For many years, a home-grown computer system that managed sales, inventory and production needs performed adequately for day-to-day business management in a manufacturing business. However, today many companies find that there are missed opportunities and gaps in data collection, limiting their ability to understand how the company is performing in multiple areas.
Introducing Enterprise Resource Planning (ERP) System
An ERP System is business software that provides integrated information on all your business functions, such as production planning, inventory management, materials, sales, and finance, and keeps them all interconnected. This kind of system can be a useful tool, but selecting the appropriate system can be overwhelming. There are a variety of software options that range in functionality and cost, so it can be difficult to determine the right “size” to meet your requirements.
One manufacturer (ABC) made the decision to implement an ERP System, and given the complexities involved, decided to hire a qualified independent consultant to wade through the various software options. The consultant helped organize their needs and get the right system. The consultant built a practical road map that shortened the time between investigating software packages to implementation. A good consultant will typically recommend that you change the ERP technology last – change your tools and processes first. The closer you stay to an Out-of-the-Box implementation, the better off you generally are.
The overall process from search to implementation took ABC about a year. Learning new processes and discovering new data that they never had access to was certainly challenging but gave them much more insight on making data-driven decisions. ABC continues to learn things about their real production costs, productivity, inventory valuation, and sales data each day.
Overall, the experience was advantageous. Transitioning to an ERP is not for the faint of heart. It is a significant investment in time, money, and, often times comes with a culture change. ABC believes that the awareness gained has been well worth the investment, and is confident that they operate smarter because of it. Below are some resources that may be useful if your company is considering implementing an ERP system.