Getting the Most Out of an ERP System Scott A. Holter, CPIM April - - PowerPoint PPT Presentation
The Entrepreneurs Edge Click to add headline Getting the Most Out of an ERP System Scott A. Holter, CPIM April 9, 2014 Presentation Outline Click to add headline Managing the Maintain, Upgrade, or Replace Dilemma for ERP Software
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Scott A. Holter, CPIM April 9, 2014
The Entrepreneur’s Edge
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Managing the Maintain, Upgrade, or Replace Dilemma for ERP Software Closing Gaps in Existing ERP Systems
Finding a replacement ERP System Presentation Outline
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Their Effectiveness
Your System
Managing the Maintain, Upgrade, or Replace Dilemma for ERP Software
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Requirements and Expectations Change Over Time
More
Our ERP System Doesn’t Seem to Work as Well as Expected…Why Not?
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Distributor acquires a manufacturing business
– Routings – MPS/MRP – Scheduling – Shop Floor Control – Quality Management and Control – Preventative Maintenance Business Model or Process Changes – Examples from among our clientele
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Assembler backward integrates and adds injection molding business
– Tool / mold management – Finite scheduling of machines – Infinite scheduling of labor – Co-products (multiple products made from one mold) – By-products (such as re-grind) Business Model or Process Changes – Examples from among our clientele
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Job Shop (Contract) manufacturer launches its
– Standard Costing – Engineering Change Control – Complex Pricing routines to support sale of single product to many customers – Retention-based CRM (rather than opportunity/project- based CRM) Business Model or Process Changes – Examples from among our clientele
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Capital equipment manufacturer begins to service and repair customer’s equipment
– Help Desk – As-Built and As-Maintained BOMs – Serialized Equipment – Service quotation and order processing – Preventative maintenance and other service contracts – Service technician scheduling, dispatch, and repair
– Mobile computing Business Model or Process Changes – Examples from among our clientele
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Domestic manufacturer acquires overseas business unit and increases export sales
– Currency translations – Financial consolidations and eliminations – Multi-currency quotations, sales orders, and invoices – Value Added Tax (VAT) charges and collections – Trade documents produced in foreign languages – Processing language selectable by user Business Model or Process Changes – Examples from among our clientele
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Large multinational metal processor purchases five (5) small electronics companies around the world
high-tech companies
– Smaller, simpler solution – Language and tax localization for South Korea, UK, and Ontario CN – Reference designators (“bubble numbers”) tying BOM to drawing – Serialized components and serialized assemblies – Revision-controlled perpetual inventory Business Model or Process Changes – Examples from among our clientele
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New requirements include
and invoices
Customers’ Demands Change
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New requirements include
automotive, medical, aerospace, etc…
Customers’ Demands Change
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New requirements include
documents
Governmental Agencies and Regulators Demand More
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cadre of key employees
and processes System Expertise Leaves with Departing Employees
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Transaction processing often implemented without decision support
Partially Implemented from The Get Go
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Continued…
Inventory
(CRM)
Partially Implemented from The Get Go
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Often not or partially implemented
– Master Production Scheduling / Material Requirements Planning – Capacity Requirements Planning – Detailed Finite / Infinite Scheduling – Lot Traceability – Cycle Counting
Partially Implemented from The Get Go
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Often not or partially implemented continued…
(CRM)
Partially Implemented from The Get Go
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Substitutions for Partially Implemented ERP System
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ERP Software Results / Scorecard – State of the market
limited pipeline visibility
dates
Partially Implemented from The Get Go
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ERP Software Results / Scorecard – State of the market continued…
schedules
Partially Implemented from The Get Go
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ERP Software Results / Scorecard – State of the market continued…
visibility
production schedules
into “back office”
Partially Implemented from The Get Go
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Utilization and Effectiveness of ERP- a Client Example
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Utilization and Effectiveness of ERP- a Client Example
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Utilization and Effectiveness of ERP- a Client Example
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perspective toward systems
lets Operations and Sales “off the hook”
like CRM, quoting, and estimating
financial reporting
