Can You Prevent ERP Implementation Chaos?

November 29th, 2011

I’ve found that noticing and acting on trends can be a key to success from both a professional and personal perspective. Lately there have been plenty of trends to notice; however, a noteworthy one is that I’ve received several requests and/or inquiries about ERP implementation, post go-live support and how to leverage ERP systems to drive business results. One of my recent speeches, “Leveraging ERP for Bottom Line Results” has become a popular topic, and as companies are beginning to think about investing in ERP again, it is all the more important to ensure success with your ERP projects in order to achieve the expected returns.

In my experience in working with multiple companies in a variety of industries and globally on implementing and leveraging the use of ERP systems to drive business results, I’ve seen the good, bad and ugly and have derived a set of best practices for achieving success. A few of the keys to success include the following: 1) Build core metrics into the process upfront. 2) Focus on exception processes. 3) Look for ways to simplify

1. Build Core Metrics into the Process Upfront – Building core metrics into the process upfront is undoubtedly the #1 key to success. For example, in one Oracle implementation, the company went over and beyond to ensure success by hiring not only Oracle consulting experts but also process experts to ensure a seamless transition; however, there was a significant gap with the day-to-day business. As is typical in implementations, often your best internal experts become involved with the implementation (and not focused on prior responsibilities), transition to new functions in the business or are dealing with entirely new business processes tied to the new system; thus no one is minding the store.

In my example, although there were people tasked with metrics and it appeared that the teams were well-organized, no one realized they were shipping significantly less immediately following the go-live. Soon, it built on itself, and they were suddenly behind and scrambling in shipping, production, planning and purchasing as well. Customers suffered! And costs increased. Instead, I’ve found that if you determine your core metrics upfront (or as soon as you realize your gap) and develop a simple tracking process; you’ll avoid unnecessary chaos and upheaval to your business.

2. Focus on Exception Processes – I’ve found that although there is typically a concentrated focus on testing all of the core areas of the business, implementations fall short with exception processes. I’ve yet to see an implementation that wasn’t struggling to maintain deadlines; thus, you are often fortunate to get through the testing and pilot process with your main functions let alone exceptions. Unfortunately, how many typical days are without exceptions (no mistakes, no entry errors, no changes in customer orders, and no delays in purchase orders)? Not many!

As exceptions begin to occur, the processes fall apart. It builds upon itself as well-intentioned employees find workarounds to resolve the exception which creates down-the-line issues. Instead, it is vital to ensure exceptions are incorporated into the training process. If that ship has already sailed, make sure to focus a team of people on bringing the organization up-to-speed on how to handle exceptions.

3. Look for Ways to Simplify – Last but not least, look for ways to simplify – your processes, systems and implementation. It is easy to get side-tracked in complexity when implementing a new system, as you want the system to do everything you previously couldn’t do as well as you wanted in order to achieve your business goals.

However, I’ve found it is at least 10 times better to simplify: 1) Boil down your desires to your core business drivers – what are your profit drivers? What aligns with your strategy? 2) Align your systems with your core business drivers through your critical success factors – typically, there are a handful of functionality areas to focus on in order to ensure the system will support your business and guarantee a smooth transition with key customers. 3) Ensure that the team focuses on these areas, even if it’s at the detriment to the rest of the areas. I’ve found this is easier said than done; however, the rewards are substantial.

Implementing and leveraging systems can help drive business results; however, they often cost FAR more than intended with poor results due to implementation chaos. Take a look at implementing a few best practices and turn a potential mess into results!

Why not start on the right foot by syncing lean with the business strategy, integrating it into the culture and putting in the effort to implement solid operating principles? Not only will you deliver bottom line results but you’ll also develop a culture of continuous improvement?

The Power of Relationships

November 18th, 2011

The power of relationships is immense! I typically partner with clients to accomplish significant bottom line results on a wide variety of topics ranging from organizational change and culture projects to process projects such as service improvement, inventory reduction and lean programs to technical projects such as leveraging and implementing ERP systems, and there is one common element across all of them – the power of relationships. To add fuel to the fire, it also holds true for personal success.

As tempting as it might be for executives to think that “all will be fine” if only they implement the latest fad (even if it is a “good” fad such as lean, green or whatever will be the next fad, probably rhyming with “een”), technical bell and whistle or best practice process, don’t fall in the trap! Although many of these might be valuable from one perspective or another (which is why it is so common to take a trip down this rabbit hole), the 80/20 to achieving bottom line results goes back to people. So, why waste so much time, money and resources on the “20” of the 80/20?

