Gain a lot
Sometimes, nothing changes. Two years ago, on the subject of extending ERP systems to make more of what, for many manufacturers, is their biggest ever investment in IT, I wrote: "Anyone that has ERP will have been scarred for life by the effort, time and money they and their teams invested in the implementation and go-live - and won't be rushing to repeat the experience. However, they're also likely to concede that, while it resulted in some improvements, they didn't achieve everything they expected."
Little indeed has changed, but it's the latter point that matters most. And hence some manufacturers are investigating ways to gain a lot by spending what turns out to be relatively little. Because given the relentless business pressures to continue cutting costs while also improving ompetitiveness, customer satisfaction and profitability, they have little option but to find slick ways to further reduce lead times and inventory, improve ontime, in-full delivery metrics, get even more lean and agile and the rest. None of this is trivial: it's about going the extra mile (or several extra miles) by streamlining your design, production and business processes,and moving closer to connected, automated demand-driven systems and operations wherever it counts for you.
As ever, the trick is understanding where it counts most, then the existing overall systems, processes and people capability gaps (despite your ERP installation) and thus your next priorities. Oh and by the way, you might want to factor in scope, budgets and timeframes - and you might want to do some, or all, of that first. Either way, that in turn means knowing what's feasible, both from the business and systems standpoints, what it costs and the likely nature and period of payback.Again, as I said last time: "The job is to understand how best to spend a little to gain a lot, ideally building on your existing ERP investment with a goal of making that foundation deliver more - indeed deliver some of those failed expectations."
Included in your deliberations should be everything from rolling out your existing ERP into production, if that still hasn't been done, to improving the speed andefficiency of, for example, sales order processing, notably by integrating software to assist with, or to automate, aspects of estimating and quoting where there are engineering and/or product configuration issues. Fact is, if you look at what makessuccessful manufacturing businesses as good as they are, it's not difficult to identify fairly standard business/IT projects - and it should be comforting to realise that, for many, the software modules required for those have already been bought under the original ERP license deal and maintenance contract.
At worst there's incremental cost. The rest is 'just' the implementation and roll-out!
Back to basics
Equally, it's worth remembering the value of going back to basics. Cleaning and maintaining good data is rarely better than 'work in progress' hanging over from your original migration, yet it's fundamental to the smooth running of your whole organisation. Also, still too few understand the substantial value of auditing current system usage - even though wherever you look in business you find people falling back to the 'lowest common denominator1 over time. Everyone needs to budget time and money for systemised education, training and a cycle of best practice renewal and data quality improvement - and there are good software tools to help.
You also need to ensure that you're on top of your system upgrades, not least because new or enhanced modules may well have the potential both to support your identified development initiatives and to offer substantial additional economies and benefits. And it's a similar story with the server and network hardware. Think of all this as doing lean's '5S' or removing the seven deadly wastes on your overall ERP system absolutely including the people and processes touching it. The cost of ownership of any system becomes ridiculous if either the system or its data isn't up to date, or your people aren't using it properly.
All that said, let's explore the add-ons' for ERP systems that are proving their worth, and try to establish what works best, where - and perhaps what you ought to be doing. Key options are: business intelligence (BI) software, including enterprise management, dashboards etc; advanced planning and scheduling (APS) and finite capacity scheduling (FCS) add-ons; and e-kanban systems and operational supply chain e-business and e-procurement systems - all of which are available creasingly both as ERP module and/or service additions, and as third party bolt-ons.
In no particular order, other important additions to consider include: automated shop floor data collection (SFDC) systems for WIP (work in progress) tracking and the rest; the substantial range of fairly industry-specific production management/execution systems; the aforementioned sales-based automated product configurators; and customer relationship management (CRM) suites. And there are also: operations and workforce analytics modules; maintenance management/analytics modules; capacity and capex planning assistants; engineering CAD/PDM (product data management)-to-ERP links to underpin manufacturing change and after-sales and MRO (maintenance, repair and overhaul) operations; warehouse management (WMS) extensions; and environmental health and safety systems.
