Essentials of Supply Chain Management, 2nd Edition:- This is written by Michael H. Hugos and contains valuable tips, techniques, illustrative real-world examples, exhibits, and best practices in the are of SCM. This handy and concise paperback helps to stay up to date on the newest thinking, strategies, developments, and technologies in supply chain management. A quite useful possession indeed. This can be bought at most economical price here
Modern ERP: Select, Implement & Use Today’s Advanced Business Systems:- This book is written by Marianne Bradford and what is unique about this book is that it contains contributions from organizations like NetSuite, Microsoft, SAS, GlaxoSmithKline and Deloitte Consulting. This makes this book a much practical document to read and implement in rela life. Incidentally, this is one of the best selling books on ERP these days on Amazon
We have all seen lot of material available all over the internet in vendor white papers, research articles and independent blogs about the best practices on improving the ERP implementation cycle in terms of cost, cycle time and return on investment. Most of these articles stop at Go-Live and do not capture the challenges and the opportunities after Go-Live so that the envisaged benefits from ERP can be realized.
If you ask me, I would say that Going Live successfully with the application is the first milestone in the whole business transformation exercise and we still need to not only measure and benchmark the process efficiencies as well as automation levels at fixed intervals to continuously improve them, but also make sure that the changes that have been brought in the organization as a result of the ERP Application Implementation, have gone down well with the users and they also see long terms benefits in switching to this new ERP, leaving behind their favorite legacy systems.
I have tried to capture few challenges and opportunities that we stumble upon after Going Live with ERP that we all should consider so as to reap the benefits to the maximum. Let me first start with the challenges:
- The first and foremost challenge after Going Live is to stop running parallel systems. While few organizations have really matured on this part and wither switch off the entire legacy systems or those functionalities in them that are now available in the new ERP and users are expected to work on them only in ERP, but still a very large number of organizations still do not have a well charted process in this regard. This poses multiple issues, the biggest being division of data in 2 or more applications and the very objective of having one source of truth is defeated.
- Transition of Project Managers. While, all ERP projects have dedicated project managers who go well beyond the go-live to post production support period and make sure that the Live system is stable from bugs perspective before they off board, but often, role and responsibility clarity after that phase, dissolves and there are multiple owners (or shall I say Managers) and very less number of contributors that are needed to take it to the next level of change management, ongoing trainings, user access process, upgrade or enhancement decision processes etc.
Over dependence on support teams for knowledge management. It is often seen that after setting up a vendor team for providing post production support, organizations depend totally on their teams for preparing and updating the user manuals and other soft training material for users and new employees. Though they claim to review the documents before releasing to the business teams but I have my doubts on the review process. Again, not only the ERP documentation but defining the complete process of knowledge management for the process improvements using the application is a challenge.
Independent customizations in multi country rollouts. One of my friends, is working in an European company and they implemented ERP in 1999 and never upgraded after that. The implementation was done in 23 countries across the globe and finally when they thought of upgrading the ERP this year, they came to know that their ERP system is not a standard system any more. Every country has got done some or more country specific customizations in the ERP, making this a bunch of disparate systems that do not offer a standard process. The pain that they are going through now for upgrading the ERP is enormous and it has increased their costs multifold. The challenge here is to keep the standard system, standard enough so that future upgrades are done with minimum costs
ERP is not a magic wand. As soon as we go live with ERP we start expecting it to take over the organization and transform it to a world class organization. We want to be Best in Class as soon as possible, being done so much hard work during the implementation period. Keeping the expectations of business users to realistic levels is another challenge that needs to be addressed.
Likewise there are more Post Go-Live challenges that we all need to consider while making a strategy to realize maximum benefits from your ERP. I do not want to paint a gloomy picture by just highlighting the challenges here. It is not that you only have challenges after Go-Live and ours lives will revolve around them forever. Successful ERP implementation offers multiple opportunities to business beyond the expected benefits. Some of them are:
- Improve the KPIs. Now that the as-is values of the KPIs are known to you, it is easier to make desired KPI model by benchmakring with the Best in Class and charting a roadmap to reach there
Rationalize the staff. It provides you with an opportunity to relook at the staffing levels and use them in more productive areas as automation will free up some staffing hours/days
Flank it with Best in Breed Systems. ERP might not be there in its present role for eternity. While ERP will give a standard platform and one source of truth, there are chances that it is not the best system in all areas. It might be the best transaction system (or financial reporting system) but still might need to be complimented with best in breed systems for niche areas like service parts planning, demand driven supply chain planning, procurement auctions or product lifecycle management for that matter. Having an ERP system tells you where you are currently and what do you still miss to reach the pinnacle of success
I have not captured the direct benefits that an ERP will provide to an organization but I understand that these opportunities sometimes look like the benefits (due to a thin line difference between them) only but believe me, you will still need to do some good amount of work to explore these as against the direct benefits that you will get after implementing ERP successfully. Essentially, the challenges are required to be part of our overall Benefit Realization Strategy from ERP and opportunities are the areas which show the way for reaping the by product benefits from ERP.
With the advent of BRIC nations, especially India and China, every organization view globalization as an opportunity for growth. Some of them want to tap the economical resources from these countries to reduce the cost of operations and others want to tap the growing market demand and see most of their growth coming from these nations. While the organizations might have some IT systems to depend to fuel their growth at home but they still need something to hold all their international operations together so that not only expansion but continuously monitoring and improvement actualization is also a possibility. Organizations can not focus on gaining a competitive advantage if they struggle to integrate their own international operations. Their internal operations need to be integrated first to achieving interoperability on a global scale. Seamless integration is easier to manage governance, risk and compliance. It all means that if the core ERP is capable of dealing with issues like multi currency, multi site and multi-company transfer of inventory, consolidation, localization and translation, then it is much easier for the organization to globalize their operations and benefit from them.
ERP also plays a key role in the consolidation of global financials for an organization. The ability to support a multi national implementation from a single instance of ERP and global consolidation across multi site and multi database (yes, that’s correct) implementations are the kind of benefits that enable organizations in their globalization endeavors.
ERP also addresses largely the major challenges, companies face in the wake of globalization, like complex supply chains both in raw material and finished goods, the need to adapt to the rules & laws of foreign nations, lead times that inhibit the ability to respond to customer or market demands and most importantly end to end supply chain visibility.
Having talked about the features of ERP that helps in globalization, there are few limitations in almost all the ERP products that still need to be addressed by the providers so that it can become a complete package. Issues like inability to capture the export or shipping documentation, lack of translated versions of ERP or challenges in managing global de-centralized IT installation. All these, force the organizations to customize the product or add best of breed systems to flank the core ERP system so that all of their needs are addressed.
If we look at the Best in Class organizations today, we will know that ERP is already implemented at all their major operating sites and conforms to corporate standards worldwide. Reporting capabilities are fully utilized and assist the executives in taking the right decisions at right time. They have realized the potential of ERP for them, have you?
Puneesh Lamba is a seasoned Supply Chain Management and ERP Expert who has more than 16 years of experience in SCM, ERP and Distribution areas in multiple industries and various organizations. He has worked across the globe with his major assignments in India, Americas and Europe. He keeps on contributing in the ERP and SCM space at his site http://www.infoverto.com leveraging the knowledge he has gatherd over the years and likes to debate on new trends as well as strategies for growth in his areas of interest.