strategy
Reasons for incomplete / partially implemented systems
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knowledge
– Discrete system for a process manufacturer – Distribution package for a manufacturer – No modules for tangential functions leads to point solutions
Reason for incomplete / partially implemented systems
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Functionality Gaps
publisher/vendor
Vendor (e.g. O2 for MAS500)
Planet Together for Scheduling)
system tools
ERP Software Gaps and How to Close Them
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Utilization Gaps
project
– Educate – Design, Model, and Simulate – Setup and Prepare – Train – Deploy and Monitor
ERP Software Gaps and How to Close Them
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Structural Gaps Short- and intermediate-term workarounds, at best
databases/installations
company/database/installation
replenishment planning and transfers done outside the system
ERP Software Gaps and How to Close Them
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Structural Gaps continued…
foreign country
Vendor IDs – adopt system convention
costing systems supported
ERP Software Gaps and How to Close Them
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Technology Gaps (short- and intermediate-term workarounds, at best)
– Unable to collaborate with customers and suppliers electronically – Reporting and information access weaknesses – Lack of analytics and graphical reporting – Lack of interaction with Office tools like Excel or Outlook – Limited remote connectivity options – Inflexible – Slow processing speed
ERP Software Gaps and How to Close Them
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Technology Gaps (short- and intermediate-term workarounds, at best)
strategic, replacement is likely
– Web-based collaboration tools – Port to a modern database – ODBC connections to allow report-writer access – Data warehouse – Citrix or Terminal Server for remote access
ERP Software Gaps and How to Close Them
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Strategic Benefits of Modern ERP Systems
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integrated ERP
configurator
Functional
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integrated ERP continued…
Functional
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manufacturing in single system
some actual)
Functional
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– Request quotations – Place orders – Report problems – Request help
– Lot and sublot tracking – Graded inventory – Dimensional inventory – Consigned inventory – Quality/quarantined inventory
Functional
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– Packing slips and bills of lading – Export documents – Quality documents
– Multiple methods – More cost elements/buckets – What-If cost simulations
Functional
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Increased utilization due to:
– Standard Windows layouts similar to Outlook, Excel, etc. – Browser and Web Page orientation
Utilization
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– Multi-company – Multi-currency
and/or plants
– Shared item master – Shared BOMs and Routings – Shared customers – Shared suppliers
Structural
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– Web browser – Terminal services/Citrix – Tablet and smartphone apps – Integration with Email
Technological
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10.Handheld and Touchscreen for non-office users Technological
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Strategic Benefits Summary
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Replacing an ERP System
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Meaden & Moore
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ERP Industry Background
– Accounting software packages for mainframes and minis – Separate MRP and Job Shop packages for
– Heavily customized in most instances – Complimentary custom applications developed internally – hard-coded or using tools like dBase
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ERP Industry Background
– Enterprise Resource Planning conceived – ERP unites accounting, operations, and others – Thousands of custom developers attempt to brand/“package” their software for re-sale – Industry and software company consolidation accelerates but new ones emerge – Environment changes over time: mainframes, minis, fat client-server networks, thin-client and browser-based applications
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ERP Industry Background
– Software management trend – Custom applications dwindle, remain – Modifying packages’ source code comes and (mostly) goes – Plain-vanilla implementation strategy – Customization and personalization strategy emerges
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ERP Industry Background
– Dozens (100+) viable ERP software vendors remain – Most have carved out target markets based on size, scope, industry, or niche features – 5-25 competitors in a target market – Continuum of integration: fully-integrated ERP to core plus best-of-breed. – Vast differences in technology, sophistication, rigidity, and cost to own
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ERP Partner Selection
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ERP Partner Selection
– Touches virtually every aspect of a manufacturing business – Is a marriage
– With rocky relations, at times – Where divorces are painful and expensive – That requires a careful courtship
– Requires executive leadership and mid-level management and staff support and input
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ERP Partner Selection
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ERP Partner Selection
