If you are a manufacturer — whether large or small — you should have an ERP system to help you operate your business most efficiently. It’s no longer a matter of “if”, but “when” you will acquire an ERP solution. These systems can link every function in your business and bring new levels of performance and efficiency to such key operations as purchasing, production, inventory, accounting and HR. Comprehensive reporting tools in an ERP solution also allow you to monitor activity in real time.
This may sound great, but I must warn you that there are challenges associated with implementing a new ERP system or upgrading an existing one. Your employees may not embrace the new technology and ROI is far from assured. In a recent survey, by Panorama Consulting, it was reported that 60 percent of companies that implemented a new ERP solution failed to realize the business benefits that were expected as a result of that implementation. Fortunately, there are a number of strategies you can employ to increase the odds that your ERP installation will be a success.
Vendor Selection Process
CEOs of consumer goods manufacturers and retailers—the two ends of the consumer goods pipeline—might be feeling a bit beleaguered these days. Growth is hard to come by, especially for the larger, more established players; investment budgets are stretched thin; consumer preferences and shopping habits are in rapid flux; and investors are waiting impatiently for near-term improvements. These circumstances help explain why consumer goods CEOs aren’t as bullish as the average CEO about growth prospects for the economy and their own organisations.
With consumer markets in unprecedented upheaval, CEOs in the sector appear to be more focused on the here and now than on ambitious long-term undertakings. Operating as they are in an environment of dramatic change, the long view may be a luxury they can’t afford.
Before you issue the RFP, create a predefined selection process that will allow you to zero in on vendors who appear most likely to meet your needs. It is important that the solutions proposed by the vendors address the gaps in your current ERP systems. These gaps will become readily apparent as you go about gaining a thorough understanding of your current business processes – a mandatory exercise.
For example, you will want to know what business processes should remain “as is” and retain their features and functions in the upgraded system. As a result of this exercise, it will soon become apparent which Legacy processes need to be eliminated or streamlined.
It is critical to “vet” the vendors; after all, the winning vendor will be working in sensitive enterprise areas dependent on the policies and procedures spelled out by the new ERP platform.
Challenges to a Successful ERP Implementation
Other factors are often at play and the results can be unexpected. For example, the success of a new ERP implementation could be derailed because the users of the system were not adequately prepared for the transition from old to new.
Based on our experience, we have found there may be other reasons for substandard results. In fact, the majority of individuals who indicated that they were dissatisfied with the initial implementation would still choose the same ERP solution again. The implication is that the vendor’s product was not faulty; instead other factors influenced their negative response to the initial ERP deployment.
One of the major problems with the implementation was the fact that the user base was not adequately prepared for the impact of the new ERP system. Perhaps they were not involved in the planning and decision making process and had not received enough training. Key stakeholders may have been left out of the process — they should have been members of the initial technology selection team.
Selecting the Implementation Team
In fact, selecting the right implementation team can make or break the effort. Make sure that you put together a cross-functional team that represents the many phases and job functions that interact with an ERP solution. And, key stakeholders in the implementation should be members of the initial technology selection team.
Implementation team members should possess strong functional experience and in-depth knowledge, and not be selected based solely on their title. Most importantly, the implementation team members must have strong leadership qualities. Lastly, all employees need to understand the “why” or WIIFM (what’s in it for me), of rolling out an ERP solution.
Have a Plan and Work the Plan
Once the ERP implementation team is up and running, one of its first tasks is to create a plan of action and work from that plan. Organizations need to understand the pros and cons of different ERP implementation approaches (such as the big-bang, pilot, phased, etc.). With a big-bang implementation, all the main modules of the system go live at the same time, as compared to the phased approach used mainly by large organizations.
Another key element of the implementation plan is to include specific and well-defined deadlines with built-in contingencies, in case the implementation starts going off the rails.
And finally, build some quick wins into the plan to help keep the momentum going and the team motivated. Along the way, celebrate the successes. As the implementation draws to a successful close, it’s never too early to begin planning for the next iteration — ERP is a never-ending process.