Monday, January 3, 2022

Getting Value and Results (5) out of an ERP System Part 5 (of 5): The Big Picture


In the last part of this series, I’d like to begin with the original question these blogs are trying to answer: Have we forgotten that an ERP system implementation or roll-out is supposed to provide us with value? Or are we simply content if the system is up and running and ‘kind of works’? Specifically, when ERP systems are rolled out to plants or distribution centers globally, we often see the ‘template’ approach, where transactions and processes are plugged in without great consideration of value gain or improvements in terms of efficiency, automation and transparency.

“Let’s get it up and running first and worry about the details later”, is what I hear a lot. Is that detail really done after ‘go-live’? More often than not, work-arounds, quick fixes and band aides are devised in order to save the day. This is mainly due to the fact that focus quickly shifts to keeping the business running. No one has time for a thorough system overhaul as everybody is busy expediting,

On top of that, leadership is not keen spending more money on “theoretical” promises when they had just spent exorbitant funds on the ERP implementation.

This is all ok when the business works out and the results are rolling in. The next question then is: what are good results? All too often we hear “We have a service level of 95%. What’s the problem?” The problem is, that in most cases those service levels are achieved through herculean efforts of your heroes and none of it is due to the new (or now already old) ERP system. Your company was already competitive before (otherwise you would not be in business) and the ERP did absolutely nothing (or very little) to better that situation. However, it did cost a lot of money and still does as it needs to be supported and kept running. For what? So that you’re part of global digitalization?

Enough complaining. Let’s talk solutions. Firstly, I believe it’s never too late to optimize. But one has to be committed to focus on value-based goal setting, with the awareness and acceptance that there is quite some work to be done. Most importantly, and this is nothing new, we’ve got to be willing to change. You can’t hang on to the stuff you know how it works. You must have an open mind for transactions and processes you might have not executed before or even heard about. And you must be willing to let go of old structures and habits, no matter how hard and scary that might be.

It is not guaranteed that if you change things will get better, but things will for sure not get better if you don’t change anything.

However, don’t get me wrong, I’m not saying you should change everything no matter what. All I am saying is get prepared for change and accept it if it’s based on a sound plan to get value-based results. There are many ways to achieve that, and I am by far not claiming that my approach is the best, but it is an approach. Without one you’ll most likely get stuck.

As described in the previous blogs in this series we suggest a 10 point plan of action:
1.       Devise a problem statement that brings about clarity of your current situation, without being         clouded by fixes and work-arounds that keep us barely going.
2.       Analyze your current situation with effective KPIs and clearly state your goals
3.       Develop a goal tree with critical success factors and necessary conditions
4.       From it, and with your undesired effects, construct a Current Reality Tree
5.       Define Injections (activities and plans) that help you turn the undesired effects into desired effects and describe those in a Future Reality Tree
6.       Develop your value streams and make them transparent to all stake holders
7.       Work with SAP value stream maps to define de-coupling points, planning and scheduling processes, master data and expected results in terms of inventory holdings and service levels
8.       Develop a training program to communicate the standardized processes and make sure everybody knows them and uses them for sustainable, long-lasting results.
9.       Implement a culture of causality and value-driven problem solving and get away from the “busy work” of utilization driven and event-based thinking.
10.   Change! Then stay on course.

If you are looking for a good reason to do all this, just think about the fact that purchasing and implementing an expensive ERP system, without getting business value out of it, is like buying a race car and putting it into the living room.

Getting Value and Results out of an ERP 1

Getting Value and Results out of an ERP 2

Getting Value and Results out of an ERP 3

Getting Value and Results out of an ERP 4

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