In the following, we’ll discuss part 3 of the series on getting value out of your ERP system. Once you clearly stated the problem and carried out a thorough and useful analysis, you should then clearly define your goals and the desired effects you’d like to get out of a rather expensive ERP system, that looked so promising when you purchased it.
To develop a roadmap with all the activities necessary to achieve better results, we must first define what those results are supposed to be. A very systemic and logical approach to define quality results is William H Dettmer’s ‘Logical Thinking Process’. With it, Dettmer suggest defining a goal tree with critical success factors and necessary conditions.
A goal tree provides clarity about necessary conditions which must be fulfilled to use critical success factors to achieve the goal. It’s really worthwhile to spend a good amount of time defining the goal tree, as it serves the basis for the determination of the root causes for undesired effects.
Dettmer suggests listing the undesired effects with their causalities and then building a tree with an ‘IF… Then’ structure from the top down. As an example: one of the undesired effects is that we have high inventory of purchased parts, but still many stock-outs. One of the causes for that situation is that our suppliers don’t deliver what we need when we need it. This in turn can be caused by the fact that we plan exclusively deterministic and therefore order the wrong quantities too late. Another additive cause could be that we’re not planning, but only react to what we need right now.
Knowing now the causality tree, you can find and identify critical root causes. These critical root causes are then used to develop the Future Reality Tree.
In the FRT you go from the bottom up and use Injections (solutions) to break the negative causalities and turn undesired effects into desired effects.
If you do this using system thinking and logical causalities, you will be rewarded with a very clear picture about what needs to be done in order to achieve your goals. I find this extremely helpful in our optimization projects as it lays out a plan that you can use to define your road map, monitor your progress and measure your results.
In below graphic you can also see that the Future Reality Tree also shows those real effective reinforcing loops that are essential for sustainable success.
The approach which we’re discussing here requires time, effort and discipline. It’s not complicated but requires attention and focus. It is very contrary to the ‘band aid’ and ‘work-around’ problem fixing which so many apply. Dettmer’s Logical Thinking Process stems from and combines parts from the Theory Of Constraints and, maybe even more important, Systems Thinking and causal loops. These are thinking and problem-solving techniques which look at the Big Picture and strive to solve problems holistically, considering and avoiding unintended consequences.