Neustro

I have to start this blog with an apology. I’m going to talk about a phenomenon I’m going to call ‘Property Ladder Syndrome’ and it’s based on a British television program – so if you don’t watch UK TV then you may not appreciate the parallel I’m drawing. However, I hope to explain what I mean anyway.

Property Ladder is a program on our Channel 4 that is presented by (a seemingly constantly pregnant) Sarah Beany. She has been a property developer for quite a long time and has been successful at it. The program format is that she follows some first time developers travails as they take a run-down property and convert it into a pristine, saleable property that is supposed to make them a considerable amount of money. It’s not a competition – it’s real people making real life decisions with their own money.

The format goes roughly like this: Introduction to a couple. Look at the house they have bought – either  1970’s décor or falling down. Talk of their budget for the development. Sarah telling them that the budget is too small and their target sales price too high.  Then her offering advice on how to not spend so much money or add value by changing the plans.

For instance a couple might decide to refurbish the house and have three huge bedrooms. Sarah suggests that you could get four bedrooms in the same amount of space and that would add a twenty percent premium to the sales price. The couple then look at each other and then almost in unison say that the original vision was to have three bedrooms and nothing will change their mind. They also suggest that Sarah ‘has got it wrong’. In effect they ignore all of Sarah’s knowledge and experience, suggest that she doesn’t know what she is talking about and then continue down the path they started with. Often they won’t even let Sarah explain how she has reached her conclusions.

So?

I’ve had a ‘Property Ladder’ encounter this week. It went like this.

“We are having a bespoke software package written because our business is very specific”

“Well, knowing what I do know about your business, I think you ought to look at Microsoft Dynamics CRM because it does most of what you want out of the box so you wouldn’t have to wait for your development, you can customise it to your precise requirements, you won’t be locked into one person to support your business application, it works like the software you are familiar with and in my experience you will find it will be very competitive in terms of price compared to a bespoke system”

“But we’ve decided on what we want we won’t consider anything else”

“Don’t you think it would be at least worth sparing an hour to look at CRM before discounting it?”

“Er, no”

At the end of the program, Property Ladder, not Microsoft Dynamics CRM, Sarah returns to the amateur developers. They are very tired and often vowing never to do it again. They have overspent on their budget and surprise, surprise, the target they set for the asking price is discounted by three estate agents. In short they’ve spent all their savings, lost 6 months of their lives, and ended up losing money. Sarah looks into the camera and says (with a lot less smugness than I could muster) “If only they had listened to me they …….”

Well, this week, when a customer I advised some months ago came back to me and said they would like to look at CRM because their bespoke development by their lone developer was taking too long, running over budget and wasn’t going to achieve what they wanted it to I turned to my imaginary camera and said……

Listening to the radio on my way into work this morning I was entertained by a story relating to an error in a mathematical program that was used to estimate the weight of dinosaurs.

It seems that the error was overstating their weight by rather large amounts – for instance there was a 16 ton weight gain for the Brachiosaurus. Interestingly it appears that the mistake has been perpetuated for the past 25 years.

Although I am not a palaeontologist I am not entirely surprised by the revelation. Carrying on the theme of my recent posts regarding the use, or overuse of Excel, in business (and sometime substitute for a business system) it reminded me that a great many spreadsheets contain errors that often lead people to draw the wrong conclusions, which they then use to make important decisions.

Although our main focus is on implementing and supporting ERP such as Microsoft Dynamics AX and Infor ERP LN, as well as other complimentary products, we also develop custom applications, if required, for our customers. One recent example was a secure web site for a European company to allow them to collect their health and safety statistics on line. Information about incidents such as slips, trips and falls and safety inspections had to be recorded by each of the 60 plus sites.

The web based solution was designed to replace the previous reporting regime that was based wholly around the use of Excel. Each month end the chief safety officer had to badger the sites for their reports and then spend several days collating the data into regional and global analysis. It was time consuming and tedious. He had spent some time trying to speed things up by writing complex macros – he was becoming quite an Excel expert.

We finished the development of the new website and as a part of the testing he entered some historical data. Unfortunately, the results on the web site for some critical statistics were coming out ‘wrong’. This clearly had to be corrected as the statistics were reported to the global organisation and, quite importantly, many people had an element of their bonuses based on achieving certain health and safety targets.

We checked our program. It appeared to be correct. We then checked the spreadsheet. It was wrong. It transpired that the previous two years of statistics had been wrong. Had people lost money because of this error? I’ll let you guess.

The lesson is that if you are going to rely on Excel for collecting, collating and calculating critical data then at the very least get it checked.

Sorry for the title of the blog. I’ll also apologise right now for promoting something that I have a direct interest in – but I’m quite excited about it.