Also, although it's not an ERP add-on, given our common heritage of manufacturing business systems that result from piecemeal, unconnected additions over time, you also need to consider prioritising some legacy system integration. Those offline departmental databases, spreadsheets and reports are also part of your investment,and in many cases remain key to the business so they can't simply be swept aside.Somehow they need to be brought into the fold.
It's a long list, and what works for one won't necessarily be a priority for another. However, it's important to acknowledge that, whatever your preferences, today each of these will be a relatively low cost, short timeframe addition -certainly compared to your original ERP experience. Just as certainly, each of them is capable of returning significant improvements and delivering a worthwhile business case.
Advice and guidance
Anecdotal evidence suggests that interest in, and adoption of, ERP add-ons, especially those aimed at improving production operations and efficiencies, is now close to outstripping ERP itself (see panel, 'Lean Manufacturers' ERP add-on choices' for our own survey findings). If we accept the idea that more manufacturers see themselves as having done much of the office and business automation job through ERP, that's not so surprising.
But translating that to what's critical for you (not just going to work) requires a holistic review of your business and its issues, and the gap analysis I mentioned earlier. For example, is the fact that you have problems trying to monitor WIP on shopfloor as limiting to your company now and in the future as the fact that you can't get a clear picture of when orders are going to be complete and available for shipment? Do you think you might be losing orders because, as a result, you're late shipping? You're certainly wasting money if you're using express freight, but only you can do a full business audit and determine what's crucial and what can wait.
That said, let's romp through the pros and cons of current add-ons starting, for no particular reason, with CRM, which, to say the least, has had a chequered past. As Steve Tattum, manufacturing and supply chain product manager at Sage, says: "CRM was the plaything of marketing departments but now it delivers real world solutions."Just so, and there are now very good examples of manufacturers using CRM modules integrated with their ERP systems, for example, to manage returns and materials in rework and refurbishment for customers in much more proactive and profitable ways.
"CRM brings the whole business activity into one place," says Tattum. "It provides you with much more targeted business opportunities; it helps manufacturers to identify buying patterns, and to assess the effectiveness of mail shots and track opportunities. It means they can spend time and effort more productivity and capitalise on that." Also, modern CRM systems, if tightly integrated, get away from the issues of earlier software since so many fields and transactions can be automatically populated by the ERP system itself.
There's also a lot to be said for a system that automatically organises all incoming and outgoing emails etc against suppliers, customers, projects and so on. Cataloguing and sorting can save a huge amount of time, and makes your organisation look and behave professionally. Additionally, CRM's properly integrated customer view makes returns management, increasingly an issue for companies trading more online, far easier. Similarly, it's a good tool to improve after sales service and potentially also to open up that revenue stream.Product configurators
Moving on to product configurators, there is a distinction between rules-based design/configure to order systems and what's more commonly requested, which is relatively simple assistance for customers themselves in selecting options for mass customisation during the order cycle. Tattum again: "Companies are increasingly trying to provide a unique experience for customers and '. are making that economical by offering options that can be added during production or despatch.There's precious little that doesn't have half a dozen or more options, and historically that was taken care of in telesales with prompts for options and ancillaries. Product configurators can now offer all of that online direct to the customer."
What about SFDC? Again, Tattum is good value: "My concern is that it's still got a bad name on the shop floor. Even these days, they still hark back to Taylorism and see shop floor systems as all about measuring every operation, employees logging on and off jobs and so on. But they need to understand that today it's about helping businesses to manage by exception - for example, real issues that may impact due-dates."
The secret, apart from working with the workforce and changing minds, is automating as much data collection as possible so you don't waste operator time or leave yourself open to errors and inaccuracy. Barcode or RFID tagging is the key - and ensuring that you only collect data if you intend to do something useful with it now or in the foreseeable future. "If you don't have a problem with delivery dates,don't do it," says Tattum although he agrees that implementing automated SFDC can still cut inventories, underpin continuous improvement, facilitate real gains in production optimisation and enable audit trails.
