ERP, MRP, PDM, PLM, CRM, SCM, B2B, and on and on and on. Its a crazy business world out there with so many options. The cloud, on premise, cloud on premise. Big data. Social outsourcing. Where does a business start?
I’m the Technical Services Manager for a mining equipment manufacturer. The business is 35-years old and has been quite successful in the local market. However, we knew it was time for a change. Expand our reach. Move into new markets. Become more global. Very ambitious goals and we know we need help to get there, and that’s how the search for ERP started.
This is going to be an ongoing series on the selection process we used to make our ERP selection. We’ve just kicked off the implementation so as we go through this journey I’ll have a running commentary of what has and has not worked. My goal is to help others about to embark on this journey, but also hoping that others reach out and we can share wins, successes, and losses.
Turning to my good friend Wikipedia, ERP is defined as:
“Enterprise resource planning (ERP) is business management software—usually a suite of integrated applications—that a company can use to collect, store, manage and interpret data from many business activities, including: Product planning, cost Manufacturing or service delivery, Marketing and sales, Inventory management, and Shipping and payment”
ERP is a term coined by the Gartner Group to describe the growing software segment combining Manufacturing Resource Planning (MRP) and Computer-Integrated manufacturing. It has grown to reflect the management of the entire manufacturing process… “quote to cash”. ERP has also grown into non-manufacturing industries, but my focus will remain within manufacturing.
Implementing ERP is not an overnight installation, run from the seat of your pants thing. It costs money. It takes planning. It takes dedication. It takes management buy-in. All-and-all it is a significant investment.
Question: What is the first step to implementing an ERP system?
Answer: Knowing that you need an ERP system.
We were a company in an industry that was at its absolute max. We had more business than we knew what to do with, in fact we were turning down business. Additional overtime was not an option, in fact you could work as many hours as you wanted, supervisor approval not required. When things are that busy you don’t worry about job costs, bottlenecks, inefficiencies, KPIs, scheduling, lean manufacturing, real-time ordering, and all other things about good business. The concern and the focus is just getting the product out the door, meeting deadlines, and keeping the customer happy..
We knew we had reached the peak of “the boom” and the industry was on the way down, back to normal. What we didn’t account for was how quick the down swing would be. The price of potash dropped significantly and our main customers stopped doing business with us (and everyone else), and worse actually started cancelling existing orders. We had layoffs, unlimited OT was stopped, and focus was placed by management on cost-cutting.
Seems like an odd time to be looking at ERP, right?
Actually its the perfect time. Its the perfect time to take a step back and really look at the business. Where are we? Where do we want to be? Where do we excel? What areas do we lack in? What could we be doing that we aren’t currently?
This is when we sat down and had open dialog about the present state and future goals of the company. We want to grow. We want to expand into new markets. But how do we get there?
We mapped out our existing processes with good-old powerpoint. Everyone knew our processes (or at least they thought they did) but it was never really documented. This opened a lot of eyes.
We evaluated our existing system. Were there features we weren’t currently using, that we should be? Were there modules or perhaps customization that we could purchase to help us?
Our existing “system” was a collection of spreadsheets and what I supposed could be labeled as an ERP system. Using spreadsheets is always the simple route, the path of least resistance, but also the path that quickly falls into the chasm. It was inefficient and each spreadsheet was its own self contained object. We needed this information in a centrally managed system.
The ERP system we were using was antiquated, difficult to use, and actually loathed by most within the organization (honestly, I do not exaggerate). Why keep using it? It was implemented in the 90’s and is what everyone knows. It had worked for us for so long. “Better to sleep with the devil you know, then the devil you don’t”.
The problem is it became more about living with the limitations or finding solutions to work around them. Although a great company to work with, it really is a “mom and pop” organization and was clear that revolutionary improvements were not in its future, well at least improvements that were going to get us where we wanted to.
The biggest problem was the difficulty of extracting information, there was no visibility. Information, real-time or not, was extremely difficult to obtain. Job costs, like actual job costs were difficult to nail down. We could not really determine how effective we were because our scheduling tools were very limited. We ordered material as the jobs came in, not when it was required.
So right away we knew the number one thing we needed was real-time, fully visible, access to our data. Whether it be searches, reports, graphs, charts, whatever… “you don’t know what you don’t know, until you do”. Access to information has a trickle down effect to every process within the organization.
What are our ERP options?
This is when we decided to explore our ERP options.
However, before we cracked open Google and made that very first search, we laid out our wish list, the things that had to be there for us to make the switch. Obvious things like it had to work with Canadian taxes. Quantitative items like; take 75% less time on repeat product quotes and 25% on new product quotes. We also had items we just needed, like visual scheduling and project management.
We also made the decision that whatever system we chose, it had to have a realistic chance of being implemented in 6-months (or less). We also wanted zero customization. We wanted as close to an “out-of-the-box” solution as possible. We also made it clear that we would not attempt to implement it on our own.
With this, management green-lit our “ERP Research” team to spend the time and find three possible solutions.
The last step of this pre-ERP research was evaluating our existing staff and resources. Did we honestly feel we had the people with the right levels of expertise, skills, and dedication to pull this off. We’re fortunate to have some really strong, smart, and dedicated people so we knew with the right product implementation partner we would be fine in this area.
And the Takeaways from this are?
What you should do before looking for an ERP solution:
- Get top-management’s approval to start the search
- Take a good look at your existing system or collection of systems. List the strengths, weaknesses, pros and cons of each piece.
- Map out your processes.
- Take a seriously long look at yourself in the mirror. What does the business excel at and where is it deficient.
- Build the “wish list” of things that needs to be in the new system