I’ve been around manufacturing industry for quite some time now (in fact my very first job, at 17, was running a Heidelberg 2 colour printing press) and I’ve seen a lot of companies in recent years launch OEE projects.

OEE stands for Overall Equipment Effectiveness – which, in real long hand, is measuring and improving the use of your production machinery. Basically, your business has probably invested a great deal of money in an asset and OEE is a measure of how well the asset is being used taking into account elements such as set up time, downtime, waste and some other measures.

 A common problem is often getting the base measurements correct - it actually takes a great deal of effort that can sometimes take the initial enthusiasm out of an OEE project. One of the major stumbling blocks to quality data collection is the reliance on machine operators accurately recording time spent on each job. Getting them to log the set up time, run time, downtime, planned and unplanned, whilst trying to keep a machine running is very tough. Yet the figures are important otherwise the OEE improvement activities may be focussed in the wrong area. Too often I have seen handwritten sheets, often completed at the end of the day, or worse the end of the week, that absolutely invalidate all the effort put into the OEE project.

The answer is to make the collection of data as easy as possible and in real time. This will give you an insight to what can be called ‘machine truth’. Get this, and you can concentrate on improving OEE rather than how to measure it.

 It’s also important not to make the project too IT focussed, again valuable time can be consumed and momentum lost whilst waiting for a solution to be delivered.

 I apologised in the first paragraph for overt promotion (but you don’t have to click through on the link!) but I’m really impressed with a solution we have partnered with called Plantnode from Shoplogix.  I’d urge you to take a look – hey, you can also play with our virtual bottling machine while you are at it. Have fun.

In my last blog I talked about the use, or sometimes, overuse, of Excel as a business system. I suggested that spreadsheets can grow in complexity and expose the business to some risk. My proposal was to consider an ERP system if you didn’t already have one, or investigation of the functionality of the ERP system if you did own one.

Sometimes a company may have an ERP system but a culture has grown up whereby people spend endless hours extracting data and then manipulating it in Excel or Access (er… I did). They then produce reports for use by the business. This happens quite frequently - particularly where the standard reporting from the ERP system is basic or poor.

The reason a lot of standard reporting is basic is that businesses do have their own view on how they want to see reports so there is little point in producing a plethora of reports that will never satisfy the end users. There are cynics who would argue that some ERP vendors don’t provide easy to use and good looking reporting out of the box as it would kill a revenue stream for their separate reporting and business intelligence software. Not me.

The problem sometimes is, that the vendor selling the ERP won’t mention the need for a good reporting tool, at extra cost, because they know that the buyer is simply at their limit in terms of spend or that their product will be seen as expensive against the competition.

So by the time the implementation of reporting is tackled there can be a realisation that ‘something needs to be done’. That ‘something’ can be the buying of a reporting add on (frowned upon by the project budget holder), the development by an internal IT team (if one exists) of a suite of reports (which probably still require some software investment) or finally the ‘something’ that is ‘done’ is ‘nothing’.

After a while the more demanding people will decide that the standard reporting isn’t good enough and will, if they have the wherewithal, use either an extract from the system or connect via ODBC to take data and read it into the aforementioned Excel or Access. And this is where the problems start!

As part of our business review service we often attend internal business meetings where we witness some of the results of the situation outlined above. It’s this: participants turn up to the meeting and spend more time arguing about who has got the right data rather than what the data is telling them about the business. The truth is if you take raw data and then start manipulating it in spreadsheets there is likely to be a difference in the way each person interprets the data – it’s maybe because of grouping, or dates, for instance. It may even be that there are faults in the formulae within the spreadsheet – which is very common.

So what to do? Well, I’d suggest putting together a team to agree what the key metrics are. Then, as a team, design and deliver reports that are ‘the same’ to each person that needs them. Ensure you are comparing apples with the proverbial apples. At least at that point you can address the problems (if there are any) in the business.

This is an activity that can be relatively low cost – and it will ensure that if you do decide later to invest in a reporting application you will have a jump start to your project and shorten the time to realising value. I’ll talk next time about the advantage of formal ‘reporting packages’.

I love Microsoft Excel. I remember clearly the first time I came across an electronic spreadsheet application (for the record it was Smartsuite) and being blown away with the possibilities it offered. The ability to use macro’s and automate various tasks allowed for the creating of ‘mini-programs’ that would remove the mundane paper filling in the office and make data available for analysis.

Not long later I was taught, after much badgering of the IT department, how to create and download files from the ‘Master Business System’ which I could then import into the spreadsheet to then slice and dice and produce my own sets of figures for my management meetings.

