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Blog Written By | ERPFocus

ERP Manufacturers: Does ERP Support your Strategic Advantage?

Do you know why you make a profit? Not because revenue exceeds costs, but why your customers are willing to pay you a premium above costs for your products? If you can’t articulate why you have an advantage, two things are undoubtedly true: 1. If if you ever begin losing money, you won’t know why, and 2. your ERP implementation team will not know what manufacturing of business processes to concentrate on in order to support your strategic advantages.

If your strategic advantages are post-sales support and customer service but your ERP blueprint design emphasizes inventory control and quality monitoring, it is a certainty that you will end up with a system that does not maximize ROI. Even worse, you will hear the dreaded statement – our new computer system won’t let us. Once that statement is permitted, then every managerial problem you can think of, ranging from container ship congestion in the port to the quality of coffee in the vending machines will be blamed on the new ERP system.

After you become convinced of the importance of articulating why you make money, then organizationally, how will you convey that to your project management in a manner that is clear and unambiguous? Because the implementation team is going to be comprised of manufacturing managers, quality managers, supply chain professionals, financial controllers, sales managers, distribution managers, new product development managers, purchasing managers, and customer service managers all of whom who are fully invested in the notion that their functional area is the sole reason the company makes money. In the absence of a clear leadership direction, the ERP solution will be a watered-down version of consensus in which every area receives a little bit of ERP attention, but no area has a world-class business solution.

Put it in writing

So, if you are considering an ERP implementation, take ten minutes and write down the three or four sentences that describe why you make money, and give it to your project manager. This will help the team select the appropriate modules and the vendor with the strongest modules in the important areas. If you are in the middle of an ERP implementation, ask your project manager to write down the same three or four sentences about why they think profit is made, and see how how it compares to your list. If there is a difference, you still have time to make a mid-course correction. If you have already implemented, and there is a difference, keep a close eye on your business performance.

In ERP, an ounce of prevention is worth a ton of cure. Take the time in the beginning to define the big picture. Contact allonline365 to speak to us about the relevant modules you want to include in your ERP solution. Let us help guide you, call us on  +27 (21) 205 3650  or email us on  info@allonline365.com.

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Blog Written By | ERPFocus

ERP in Process Manufacturing: Business Benefits

You may call it an accidental benefit, but one thing that an ERP implementation forces on an organization is a thorough examination of its business models and practices, and process manufacturing benefits disproportionately from this examination. By its very nature, process manufacturing tends to be more flexible and dynamic over time. As a result, many business practices are the result of evolution, instead of a thoughtful and well-executed strategy. In a process manufacturing, you can almost always accommodate one more special customer need, until, after a while, your business model hardly resembles what your manufacturing, service, or systems were designed for. The misalignment between how the business was designed to run and how it actually does run will be highlighted in a number of ERP design issues.

Turning Over the Rock

A typical example might be defining a business model as either make-to-order (a specific manufacturing plan for each customer order) or make-to-stock (sell orders from inventory). ERP generally rewards a clear-cut choice between these two with rich functionality, but process manufacturers often have difficulty committing to only one strategy. They want to describe a hybrid strategy and decide, order by order which strategy applies. While this sounds very customer-focused, it is an administrative nightmare. As you begin asking who has the authority to decide, and what the decision criteria are, you grasp that there is no overarching logic to the choices being made, and therefore it is not a business model that is easily programmable within an ERP environment. The conversation which emerges as a result of this ERP question is a vitally important one to the leaders of the business. If the leadership team is collaborative and synergistic, it is possible that ERP will serve as the framework for re-establishing a set of logical business rules. If the leadership team is dysfunctional and does not work together well, at least everyone explicitly understands that the business model does behave according to any predictable rules. This is not an observation in sarcasm; it is an important reference point for helping people understand why things do not go as expected.

Other examples might include how planning and manufacturing scheduling occurs, how a product that does not strictly meet quality specifications is handled, or how much lot traceability is truly required. The benefit in all of these, just like the one in the preceding paragraph, is to hold up the evolutionary decisions that a single functional area has turned into business policy, and examine them in the clear light of the total business process. The results can vary from exhilarating to frightening, depending on your organization.

If your workgroup can agree to operate your process manufacturing business logically, ERP will be a stair-step improvement. allonline365 can help guide you during your implementation of Dynamics 365 Business Central ERP, offering advice on the best modules and customizations need for your business. Call us on +27 (21) 205 3650 or email us on  info@allonline365.com.