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ERP Partner Selection
1. Strategic Factors – Company-based
3. Features / Functionality
5. Cost of Acquisition and Ownership
Approach
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Strategic: Company-based
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Strategic: Company-based
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Strategic: Company-based
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Strategic: Company-based
Material Acquisition Manufacturing Distribution
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Strategic: Company-based
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Strategic: Company-based
Follower Innovator Middle of the Road
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Strategic: Company-based
decision-making
and interchange intensity
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ERP Partner Selection
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Strategic: Partner-based
boutique shop
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Strategic: Partner-based
don’t prevent acquisition
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Strategic: Partner-based
increases odds of life after acquisition
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ERP Partner Selection
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Sample Client Profile
plans to grow 2-3X next decade
MTO and 25% MTS
need a high-end ERP solution
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Sample Client Profile
stable and reliable technology
customers
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Sample Client Profile
have a 10-year history as a going concern
provided there’s strong local (100 miles) support
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Sample Client Profile
numerous metal fabrication shops as customers
maintained by vendor, but open to interfaced products for reporting, analytics, asset management, and CRM
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Sample Client Profile
the potential candidates to an even shorter list
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Sample Client Profile
requirements
checklist, so don’t skip next step
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Strategic Evaluation
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Strategic Evaluation
Req ID Subtopic Attribute (Short Description) Client Priority A B C D E F G H I J K 3 Size and Scope Tier 3 ($30- 70MM) Required Exceptional Exceptional Above Average Above Average Exceptional Exceptional Above Average Exceptional Exceptional Above Average Exceptional 4 Size and Scope Tier 2b ($70 - 150MM) Nice-to- Have Above Average Exceptional Exceptional Exceptional Above Average Exceptional Industry Standard Exceptional Above Average Industry Standard Industry Standard 10 Manufacturing Strategy Make-to-Stock Discrete Key Above Average Above Average Exceptional Above Average Above Average Above Average Exceptional Exceptional Exceptional Above Average Exceptional 12 Manufacturing Strategy Make-to-Order Discrete (Job Shop) Key Above Average Above Average Below Average Industry Standard Exceptional Exceptional Industry Standard Above Average Above Average Exceptional Exceptional 13 Manufacturing Strategy Engineer-to-Order Discrete Nice-to- Have Above Average N/A Below Average Below Average Exceptional Above Average Above Average N/A Above Average Above Average Industry Standard 15 IT Strategy Technology Leadership Key Above Average Exceptional Above Average Above Average Exceptional Exceptional Exceptional Above Average Above Average Above Average Above Average 16 IT Strategy IT Staff Technology Self- Sufficiency Key Industry Standard Industry Standard Above Average Above Average Exceptional Above Average Exceptional Above Average Above Average Above Average Above Average 18 IT Strategy Analytical, Data-Driven Key Exceptional Above Average Exceptional Above Average Above Average Exceptional Exceptional Exceptional Exceptional Exceptional Above Average 19 IT Strategy External Collaboration Key Above Average Exceptional Exceptional Exceptional Above Average Industry Standard Above Average Above Average Above Average Above Average Above Average 25 Industry Specific Support Automotive Required Exceptional Exceptional Exceptional Exceptional Above Average Industry Standard N/A Below Average Industry Standard Industry Standard Industry Standard 34 Industry Specific Support Medical Required Exceptional N/A Industry Standard N/A Industry Standard Above Average N/A Below Average Industry Standard Below Average Below Average 37 Industry Specific Support Plastics / Polymers Key Exceptional Industry Standard Industry Standard Above Average Industry Standard Industry Standard N/A Below Average Industry Standard Industry Standard N/A 39 Industry Specific Support Non-Consumable Tooling Intensive Key Exceptional Exceptional Exceptional Exceptional Above Average Above Average Industry Standard Industry Standard Industry Standard Above Average Above Average
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ERP Partner Selection
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Functionality Topics
Marketing Management Process Master Data Asset Maintenance Sales Automation Sales Forecasting Purchasing Quoting and Estimating Dist’n. Planning/Control Receiving Sales Order Processing Master Prod. Scheduling Inventory Control Shipment Processing Material Req’s. Planning Cost Accounting Post-Sales Service Production Scheduling Accounts Payable Product Master Data Shop Floor Control Accounts Receivable Project Management Quality Management GL / Financial Reporting
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Functionality Requirements
etc.)
