Over the past few years much has been written about the poor track record of enterprise resource planning (ERP): arguably too much. Disillusionment over project failure rates, the high costs of implementations and the inability to demonstrate commensurate value has led to a growing credibility gap for vendors. IT professionals argue that the silver bullet for manufacturing companies lies elsewhere, and vendors argue that this lies with more technology, of course.
Not surprisingly, when one asks vendors for perspective, the advice given is tainted by their agenda, which as we know is not always congruent with your interests. The problem is compounded by relatively low barriers to entry to becoming an ERP "consultant". We now have many self-professed experts in business applications and particularly ERP looking to advise you, forgetting that the implementations they were involved in four years ago during the Y2K feeding frenzy are now monumental failures. Unfortunately, these charlatans can sow confusion and obscure the fundamental value of an effective ERP system. Does the solution to ERP effectiveness not lie in sidestepping the fakes and ensuring that your implementation benefits from specialised knowledge?
To get perspective on a complicated subject requires an understanding of context. Assuming then that you are in manufacturing, what then is the most important driver for an ERP solution in your business? When talking to business managers, it is apparent that the concept of a common database and logic for all business information is understood and deemed desirable. If this database is centred on the core manufacturing process, materials can be planned and traced through the plant. Aggregating this data to support production decision-making then becomes easier. By extending this concept to data on suppliers, customers, employees, logistics and operations, all held in the same common database, tremendous benefits can be realised to improve business agility, enhance service levels and ultimately maintain competitive advantage.
However, business managers recognise that there is a flip-side to this common database approach. The first is that by tightly coupling your information in this way, bad data will impact the rest of the system. Because people using the system can easily become isolated from the big picture, the consequences of incorrect information can remain undetected and the entire operation become sub-optimal. It can take years to detect systematic errors of this nature, and unfortunately the ERP system can hide the truth in an over-abundance of information and complexity.
To add to these limitations, ERP in manufacturing usually operates without taking account of other necessary production databases such as process control, laboratory management, quality assurance and plant historians. The reality in many businesses is therefore that the envisaged common database simply cannot exist. So what starts out as a clear strategy to keep information in one place is only partly realised, and a mixed environment is inevitable.
Beware the impostors and engage with specialists who have a track record in your industry.
Gavin Halse, MD, ApplyIT
Importantly, ERP systems can also introduce defective logic when implemented in certain manufacturing environments, particularly those involving continuous processes such as chemicals, petrochemicals, food and beverage, and pharmaceuticals. The problem arises because of the continuous or semi-batch nature of these processes. Process plants often have significant interdependencies and this resulting inertia in the process makes resource scheduling and tracking very difficult. In these industries, measurement of materials flow is frequently subject to error and substantial measurement delays. Many ERP solutions are based on principles suited to discrete manufacturing and simply do not work effectively in a process environment.
However, to the distress of those selling advanced and expensive software, simple solutions (such as spreadsheets in a proper collaborative environment) can be used to overcome this fundamental issue without resorting to even more complex software add-ons. What is always worth remembering is that the best solutions are not dependent on the tool used but rather the ingenuity and approach of the person or persons using these tools. Unfortunately, few consultants and advisors will advocate a simple approach if software licence or implementation revenue is under threat.
Having considered these, is it then still surprising that many ERP implementations in manufacturing companies fail to deliver value? The potential exists in ERP to achieve actual business benefit - but an informed and specialised approach is clearly required. Beware the impostors and engage with specialists who have a track record in your industry. While they are few and far between, they will make all the difference to a multimillion-rand ERP implementation.
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