The decision to invest in an enterprise resource planning (ERP) system isn’t a light one. They’re expensive to buy and disruptive to implement and run.
ERP systems aren’t economical for your typical small business. But at some point, the business grows to a size where it is economical and if you don’t have one, you’re at a competitive disadvantage.
The key is determining the right timing to implement an ERP and, equally important, making sure your processes are ready.
Do I need an ERP system?
‘If it ain’t broke, don’t fix it’ doesn’t exactly apply here, but if it is broke, then you probably already know you need to do something.
Maybe your month-end takes a week, your stock counts are always off, or your sales team is selling stuff that has already been sold. Your business isn’t running smoothly and the cause is some combination of people, systems, and processes. ERP systems are good at fixing these big problems.
In other scenarios, potential customers could be excluding you from deals because you can’t integrate with their automated electronic data interchange systems. Or maybe your turnaround times aren’t as fast as your competitors and customers are going elsewhere as a result.
“Maybe your month-end takes a week, your stock counts are always off, or your sales team is selling stuff that has already been sold. Your business isn’t running smoothly and the cause is some combination of people, systems, and processes.”
Even if you’re experiencing business problems or realize your company is at a competitive disadvantage, you don’t necessarily need an ERP system.
Streamlining manual processes could improve the situation. A hodge-podge of stand-alone systems might work for your business in the interim, until the economics of an ERP make more sense.
Talk with some vendors and resellers about the costs of ERP. You will undoubtedly encounter people who insist that every problem is solved by their ERP and every business should get their solution. But there are plenty of people in the industry who will give you an honest answer. SYSPRO Canada offers to help figure out whether you are ready for ERP to build goodwill in the manufacturing industry.
How should I proceed with getting ERP?
You may have the business case for getting a new ERP system, but you’re not ready to go ahead. There are still a lot of questions that you need to find answers for before running off to invest in a new system.
Once you’ve established there is business value in an ERP system, the first step is getting a senior-level internal champion. Maybe that’s you, but if it isn’t, you’ll need a senior advocate to understand the problems and agree that the right ERP system will solve them and deliver value in excess of costs.
Start by making sure your senior staff understand the issues and your confidence that an ERP system will address them. If that isn’t enough to drive the process forward, talk with other departments to see if they’re having similar problems. Keep educating.
A tepid champion is not a champion. If you can’t get any senior staff excited about the project, then it won’t be successful. You’ll be better off putting up with the status quo.
Once you have buy in though, you need to start documenting the business processes that the new system will address—and determine what processes could be done better. Then you need to solicit opinions from across the organization on how you will define success. Here are a few typical problem scenarios that ERP systems solve:
• We want our sales reps to know exactly what material is in stock and when material on order will arrive so they can make reliable delivery promises to customers.
• We want to automatically trace materials up and down the supply chain to comply with new food safety laws.
• We want drawings and specs to automatically attach to work orders.
While you’re outlining success measures, start speaking with companies of a similar size and type to see what experiences they’ve had with ERP and what problems they’re experiencing. Competitive companies aren’t likely to open up to you, but if you or someone in your company has a good business network then you can probably have some good conversations.
Finally, if you’re feeling uncertain about whether you have really done a good job defining needs, consider hiring a consultant. The best ones will have worked with a number of companies like yours and will very quickly hone in on some big wins.
Senior staff at the vendor and reseller level should be able to spot needs you have missed and unrealistic requirements so even if your list is incomplete, you will have more chances to get it right.
If you are struggling with these issues, SYSPRO Canada has a number of veteran ERP consultants who regularly give first-time ERP buyers advice on how to navigate these challenges.
Odete Passingham is the marketing director at SYSPRO Canada. SYSPRO is an ERP application consisting of finance, distribution and manufacturing controls for mid-size companies. To contact Odete, email: [email protected] or call (604) 451-8889. Learn more about SYSPRO at www.syspro.com
This article is part of the Manufacturing Growth & Innovation Centre, showcasing strategies for manufacturers on the move.