the tasks they desired and then some.

Full Confession, during my career in various roles within Production Control and Operations I became a Master Wizard manipulating ERP systems to succumb to my bidding.

I did not do this out of spite but rather necessity. It seemed that every time I approached our I.T. department seeking a change the automatic response I received is that it would take 2 boys, a man with a donkey 6 months minimum to complete. Unfortunately, the speed of business could never wait that long.

But a Saviour was available ... those glorious "Query" or "Crystal" report writers. What our programmers could not deliver we figured out how to get it accomplished sometimes even with a little help from Excel. But this then became a problem because slowly and without intent our business was being run using those Query and Crystal Reports and not the core functionality of our ERP system. Quickly people would scream that the system was no longer effective or in tune with how we run our business.

My next shocking revelation happened recently when a client asked us to project manage the implementation of their SAP ERP system. Frankly, I was nervous, no I was scared not knowing how much ERP systems may have changed during the past many years.

SURPRISE !! Not much has really changed within ERP systems, they still rely on some key databases and those still look very similar to how they looked like 30 years ago. let me explain ...

Item Master | still contains all of the detail related to a specific part, including how you wish to plan, Unit of Measure, Pricing and Price Breaks ... yup still looked the same.

Business Partner Master Data | all the information related to both our Customers and Suppliers although maybe a bit more enhanced to take advantage of today's technology of e-mails and Electronic Data Interchange.

Bill Of Material (BOM) | really the secret ingredient that will determine how your ERP will perform, get the structure incorrect and you will suffer forever and of course the challenge of what to include or not include within your BOM.

Finally that Routing Database | this is an evil one that can quickly create business havoc. Yes, I know that people want Capacity Planning and to know just how much work is residing within a specific work center ... it will never be accurate, but it can be a good tool to assess your "Rough-Cut Capacity" utilization.

And the same pesky problems still persist within the ERP system. 1) how to manage Revision Control and Effectivity Dates and 2) Unit of Measure Conversion, I purchase steel in pounds but consume the sheets as eaches. Of course, most important, is Order Tracking.

So as much as things seem to have changed, they also seem to have stayed the same.

You readers know how passionate I am about Enterprise Value Stream Mapping and the need to review it annually and I still am. But I want you to extend that review to now include your ERP System and your ERP provider.

Supply your ERP Provider with your Value Stream and then have them take you on a journey of a Solution Walk-Through of your ERP system, let them share how the system can be utilized compared to how you may be using it. What are some of the new features and capabilities. Software does not typically stop with its development after you have it installed, but if you don't ask, you will not know what is new.

Swapping out your ERP system is not for the faint of heart. Your people are already familiar with your current system, and it has become part of your business and your culture. Swapping the system will be very expensive, it will require lot of training, data mapping and migration. I still believe that for every dollar spent on software you will need to invest and addition 5 dollars towards training and implementation costs at minimum, not to mention the possibility of business interruption.

Is swapping out your ERP system really worth it?

Perhaps, I have one client that built their manufacturing business using an accounting system software solution. They have outgrown it and they do need to migrate. For others, perhaps not, so I would definitely pause and invest in a Solutions Walk-Through before pulling the trigger.



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