executives must be involved
APICS, etc.
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Functionality Requirements
1. Do-it-Yourself
2. Consultant facilitator / architect
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Functionality Requirements
3. Review Your Business Processes Supported by
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Functionality Requirements
Requirement Use / Application in Our Company Estimate and quote with non-existent items Win 20% of custom jobs (job shop) and don’t want to set them up Link a Shop Order to a Sales Order For our MTO jobs, print customer information on shop documents Forecasting with seasonality model Products sold to construction market (25% of our revenue) are seasonal Scheduling groups like work together Sequence paint line by color Sequence presses by raw material Record production of co-products Many family dies produce more than 1 item when run (left side / right side) Multiple costing methods within plant Product line ABC costed at standard Product line XYZ costed at actual Consolidated cash application Large corporate customers central AP pays invoices for multiple customers
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ERP Partner Selection
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Technology Topics
User Interface Query and Reporting Tools Document Management Business Analytics Training Aids and Help Simple Personalization Tools Database(s) Advanced Customization Tools Network Operating System(s) Workflow Management End-User Access (Fat Client, Thin Client, Browser, Tablet, Phone) Integration Tools Security
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On-Paper Comparisons
Solicit Responses from Vendors Utilize Online or Consulting Firm KB
Lowest internal cost alternative Best option if engaging a consultant Will the vendors understand the requirements, applications descriptions? Consulting firm and online research can be
worth it? What incentive do vendors have to respond completely and accurately? Understand consulting firm’s research process Start with module configuration needs and
especially those that are high-degree of difficulty. Examine samples from prior engagements
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Many Ways to “Yes”
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Comparison Matrix
Req ID Topic (Client Sort
Subtopic Attribute (Short Description)
Client Priority
A B C D E F G H I J K
778 Manufacturing Execution
Work Order Creation Conversion of planned orders directly into work order
Nice-to- Have
Y Y Y Y Y Y Y Y Y Y Y
783 Manufacturing Execution
Work Order Creation Link a work order to sales order (order line item/release)
Nice-to- Have
Y Y Y Y Y Y Y Y Y Y Y
785 Manufacturing Execution
Work Order Creation Warning or hold capability for work
changes
Nice-to- Have
N Y N Y T T Y T Y Y N
786 Manufacturing Execution
Work Order Creation The Work Order maintains both the quantity to be produced and the customer's required quantity.
