18 posts tagged “erp”

Above the planning board in the sales office of one of our customers is a sign that says ‘Failing to Plan is Planning to Fail’. Although we do come across a few customers, when undertaking our business process reengineering projects, that don’t plan at all, it is the rare exception. The truth is that there are a number of business that believe that they plan well but make it hard work for themselves by not utilising properly the business systems that they have – but there are a few that have too much planning going on. To see what I mean by this take a look at my whitepaper ‘Too much planning hurts your business’ at our free downloads website section.

The most common issue we find is customers who have implemented ERP but then, over time, begin to ignore what it is telling them. Rather than address the issues that are making the output from MRP ‘wrong’ they spend a great deal of time, effort and sometimes money on producing reports or developing stupendous spreadsheets that will give them the data they need to plan correctly (but it doesn’t).

During our BPR and ERP optimisation projects we spend time with each department and discuss the challenges they are facing. Regularly we sit down with purchasing and we meet a harassed purchasing manager and frazzled purchasing clerks who are at their wits end because they simply do not have enough time in their days to handle the workload. What do we hear? It’s often these expressions;

‘The output from MRP is wrong...’

‘We have had to develop our own reports to ignore the bad output...’

‘We download the MRP output to Excel and then manipulate it to come up with some sort of reasonable purchasing plan...’

‘If we bought in everything MRP was suggesting we’d need five more warehouses!’

‘Although we have got too much inventory it’s never the right stuff...’ etc

I’ve yet to come across an ERP systems’ MRP programme that doesn’t basically work in the same way – looks at all demand and then produces suggestions that can then be confirmed into purchase orders. It will also make suggestions for orders to be cancelled, brought forward, moved back, increased or decreased. OK, some MRP can be quite crude and simply aggregate all demand whereas others can have sophisticated order pegging that allows you to see where the demand is coming from. But overall, they do pretty much the same thing. At the end of the day it’s nothing more than a calculation.

What has often happened is that there has been a lack of housekeeping on the ERP and there are backorders that have been ignored, or production orders with back-flushed items have not been completed, receipts of goods inwards have not been carried out in a timely fashion – amongst a number of other things.

We also find that blanket policies may have been put in place – for instance all lead times on all items set at a standard number of weeks. Sometimes we see safety time added to every item from every supplier.

In these situations it is absolutely obvious why the output from MRP is as it is – the data that all the calculations are based on is garbage.... and if it’s garbage in it is highly unlikely that anything sensible will come out.

Rather than address the underlying issues with the data people begin to develop their own suite of reports – these will try to ignore some of the output as it is known that this is ‘wrong’. Sometimes people will have all the MRP output shipped out to a spreadsheet where highly developed macros and code will mash the data and make it ‘sensible’.

Sadly, it doesn’t. What really happens is that things turn up too late, some turn up too early and some don’t appear at all.  Production and warehousing start beating up purchasing and purchasing respond by employing more people. Soon there is a whole department focussed on expediting orders rather than negotiating deals and forming long term relationships with suppliers.

The reality is that the best way to address the issues is to get in there and tidy up all the data – make it sensible in terms of lead times etc and educate the other departments about the need to housekeep their data too.

On a few occasions we have helped customers get a few more years out of their existing ERP system rather than move or upgrade to a new one by helping them ‘sort out’ MRP.

So if you have a purchasing department that has a larger than expected headcount yet they can’t seem to get the suppliers to deliver on time then ask them what they are using to plan....

Sometimes I sit here in front of the computer gathering my thoughts for another blog and I wonder if anyone is really interested. Well, clearly they are, as a few people have noticed I’ve not posted for a while and dropped me a line to see if I’m alright and when I’m due to post again. Well folks, thanks for your concern and more importantly for your interest.

The reason for the gap in blogs is that we were preparing and then exhibiting at the PPMA show at the NEC in Birmingham. You may recall that we have been appointed as a Partner to Shoplogix – and we were taking the show at the NEC as an opportunity to launch the product properly here in the UK.

As a business we have deep experience in delivering ERP – particularly Infor ERP LN / Baan and Microsoft Dynamics AX / Axapta but we took the Shoplogix product line on as it is absolutely suited to our target market of manufacturing companies.

If you take a look at our Shoplogix webpage you’ll see all about the product there. In short, if you haven’t read any of my previous blogs (and it still surprises me when you do) , (by the way, say hello) Plantnode by Shoplogix is a device that collects data on the status of your production machinery and allows your operators to collect data in real-time so you can improve efficiency.

Anyway we were at the NEC with my now famous Rolling Ball Sculpture which is what I use to simulate a machine (see the Video on Youtube!) and we had a great deal of interest.