At the time I was, at least for the business I was working in, quite a pioneer and I was very much lauded for producing reports that not only looked good but had information that was timely and accurate. No waiting for the production of reports overnight from the IT department on dot matrix printers with faded ribbons and fan-fold paper for me!

In truth this activity was responsible for my later selection to a project to implement a new ‘Master Business System’ – something that was called ‘ERP’.

Nowadays, as part of a company that implements ERP, both Microsoft Dynamics AX (formally known as Axapta) and Infor ERP LN (formally known as Baan, iBaan, SSA Baan, Triton etc, etc), I see a number of companies who have developed terrific spreadsheets with incredible macros and code that actually seem to be so essential to the business that, in the event of their loss, the business would be in serious trouble without them.

And herein lies the problem. In most cases the spreadsheets have been developed by people within the business who have used their talents and taught themselves to become spreadsheet Gurus.

Once these people move on (as I did) the ‘applications’ (in effect the business system) are essentially unsupported. The business has a choice; work out how and what the spreadsheet does, or employ someone from outside to do this, or start again.  An important aside here is that often these spreadsheets are not even backed up properly and reside on the authors PC introducing further risk.

A more robust answer is to implement a business system that doesn’t require all the spreadsheets to make the business work – such as ERP.

Or… actually look at what your current business system offers and make sure you are not ignoring what it could do for you therefore replacing the functionality of the spreadsheets. For instance some report enhancements or utilisation of modules that perhaps you currently don’t use.

Importantly, I would urge you to look at your business right now and see if you are in this situation – and if you are take some action before you find yourself facing an emergency.

I’d like to tell you about a recent project where we helped a customer save lots of money by reducing their stockholding of raw materials, saving space, bank borrowing and ultimately some headcount.

We found a business that seemed to have lots of stock but it was not always the right inventory to finish the shop orders on hand.  They had a lot of people in their purchasing department but they weren’t in control – nearly everyone was involved in expediting. Morale was pretty low because the rest of the business was kicking them for late deliveries.

We spent a little time interviewing the people in the department and then their co-workers in planning and production. Then we had a look at their processes and their ERP data.

Amongst many other things something jumped out that seemed incongruous – the lead times on almost every purchased item was, it appeared, to be generous.  We took the information back to the team and it became clear that a general policy was in place to always add a week to any quoted lead time by the supplier. The reason for this, it was explained, was that a number of suppliers in the past had been tardy with their delivery timings and it had led to shortages on the shop floor which later led to late delivery to customers. By applying this general rule they believed that hey would solve the problems of shortages.

To compound the problem they were also adding safety time, which was in theory, bringing in the stock even sooner.

We did some analysis and explained that all this stock was sitting around unused and that by bringing it in just in time would reduce their inventory significantly. ‘But why’ they asked ‘if we have all this inventory do we not have the stuff we need, when we need it? Why the shortages?’

The reason was this: at the end of each month it was recognised that they had too much stock. So they would, to reach financial targets, speak to all of their suppliers asking them to delay delivery of goods until the following month. It was only by a few days but it helped them meet the narrow fiscal target of stock on hand. They would then ask them to expedite the deliveries to meet production demand. Poor suppliers! They didn’t know if they were coming or going. The good suppliers were suffering and the poor suppliers were taking advantage. They had imposed a blanket policy and they had lost their focus on what was important.

We agreed to make the lead time reflect reality. We removed safety time where suppliers were reliable. We adjusted safety time where suppliers were not reliable. Where there was safety time we put a plan in place to improve supplier performance or change them. We convinced the business that the month end target of ‘X’ stock on hand was a false target.

Very quickly things improved. Stock reduced, the focus on poor suppliers improved their performance and so there were fewer shortages, and importantly, the people in purchasing had the opportunity to manage supplier relationships and gain greater discounts because they were no longer spending all their time expediting.

The important thing is that the company did not have to invest any money in new hardware or software – it was using ‘properly’ what they already had.

If you are looking for ways to save money right now take a look at your purchasing department – do you recognise the problems above?

I recall watching some old WWII movies where on an army or air force base, when things were quiet, the commanding officer would have the troops whitewash stones. A quite pointless activity - though I guess with health and safety regimes these days it would be considered a good thing to highlight a trip hazard.

I once used to work for a boss a number of years ago that insisted on having a list of jobs that, though unnecessary, should always be done in the event of having nothing better to do. He didn’t ever like the idea of us having idle hands – he believed that when the real work came along we would get ‘out of the habit’.

Right now there are a lot of companies that are struggling to keep their people busy whilst order books are tight. The reaction of some companies is to lay people off whilst others opt for short time working.

I’ve been to a number of businesses recently where the factories are the cleanest they’ve been for a long while. The employees, whilst waiting for work are ensuring that their work areas and environments are spruced up and ready for when (we all hope) they get busy again.

