When discussing manufacturing software implementations, what I am talking about is ERP and MES, Enterprise Resource Planning and Manufacturing Execution System respectively.
But there are other acronyms out there that also pop up during these discussions: PLM, CRM, PDM, MRP, IOT, WMS, TMS, WHS, RFID — I’m sure you’ve heard the terms thrown around loosely in office meeting rooms or by the coffee machine in the morning. If you are upgrading a legacy system, I’m also certain you’ve heard the following:
“We are dinosaurs.”
“This is so antiquated.”
“They have computer systems that handle this off the shelf.”
“I want to use my phone, is that too much to ask?”
Frustrations at work build to organizational problems. Problems or inefficiencies turn into strategic initiatives and in turn lead to planning committees. The next thing you know, you’re in budget meetings discussing what its going to take to upgrade your business applications.
We are seeing technology adopted and utilized in businesses at an ever-increasing rate. How does a company keep up? How can a company make decisions about technology that won’t disrupt their business? How is a business able to justify so much money on a software system that just manages customer records?
Customer/Vendor Technology Decision Cycle
If I’ve still managed to keep your attention, the next few paragraphs are written to explain the concepts contained within a customer/vendor technology decision cycle. First a little background.
Customer Side
I started my career on the customer side in manufacturing. We were using a green screen, AS400 system along with Lotus Notes and a myriad of other software applications all managed by our IT department. As much as we liked to think that our business was so different from other companies, we still shared the same issues:
- Disparate systems/lack of real-time information
- Non-integrated Email
- Excel Super Users running the day from a report run the night before
- Multiple touch points to accomplish any task
Sound familiar?
We eventually implemented a new ERP system. I was a key business decision maker, the “SME” on the project. Long story short, I was new to this world—the jargon, the concepts, the unified platform, and the interconnectivity of every department. Imagine a company who had been operating for 40+ years where everything was changing and yet everything was not. In this author’s opinion, we didn’t really know what we were buying, because we didn’t understand the scope of what was possible.
We thought that ERP was going to solve all our problems, but we didn’t exactly know how.
Consultant Side
I learned a lot from our implementation, emerging from the process with a deeper understanding of the complexities of cross-department transactions and how financial data ties into every step along the way. I additionally gained soft skills like how to interact with consultants vs. developers, Project managers vs. steering committees, end users vs managers. When I was presented with the opportunity, I became an ERP consultant.
Four a.m. Monday morning to the airport – Thursday night midnight back home, Debrief, paperwork and most importantly my timecard on Friday. Wash, rinse, repeat. Distribution companies, manufacturing companies, big companies, small companies. They are all looking to solve the same underlying issues.
I’m not a salesman by trade, but I do know what the customer goes through, what consultants go through, and the challenges both sides of the coin encounter before, during, and after implementation. My next step was into the Pre-sales world—consultative selling is what I like to call it. We need to plan for where we are going and make smart decisions now that will have an impact in the future.
Here is the long and short of it: Inevitably, all companies are going to have to upgrade business systems at some point in time. Whatever that reason may be, it would help to have a game plan going into the process.
ERP Jargon
Let’s start with the jargon. This may not be all of it, because it seems like every day there is something new out there.
ERP – Enterprise Resource Planning
Simply put, this is business management software that functions as your system of record. Depending upon what platform (ecosystem) you purchase it can include many things. The major players you will hear of in this space are SAP, Oracle, Microsoft, Infor, NetSuite, just to name a few. The reality is that each of these players has multiple product offerings depending upon specific functionality required by the business. This often gets broken down into terminology like:
- Tier 1 vs Tier 2
- Enterprise vs Small-Mid Size Business (SMB)
The key takeaway here is that you, as the customer, need to enter the waters as informed as possible. In an ERP system you will, at the very least, have your basics:
- Customers/Sales/AR
- Vendors/Purchases/AP
- Items/SKUs/BOMs
- Financials/GL
Typically, companies enter the selection process wanting “out of the box” functionality, “best-practice,” no customizations. Although this is the ideal state, adopting a standard business process flow means either, a) your company changes their business to match the standard put forth by the software, or b) you pay extra money for customizations.