I’ve been around ERP and senior IT management for a long time and I know how difficult it is to put a business case together for a serious investment in either large infrastructure projects or complex business systems. What is refreshing about the Shoplogix Plantnode product is that I can draw up a business case in a matter of minutes – it can deliver real improvement in performance and it’s easily quantifiable and I can demonstrate a rapid return on investment (ROI) within minutes.

Having spent years either justifying ERP or auditing other people’s business cases it’s a refreshing change when the document can be so concise. No calculating transaction value or cost to raise a purchase order required.... (though, I do enjoy the intellectual thrust of that).

On a couple of occasions last week I was also able to change some businesses view with a couple of focussed questions – which in the world of ERP I don’t think would simply be possible.

One person suggested that the Shoplogix product was perhaps too expensive for them. Not knowing the price this was quite an assumption – and he was certainly pleasantly surprised when told. The question I asked was ‘Why are you at the show?’ and the answer was (and a likely and probable answer given that is was a packaging and processing machinery show) that they were looking to buy another production line. I asked if they were happy with the efficiency of their current lines – and they said they couldn’t be sure because they didn’t know how efficient, or not, they were now. I have persuaded them to delay a significant investment into a new line until they have established this with a relatively low investment into a Shoplogix Plantnode unit. Likewise a company that was considering moving to two shifts is deploying Plantnode to see if they really need to do this. We reckon that we can improve their OEE from the region of 60% to, a still not World class, 75% which will allow them to delay a second shift by somewhere around 12 months.  A considerable saving and return on their investment.

 If only ERP were so easy to justify!

I’m always wary of writing about experiences I’ve recently had in my business dealings for fear that I may offend someone and that an ongoing piece of work may be compromised.

However, I think on this occasion there is no danger that the person will read this blog, and even if they did, what they read wouldn’t bother them anyway.

I was asked by an old friend to have a meeting with the owner of a small successful company. She had looked at his business systems and suggested that he really needed to get an expert in to give him some advice as to what to do. My default position on business systems is to look at ERP first and then Best of Breed second – you’ll find a white paper about my views on ERP v BOB here.

Anyway, I sat down with the owner of the business and he told me about his current business system – he had developed it himself entirely in Microsoft Access. It soon became clear that he understood his business very well indeed and that the Access ‘business system’ he had written was entirely tailored to his needs. Except that his needs seemed to be changing every day. He is spending hours each day changing and tinkering with his system. He insisted to me that an ‘off the shelf’ package just wouldn’t suit his needs.  

Before I go any further I need to repeat some of the expressions that he used during our meeting;

“I get frustrated because no-one else here knows how to use the system”

“Every time someone needs a report I need to get into the system and write it – no one does it themselves”

It was clear that he didn’t have any user instructions – he didn’t have the time to write them, but it seems unfair to me that he blames other people for this!

His solution is to get a local VB programmer to take his Access application and turn it into ‘A proper system’. Recognising that I was perhaps not ever going to convince him to invest in a packaged solution I tried to give him some good advice (for free) on how best to approach this.

I suggested that rather than just hand over the Access database as it was he might be better to take some time to put together a requirements specification listing the functionality his business needed to run. Then he should consider turning this into a functional specification to give the programmers some insight as to what is required – a good business analyst would be able to help them produce this functional specification and also bring some external knowledge of how a business system generally works. Although this is the type of work that we do as a business I was reaching the conclusion that I wasn’t likely to be doing this with him.

The reason I came to this way of thinking was that he explained to me that he had tried on two previous occasions to have his business system ‘written properly’ and on both occasions (costing a sum of around £30,000) he had halted the project because the programmer ‘just didn’t understand what I needed’. I reiterated the importance of the approach I outlined but he wouldn’t take it on board at all – he insisted that handing over his database was specification enough.

Finally, I suggested that at the very least he should view a couple of packaged solutions – not because he should consider buying them but simply to see what they do, how they do it and why. This would, I suggested, give him some ideas on how his system should perform.

His response to this was that he just couldn’t sit through software demonstrations because he became bored with them and switched off after a few minutes.

So, in summary, he wouldn’t consider a packaged solution. He complained that no-one understood the solution he had written himself. He’d had two previous attempts to write the solution ‘professionally’ but had aborted them. He couldn’t be bothered to write any specifications. He couldn’t be bothered to look ‘for reference’ at any other business packages.

I occasionally you meet people that you just can’t help – this was genuinely one of them. I’d have been better banging my head against a brick wall.

There is no doubt that ERP software such as Microsoft Dynamics AX and Infor Baan has become easier to use over the past few years. It is also true to say that CRM has also become a great deal more user friendly.

However, to suggest that there has been an equal reduction in the complexity of the underlying technology would probably be misleading.

We probably know that the possibilities of CRM are endless. The promise of being able to see all of your customers’ detail in one place, including all their recent purchases, returns, inquiries etc is very appealing.