I’m delighted to say that a number of our clients, and prospective clients, have taken the opportunity to review their business processes and their systems and are launching projects to upgrade or replace their business systems during this ‘quiet’ time. I think that this displays sensible thinking on a number of fronts. Firstly, they are discovering operational improvements right now that are reducing costs and relieving some of the pressure on their margins. Secondly, they are ‘getting fit’ for when business picks up in the future. They know that when they were busy in the past they simply didn’t have the capacity to undertake process reviews and implement new systems – their best people were tied up doing everyday business. Right now they have the time to improve planning, get their business case together or look at automated data collection projects.

Clearly, not all business can follow this school of thought – but I know of a few companies that are paying people to sit at home – they may as well be whitewashing stones.

I have a number of friends and relatives who, when they ask what I do for a living, I reply “Computers”.  This is a catch all answer that normally elicits one of two responses. Firstly, “Oh, that’s interesting, how are the kids?” and secondly, “I’m looking to buy a computer for home, what do you recommend?”  To avoid getting involved in helping someone make a decision as to which PC to buy I reply that I only deal in enterprise computing and that the starting price is £100k. That normally finishes the conversation off.

In reality I am in the business of helping manufacturing companies achieve greater value through the application of technology. Mainly through the optimisation and deployment of ERP systems and extended functionality such as shop floor data collection, real time manufacturing machine performance management and the application of automated data collection.

Some people persist and demand to know more about what I actually do and it is always entertaining to watch their eyes glaze over by the time I reach the second sentence. I’m not upset. These friends are from other walks of life such as the caring professions or are personal tax advisors or, dare I admit it, from marketing.

However, I do have a good circle of friends that I have met through my work and they completely understand what I am talking about. I have other friends too who work in the manufacturing industry.  Almost all of them have heard the expression ‘ERP’. They’ve either witnessed it directly (some say suffered), or are aware that the company they work for has an ERP system.

It really is quite a shock then to come across companies in manufacturing industry that are of reasonable size that are completely oblivious to what ERP is all about – and to what extent the business may be affected.

A year or so ago I came across a business that had been acquired by a company based in another country. The head office had sent over a computer with a tier 2 software product on it and told them that this was now the corporate standard and that they must implement it.    

I recently had a further conversation. They decided to implement this system by giving it to the IT manager and telling him to get on with it. No plan, no business case, no budget, no buy-in, no project team, no sponsorship – no hope!

I feel like reporting the senior management to the RSPCITP (The Royal Society for the Prevention of Cruelty to Information Technology People). There clearly is no understanding of what ERP is about, how complicated it can be, that it is not like Microsoft Word – install and use. It truly is bizarre.

 Anyway, I am now going over to explain to the senior people within the business all about ERP – It’s great. I should be able to talk about it for hours and people will actually listen. I hope.

I think that the corporate objectives of ERP implementations, in multi-site, multi country implementations are being compromised by either the inflexibility or short-sightedness of the corporate IT function.

Let me explain. We are in the business of providing support to manufacturing businesses, primarily here in the UK, for both their Microsoft Axapta/AX and Infor Baan ERP users. We approach those users that we know of through our marketing and we also get a number of calls each week from companies that have these ERP systems.

Where the company is UK based, or has UK based IT, then our conversations with them are often fruitful and we can work together on optimising their systems.

A good number of companies have had their ERP installed via corporate diktat – and I have to say that many of these users are frustrated and unhappy with their critical business system. They often say that they feel the corporate IT doesn’t really care about them and cannot provide the resources to offer training and support but they are not allowed to look at locally based partners who could help them get the most out of their ERP.

I understand the problem and the conflicts. At a corporate level you are trying to attain economies of scale and common business processes and have a blueprint as to how your business works. This can lead to value being released by having less local IT and its associated costs – I’ve been there, I know.

However, the local user, in a different country, feels that the corporate IT function doesn’t understand about the issues and problems facing the users ‘on the ground’. It doesn’t make sense to fly people from corporate IT to the sites around the world to help as it is far too expensive, and resources are probably rather short anyway. But the problem is that corporate won’t allow the use of local companies because they may try and subvert the corporate model.

There is an added complication too. It is likely that the user site is paying a recharge to corporate for the use of the system – they feel that they should be getting a level of service within that fee, which, they think should include on-site training and support. Corporate, on the other hand, can’t build in a recharge to include a certain number of days which may not be used as they will be accused of over charging!

My recommendation would be to allow the local site to have a local budget for training and optimisation that is discretionary spend. Set clear limits as to what can be done locally and, if necessary, vet the local provider. This way corporate will not be perceived as holding the local business back.