Nice-to- Have
Y Y Y T Y N T T Y Y Y
787 Manufacturing Execution
Work Order Creation Material availability inquiry at work
Nice-to- Have
Y Y Y Y Y Y Y Y Y Y Y
789 Manufacturing Execution
Work Order Creation Multiple outputs for a single work
Nice-to- Have
Y Y Y Y Y Y Y Y Y Y N
790 Manufacturing Execution
Work Order Creation Multiple output work order creates multiple scheduled receipts
Nice-to- Have
Y Y Y Y Y Y Y Y Y Y N
791 Manufacturing Execution
Work Order Creation Work order release allocates required components / materials
Required
Y Y Y Y Y Y Y Y Y Y Y
794 Manufacturing Execution
Work Order Creation Material pick list
Required
Y Y Y Y Y Y Y Y Y Y Y
797 Manufacturing Execution
Work Order Creation Consolidated material pick list
Required
T N N Y Y T P T T T N
798 Manufacturing Execution
Work Order Creation Shop traveler for a work order
Required
Y Y Y Y Y Y Y Y Y Y Y
799 Manufacturing Execution
Work Order Creation Bar-coded pick list and shop traveler Required
Y Y 3P Y Y Y Y Y Y Y Y
800 Manufacturing Execution
Work Order Creation Automatic print of attached / linked documents and files
Required
Y Y T N Y P Y T Y Y Y
801 Manufacturing Execution
Work Order Creation Automatic generation of lot / serial numbers
Required
Y Y Y Y Y N Y Y Y Y N
802 Manufacturing Execution
Work Order Creation Automatic print of lot / serial labels
Required
N Y Y Y T N T T T Y N
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Software Evaluation Model
On-Paper Research and Analysis Proof of Satisfaction to Highest Weighted Requirements Proof of Concept Demonstration / Workshop 20-30 Candidates 4-6 Candidates 2 Finalists Winner Using Functional and Technology Requirements
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ERP Partner Selection
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Software Evaluation
friendliness, flow, and integration)
workarounds, tailoring, and customizations
that’s coming
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Software Evaluation
preparation – minimize curve balls
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Software Evaluation
need to be timed
understand, then to be understood
and move on
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Software Evaluation
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Software Evaluation
# Demonstration Scenario A B C D 1 Technology, Navigation and User Friendliness 57.00 50.00 54.00 55.00 2 Alert/notifications and workflow 52.00 46.00 56.00 46.00 3 Centralized item master 42.00 37.00 48.00 39.00 4 Engineering change control 49.00 39.00 31.00 49.00 5 Customer quote / order management 45.00 32.00 37.00 28.00 6 Serialization 28.00 37.00 40.00 37.00 7 Multiple plants 38.00 37.00 37.00 38.00 8 Incoming inspection and quality control 39.00 36.00 37.00 49.00 9 Product structure variables 41.00 38.00 28.00 36.00 10 Shipping, including Data Collection 18.00 34.00 32.00 44.00 11 Service and Repair 41.00 33.00 30.00 52.00 12 Customer Demand / Forecasting Management / MRP 34.00 29.00 30.00 38.00 13 Costing / Cost Accounting 17.00 10.00 15.00 32.00 14 Purchase order flow 31.00 28.00 27.00 48.00 15 Production Scheduling and Control 32.00 23.00 30.00 33.00 16 Customer Relationship Management 28.00 31.00 26.00 37.00 Total Score 592.00 540.00 558.00 661.00
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ERP Partner Selection
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Cost Evaluation
Traditional On-Premise or Hosted Model Software-as-a-Service Model
Infrastructure N/A User Devices (handhelds) User Devices (handhelds) Specialty Hardware (printers) Specialty Hardware (printers) Software Licenses
N/A
Lower Assurance and Support Higher Assurance and Support Implementation Services Implementation Services Staff Costs Lower Staff Costs
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Software Evaluation
vendor-to-vendor
negotiations can increase buyer’s costs
finalists, not finalists or winner
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ERP Partner Selection
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Software Evaluation
capabilities than in the past
“install, convert data, train, go-live”
day
down
digest over a reasonable timeframe
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Software Evaluation
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Software Evaluation
per day/week
approaches with preferred strategy and confirm with customers
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Software Evaluation
continuum
Do It Yourself Combination Consultant Driven
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Software Evaluation
in annual assurance fee
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ERP Partner Selection
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ERP Partner Selection
compute scores, and let math pick the winner
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ERP Partner Selection
Qualifier Dimensions Winner Dimensions
Strategic – Company Based Functionality Strategic – Vendor Based Technology Cost of Acquisition Implementation Approach and Resources On-Going Support
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ERP Partner Selection