Most people will experience CRM in a B2C (Business to Consumer) context – you’ll probably know that one of your utility suppliers or insurance provider has an extensive  database about you which is also probably linked into your credit record from a credit reference agency so all your details are in one place when they speak to you. (I’m going to have a rant – but I’ll put it at the bottom of this blog so I don’t spoil the flow).

Of course there is a place for CRM in B2B too (Business to Business) and primarily this is the area we deal in.

Let’s get to the point of the blog. Typically a CRM implementation is made at a different time to an ERP one. And typically, it is not by the same vendor. But if you are looking for a single deployment most of the ERP vendors have a good element of CRM in their offerings now. The point is (and I am getting there, honestly) is that to get all the detail from the ERP to the CRM and any other systems , such as manufacturing execution software, so the person using the CRM can have useful information at their fingertips, is quite complex and does require a considerable amount of expertise.

Yes, CRM is relatively easy to implement and use but to get the real value out of it, where you have data from different sources, then don’t just listen to the sales person, dig deeper and understand what the associated costs are to get the ideal solution.

Mind you some people only want to hear about the great things that business systems will do and delight in ignoring, or just be plain oblivious to the underlying complexity.

When I was an IT Director for a large European business I was once called to a meeting with a vendor of a ‘mobility solution’. The pitch was that you could on the PDA he was selling present your ERP and CRM data and have access to that information out in the field.

This was music to the ears of the commercial director. He had always wanted this – and the price of a few pounds per month per device made it a no-brainer to him. The salesman of the product had said that this was entirely possible. The problem was that commercial director had taken this as a literal translation! He told me he was going to buy 50 of the devices because it would give him what he always wanted. The only reason I’d been invited was because he wanted me to confirm the spec of the PDA.

It took quite a while to explain that there would be quite a huge project, at some cost, to get the data he wanted from umpteen systems onto his magical PDA. I had torpedoed the project. I’m not sure he genuinely understood and I have a suspicion he thought I was being difficult so I could follow my own ‘complicated’ agenda.

Anyway, time for my rant as promised.

All those companies that have CRM in the B2C space – why do they only use it to sell insurance?

I’ll explain quickly. I’ve had two events in the past month that have required me to use or buy something I didn’t really want to. Firstly I had a tyre blow out on my car. At the tyre garage they took my phone number. Two days later I get a call asking  ”if I was happy with the service?”.  “Was I given a choice?”  “Was everything clearly explained to me? And “when is my car insurance due for renewal?”  And  “Your house insurance?”

A week later – a flat battery. Recovery service out and I was sorted. A day later a phone call. “Happy with the response?”, “Did the service guy explain the problem?” and “When is your home insurance due for renewal?”

CRM – sometimes I’m not so fond of it.

An important part of our business is providing a managed service to companies who use Microsoft AX (formally known as Axapta) and Infor ERP LN (formally known as Baan). This covers both technical support and functional consulting. We also, for a number of customers, provide support for all of their IT systems – we become the IT department.

Often businesses approach us because they are looking to save money on their internal resource, or realise that they are facing some risk in that the people that they employ could depart and leave them in a fix. It is not untypical to find that the people who work in IT, and who support the ERP system, have been around the business a long time. They have had the excitement of implementing the ERP system and are now lynchpins in the continued use of it.

There is a paper on our website ‘IT Support Options’ that discusses this in more detail – take a look and tell me what you think.

The challenge we always face when discussing our pricing with the potential customer is often centred around our estimates for the number of calls we believe we are likely to receive each month. We always suggest a higher number than the customer anticipates. For clarity we don’t just pick a number out the air – we will go on site and interview the users and look closely at how the systems are currently set up and used.

Why the disparity? Why do we always, in the eyes of the customer, overstate the number of calls (cases) that will be handled? We call it the ‘Not Jim Syndrome’.

‘Not Jim Syndrome’ is this: Where a long serving employee is in sole charge of IT and ERP the demand from the users decline in proportion to the user friendliness of Jim and how Jim feels valued by the organisation.

Actually I am being particularly flippant here and I don’t want to offend unnecessarily any Jims out there. It is obvious though that an internally resourced IT department of one, or two, is going to be limited by a number of things. Mainly time – there are just not enough hours in the day to solve all the problems, or importantly, take advantage of the features of your IT and, more particularly, your ERP system. It is also likely that the person just won’t have the breadth of knowledge about your IT and ERP to be able maximise the use of it. And finally, there’s history. I’ll expand a little more on this if I may.

The chances are that the user requests came in thick and fast in the early days of the ERP implementation and on some days Jim could, under the pressure of work, become a little tetchy. After a while people stop asking. They either accept that something can’t be done or start working round ‘the problem’. (See my other blogs on using spreadsheets for reporting).

