Here's our 3rd blog by our new guest contributor in 2014, Cindy Jutras, a widely recognized expert in analyzing the impact of enterprise applications on business performance. With over35 years of corporate experience and specific expertise in manufacturing, supply chain, customer service and business performance management, Cindy has spent the past 8 years benchmarking the performance of software solutions in the context of the business benefits of technology. In 2011 Cindy founded Mint Jutras LLC (www.mintjutras.com), specializing in analyzing and communicating the business value enterprise applications bring to the enterprise.
I've said it before and I'll say it again (and again and again). ERP is not brain surgery. Don't wait until the patient is dying before you take action to take better control of your business. Making a selection and running an implementation project when the business is under duress does not create an atmosphere of careful consideration, planning and execution. You will be tempted to take shortcuts that you may later regret. I've encouraged those feeling growing pains and those not functioning efficiently to treat it more like knee or hip replacement. You replace a knee or a hip when the pain becomes too great or you simply can't function the way you want or need to. Replacing outdated solutions might require a surgical procedure but can rehabilitate your business and get it running better than ever.
While my brain surgery analogy has worked well, encouraging many to take the plunge into ERP for the first time or replace outdated systems that cause pain and restrict movement, there are now some new factors to take into consideration. If you have experienced any kind of reconstructive joint surgery, you are now likely to be more sensitive to weather changes associated with the drop or rise in barometric pressure. It's almost as if you have an internal barometer that helps you predict when the weather is going to turn. While you can't change the weather, your new joint at least helps you power through and weather the storm.
And you are required to "power through" more and more storms these days. We are now living in a world of dramatic climate change. Whether you believe the cause of this climate change is the depletion of the ozone layer or just the same kind of cycle that saw the beginning and end of the ice age, you can't help but notice the increase in recent years in turbulent, often devastating weather patterns. The same can be said for the new business climate we live in today.
Preparation and having the right tools directly impacts your ability to weather these storms. Case in point: how did a two-inch snowstorm in January paralyze a city in Georgia? Although this snow was predicted, the city didn't have the equipment it needed to clear the roads and those in charge didn't understand the potential impact and were completely unprepared to handle this phenomenon. It shut down just about everything in Atlanta, including its roads, schools, churches, government offices and businesses. In contrast, the same snowfall would have been considered a minor inconvenience in New England, where communities clearly understand the potential impact and invest in the right equipment to handle it.
The business climate is experiencing similar turbulence and changing at an ever-increasing pace. This change is facilitated by technology that has caused the world to shrink and has forever changed the way individuals and businesses communicate. Major technological changes used to happen over decades. Now they are measured in years and even months. That same technology that fuels innovation of products and services and helps you attack new markets can also be a threat if you are unable to maintain your competitive advantage.
Just like joint replacement, if your business has replaced your ERP in the last decade, your new solution has probably made you more sensitive to business climate change. You not only have a system of record of your business transactions, but also a better barometer of changing patterns of buying and selling. But the pace of business continues to accelerate, along with the pace of change, placing new demands on systems. Fortunately ERP technology has also kept up. But have you?
Solution providers are delivering more innovation, providing new, more collaborative ways of engaging with ERP, taking advantage of cloud, mobile, and advanced analytics that handle growing volumes of data. Which means, even if you have upgraded or replaced ERP in the last ten years, you still may not be able to compete effectively.
If you are one of the few remaining manufacturers that have not yet invested in ERP you may be thinking you are too small. This year's Mint Jutras 2014 ERP Solution Study included over 75 participants that still had not invested in ERP and "We are too small" was the dominant factor keeping these folks from investing.
While 85% of respondents with no ERP have annual revenues less than $25 million, even $5 to$10 million of shipped product takes a lot of planning, scheduling, monitoring and managing, not only within the four walls of the manufacturer, but across supply chains that most likely extend beyond international borders. That is real tough to do using desktop applications, spreadsheets and manual processes. Unless you want to be a $5 million company forever, I would argue that you probably can't afford not to invest if you want to compete effectively.
If you have not yet invested, here are some telltale signs you need an ERP solution:
- Your inventory levels are rising, yet you still can't seem to meet customer requested ship dates.
- You find yourself asking, "How can we take control?"
- You struggle to close your books. Processes are manual; data is scattered in hard copy files, offline spreadsheets and across desktops.
- It is common for data to be transferred between desks four or five or even six or eight times, adding little value and introducing the risk of errors.
- You have aspirations to grow, but you have no visibility into the best opportunities.
- A crucial order has just come in. You know you have made this product before but have none in stock. You think you might have the components on hand to produce at least part of the order, but you don't know where that inventory might be or what the part numbers are. You reinvent the proverbial wheel.
- Technology is leaving you behind but you're growing and would rather invest in revenue-generating activities, not overhead.
Of course most of you reading this will already have something you might call ERP. Are you good to go? Not necessarily. In recent years, we've seen the percentage of manufacturers planning to replace their ERP grow from 15% to 20%. As more legacy ERP solutions get replaced, the bar is raised in terms of competition.
In contemplating a replacement you might first want to assess your current access to data for effective decision-making. World Class ERP implementations (those that have produced the best cost savings and other improvements) are 44% more likely to have immediate access to all data needed and more than twice as likely to have it available anytime, from anywhere, including from a mobile device. Do you have access to all the data needed? Does an IT professional have to set it up for you, or is access "self service?" Or are you completely reliant on others to provide data for decision-making? Does it take so long to get answers that by the time you do, the question has changed?
Also assess the level of access your top executives have to ERP. In the past these high level, strategic decision-makers never put their hands directly on ERP, but that has changed dramatically over the past few years.
This improved access is largely made possible by ERP vendors providing new ways of engaging with ERP. That might mean more intuitive access, more specialized functions ("there's an app for that") that don't require users to "figure it out," automated alerts and notifications, or access through mobile devices… or all of the above.
What kind of access do your executives have?
New and rapidly changing technology is also helping to change the climate of the business world manufacturers operate in today. Are you ready? Can your ERP respond or is it time to upgrade or replace? Don't let the equivalent of the next tsunami, tornado, or two inch snowfall paralyze your business.