While we're on the subject, prices of RFID technologies are still falling and we're fast approaching the point where the total cost of ownership of RFID will be comparable with that of barcode systems. The message is that if you run with barcodes already then it's probably wise to extend that implementation, but if your current system is limited then look at the more powerful 3D barcodes. Otherwise take advice on RFID. The issues for manufacturers, as ever, are standards, the practicalities of the installation you want and understanding the potential for additional benefits from RFID's greater intelligence, automation and read rates.
As for shop floor and supply chain planning and scheduling - a subject frequently covered in MCS - as APS and graphical planning tools increasingly become the norm in modern ERP systems (either as integral components of the MRP and scheduling engine or bolt-ons like Preactor), users are recognising how the visible picture of jobs and simulation functionality give them a better handle on issues and opportunities. It's not just about getting better schedule adherence and delivery date performance: these tools can give quantified insight into whether to move or add machines and people, redefine jobs, refine sequences and so on.
As Tattum says: "There's still a huge education job to show users what scheduling systems can do for them, and they need to understand the importance of tight integration with the ERP system. For example, bolt-on systems will show a works order that's going to be late and do it graphically - but not the impact on a particular customer. You need ERP for that to see what it's for and where it is in the BoM [bill of materials] so you can see customer orders impacted - and in the interests of proactive contact, maybe use CRM to tell customers and to e-prioritise materials and capacity. With our 'Powered by Preactor' systems, users can see the works order with a problem and drill up and down and see the pegging to the customer order all in one place."
Last but by no means least, business intelligence and the opportunity here is to get thinking beyond using the tools for business finance. It seems ridiculous to talk of early adopters' for an application type that's been around so long, but the fact is those few manufacturers that have taken modern BI systems into sales, production and even maintenance are finding significant returns from very low spend. Take a look at photocopiers manufacturer Ricoh and plastic components maker Moss Plastic Parts: they're getting a lot more than can be achieved with existing operational ERP reports.
Last but by no means least, business intelligence and the opportunity here is to get thinking beyond using the tools for business finance. It seems ridiculous to talk of early adopter's for an application type that's been around so long, but the fact is those few manufacturers that have taken modern BI systems into sales, production and even maintenance are finding significant returns from very low spend. Take a look at photocopiers manufacturer Ricoh and plastic components maker Moss Plastic Parts: they're getting a lot more than can be achieved with existing operational ERP reports.
So which of these add-ons should we tip for your urgent attention? Best to let the market decide, and ERP vendors I speak to reckon top of the interest list is BI,followed by demand planning and forecasting systems, and then the whole MES (manufacturing execution system) bit and APS and e-supply chain and e-kanban add-ons. Some also mention increasing use of business and performance analyser tools that aid that strategic review.
Infor sales director Peter Jeavons, for example, says: "BI is getting a lot of interest, and then demand planning. Any business that wants to get closer to its customers needs to get a better handle on salesmen's forecasts and information from other sources using demand planning algorithms. They're cheaper and much more sophisticated than they used to be".
Interestingly, Infor"s professional services manager Tony Antony sees APS and CRM as the big ones: "We're selling more and more CRM. The market didn't used to understand it, but today more users realise that the more information they can capture and track the more business they can win." And on APS: "No matter how fast goods are produced, users have to be able to promise delivery dates. They can work from lead times but what happens when they get a large influx of orders? They need something to give them that visibility."
But the last word goes to Tattum: "BI today is where CRM was two or three years ago - just maybe a 'nice to have'. But users who have good BI running across the whole manufacturing environment are the people who are going to clean up in this world.But again, it needs to be fully integrated."Author: Tinham, Brian
Manufacturing Computer Solutions
Wednesday, June 14, 2006
Originally Published: 2006.05.01
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