Another issue is that it is often easier to keep fixing the symptoms of an issue rather than dealing with the underlying cause. Each day Jim ‘fixes’ an error rather than investigating and changing the system to prevent the error occurring in the first place. This is sometimes done for one of three reasons; one, they just don’t have the time to do the investigation. Two, they just don’t have the knowledge on how to solve the problem or three, they prefer it that way as it makes then ‘indispensable’.

Anyway, to return to the main body of this blog: Eventually, after some haggling we agree a managed service contract with our customer and we offer our helpdesk service. The calls start at a trickle and then, when people realise they are getting answers to their questions, and solving some long term issues, the trickle becomes a stream and then a river. Importantly they begin to ask about the functionality they are not currently using in their ERP systems and we help them investigate the use of that.

So, what conclusions could you draw from this? Well I’d suggest these; If you’re a business that is relying on one or two people to run your IT and ERP then you may not save vast sums by outsourcing but you will probably make greater use of the IT and ERP you already own – get better value from it. Or, if you are a Jim – then you might do your business a favour by contracting with some external resource to help you get the best out of your systems.

Tell me what you think…..

Hey, and I know I like my syndromes!

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.

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’ve just left a meeting which has really cheered me up. I went into the meeting with fairly low hopes that the right decision would be made – but in the end they chose ‘practical’ over ‘pretty’.

I have been working with this particular customer for a number of years – they have an aged ERP system which they are continually trying to get the best out of with relatively limited budget. Over time we have made improvements to the use of the system by changing business processes, utilizing unused functionality and the use of EDI amongst other things.

Where I have always advocated some spend is in the warehouse through the introduction of bar-code readers and associated middleware.  Some time ago they were convinced that a separate warehouse management system was the answer to their woes. It soon became clear after some analysis that their current ERP had the warehouse functionality they needed but not the bar-codes. By implementing a third party solution they would be buying software that duplicated much of what they already had plus they would need to interface their ERP, with the associated costs and overhead, to give them a solution that seemed like one system. They want to show their stock in real-time. Our answer is to add barcoding to their current system and update directly into that – that is real time.

So why am I particularly happy? It’s this: a couple of weeks ago the vendor of their ERP turned up with some Business Intelligence software. My customer was smitten! It gave them data cubes and the ability to have dynamic reporting and analysis. They were enamored with the fact that they could drag and drop and point and click and they could have a dozen different views of their data. So impressed were they that they asked me to come in and advise them on how best to deploy it.

The problem was that they were going to use their bar-coding project budget to fund the purchase.

At this point I had to remind them about their current issues; the mis-deliveries, the missed deliveries, the lost stock, the endless poor quality stock takes, the mind numbing and inaccurate form filling and the fact that no one in the business was confident about quoting delivery dates.

The beauty of BI would be that they would be able to see how bad things are in great detail but not be able to afford to do anything about it.

We’ve agreed that the saving they are going to make from the implementing bar-coding first can be used to buy the BI product later.

To find out how automated data collection can have a good business case take a look at our papers here.    

And I know there will be a few people that disagree with me – BI will be good for this business – just not yet!

When a business is suffering pain with its current IT systems, or lack of them, then  it is likely there will be a great debate as to which is the best solution going forward.

There will be advocates for the ERP solution –people that are convinced about the benefits of a single system that does ‘everything’ or have actually experienced ERP for themselves in a different organization. There will likely be a group of people that believe that a ‘Best of Breed’ (read ‘Designed for that industry’) will be the correct answer to the businesses needs. They will accept that interfacing multiple systems together is acceptable providing they have a package that is core to their business doing whatever it is they do, in the best way.

The right answer, depending on your industry, the quality and availability of ERP vertical add-ons, the number of Best of Breed offerings, the size of your organization and a number of different other factors, is not obvious.

The first time I was involved in a business system replacement where ERP was an option I was firmly against the concept. Over time I have changed my mind. Though I sometimes will still recommend Best of Breed I think that ERP generally is the best business systems solution and should be discounted first before seeking a BOB alternative.

To understand what helped me changed my mind you can read my paper ‘ERP or best of breed?’

Have you changed your mind? Let me know.

I was viewing my blog statistics the other day and I noticed that a previous blog I had written; ‘Simply the best (ERP Project Team members) which related to a paper I had written by the same title had attracted a disproportionate amount of views.

I suppose there could be a number of reasons for this; a technical fault in the view statistics, or maybe quite a lot of people were bored at around the particular time the blog was published, or perhaps it was actually an interesting subject!

 After I wrote the paper and blog I sat down and wrote another piece that was a little more serious in tone. The main drive of article was about how best to keep your project team members happy once you had persuaded them to join the team. 

 Projects by their nature tend to be transitory things and if you are building a project team from within your business then it is likely there will be a lot of questions and uncertainty from some of those people. In my paper I discuss an approach to making sure you get the best people to join your project.

It’s here – take a look and tell me what you think.