Modern day ERP systems recognize the value of integration and include “additional” modules or functionality that can either be “added on,” purchased through a third party [ISV], or “lit up when ready.”
MES – Manufacturing Execution System
If ERP is your system of record, think of it as the Brain sending signals to other parts of the system. If you are a distribution company or manufacturing company, what actually makes you money? Your operations. ERP does its job by providing the signal, but your operations crew fulfills that signal through an interaction with a device or a machine.
In a distribution company, the ERP system is sending signals to a warehouse level operating system that is directing employees to Pick, Pack, or Ship. In a manufacturing company, there might be a machine that requires operator input in the form of raw materials, starting, stopping, and maintenance. Even further down into OEE concepts (Overall equipment effectiveness) machine level data, including uptime, downtime, machine speed, declarations, and general shop floor data, is typically transparent to your ERP system.
This is the function of MES. Modern day machines come with their own software that tells the operator throughput data, machine settings and information about how the machine is performing. This machine level data needs to be aggregated into a sub system that is used by operations to run as efficiently as possible while providing real-time data back to the ERP system. MES takes a subset of ERP data and optimizes it for the shopfloor.
CRM – Customer relationship management
This is much more than managing customer information. This is meeting, tracking, planning, marketing, notes recording, mobile application, and e-mail tracking. Although some elements exist in ERP, this is optimization for the sales organization.
PLM – Product Lifecycle Management
ERP systems are transactional. Meaning that financials are integrated into the system and ERP wants to track and manage every dollar that goes into the system. This doesn’t lend itself very well to R&D or Engineering departments where new items may potentially go through multiple bills of materials or new manufacturing processes and versions where costs might not be known. Sometimes a PLM system is used as a “Sandbox” for R&D heavy organizations to develop new products outside of the confines of an ERP system.
As mentioned earlier there are a bunch of other terms and vocabulary used during these implementations, a shorthand version:
WHS/WMS – Warehouse or Warehouse management system
Think Aisles/Racks/Shelves/Bins but also much more including picking, packing, and shipping.
TMS – Transportation management system
In simple terms: Rate shopping. In more complex terms: Truck routing and last mile delivery.
IOT – Internet of things
Connected devices in the warehouse and in the field.
Vendor Engagement
Before you enter the marketplace with aspirations to fix your business you need to plan and ask yourself a few questions before engaging with a vendor.
1. Will we as a company have time to handle this project?
A new ERP system is not a small decision. You are changing how you’ve done business for XX+ years. If you and your company don’t own it and the processes, you risk failure.
2. How much are we willing to spend?
This is a serious question. We all use the term, “you get what you pay for.” If the vendor is severely discounting rates or software, I would be cautious. The company has to understand that this is a long-term solution and a replacement for years of custom incremental improvements to their legacy system. There are systems for all budgets out there and the important part of selection is to make sure you are comparing equal tiered systems.
3. What do we want the company to look like in the future?
Don’t budget for just today. Acquisitions, green initiatives, new markets, new facilities. You want a platform and ecosystem that is going to be able to grow with you.
4. Who can we dedicate to the project?
Project management is essential. A dedicated team makes the process easier. Scope creep is the number one issue that causes over budget discussion. A committed team from the top down ensures budget stays within scope.
5. Does the vendor understand our business and are they quoting us fairly?
Business system implementations are like building a house. You need to find the right vendor who understands your challenges and your vision. These relationships will span longer than the implementation itself.
I’ll leave my guide to five points but will impart this last bit of advice. Business application changes are typically driven by the need for better decision making, meaning that a manager or an executive is looking to gain better insight into the business and needs strong reporting to make that decision. It is critical during the implementation process to recognize that better reporting comes from better data. The entry point for that data is the End User and not the manager or the executive. Your system needs to be implemented with User Adoption in mind.
If you’re ready to discuss working with a software consultant that will take your individual company’s needs into the process of technology selection and implementation, please contact us at any time.