In addition to the traditional aspects of people (hiring exceptional people, valuing your employees, following a simple yet effective performance management process etc.), there is nothing more critical to success than developing and leveraging the power the relationships. Thus, a few tips include: 1) Take stock. 2) Build relationships. 3) Value your relationships.

1. Take stock – It sounds silly but it is not bad to start with simplicity – what relationships do you have currently? Which are those you consider long-term partners (customers, suppliers, trade association members, brokers, other people at your company or client, etc.) and/or people you’d like to stay connected to for the long term? Which are shorter in nature yet critical for a period of time? Which are already on a solid track? Which need help? Take a step back and think about how you’d prioritize? For example, as a leader, it is typical to spend the majority of your time on your non-performers yet your top performers deliver 80% of the results – where should you focus?

2. Build relationships – I’d be surprised if you didn’t find someone you need to build a relationship with and/or a relationship to nurture. So, how do you begin? How about taking a step back and thinking of how you can provide value to your employee, your boss, your customer, your supplier or whoever you’ve identified? No point in starting with what you want – how is that interesting to the other person? It’s not! Instead, ask compelling questions and listen – you’ll learn everything you need to know in order to build a relationship.

3. Value Your Relationships – My neighbor across the street from my house passed away suddenly recently – such a nice man. 15+ years ago, I remember him always wandering by to check on things if need be, and he really liked and appreciated my parents as they were whirlwind gardeners (and he didn’t even know what they did in the house!) – they came for a long weekend, and my garden/ landscaping could go from so-so to great in 8 hours flat! It makes you think – do you take your relationships for granted or do you value them? The same is true of your best, low-maintenance customer or supplier that you always overlook for your high-maintenance, low profitability customer.

There is only one nugget of wisdom which spanned every role in my 20+ year career without exception which ranged from roles of Production Planner to Project & Transition manager to VP of Supply Chain & Operations to Business Consultant, Entrepreneur and President of LMA Consulting Group, Inc. and APICS Inland Empire (and non-profits do throw a few wrenches into the mix) – it is the undeniable power of relationships. Think of it this way – who is there for you when the unexpected occurs? What are you doing to build and nurture your relationships?

Best Practices in Inventory Management

November 16th, 2011

In today’s new normal business environment, cash is king and service is paramount! Effective inventory management is vital to both.

Implementing solid inventory planning processes provide the ability to not only reduce inventory levels (free up cash) but also improve service levels. I often consult with clients to help them reduce inventory levels while maintaining/ improving service levels, or I help them dramatically improve service levels with inventory planning process improvements. In addition, improving inventory accuracy levels also improves both outcomes – frees up cash and improves service levels.

I’ll be discussing these strategies at a presentation at APICS Orange County on November 16th. Learn more and join us – click here

How can we implement sustainability?

November 13th, 2011

Not only is sustainability gaining traction as an emerging trend but it can also add dollars to your bottom line. Here are a few tips/ ideas:

1. Reduce waste – look for all types of waste; not just the standard trash cans of manufacturing waste. Think about the lean definition of waste.

2. Packaging – certainly there are countless opportunities in packaging. How can you optimize packaging while minimizing materials? Can you optimize for more efficient pallets? Truckloads?

3. Heating, cooling & lighting – there are often times hidden opportunities in these areas. Are you using the latest lighting technology? Have you reviewed your energy usage? Opportunities often times pop out.

4. Supply chain network – have you thought through the optimal supply chain network? Consider not just cost and lead time but also distribution patterns, the complete footprint etc.

5. Collaborative partnering – have you thought about how to partner with your customers and suppliers to not only increase sustainability but to also improve the overall supply chain performance? You might be missing a goldmine!

Is Your Inventory System Working?

November 8th, 2011

In my experience in working with clients across multiple industries, geographies and sizes, I have no doubt that effective inventory management is far from a no-brainer, yet implementing a few secrets to success can yield dramatic bottom line results. In today’s new normal business environment, characterized by sluggish growth, tight liquidity, elevated customer expectations and a general theme of “more for less”, companies need an inventory edge! After all, cash is king.

I watch trends closely as one of my secrets to success is synthesizing people, processes and systems from a cross-functional perspective to uncover hidden opportunities. Lately, I’ve seen an increased need for effective inventory management systems. Interestingly, the reasons stem from vastly different sources: 1) a decrease in profitability (which led to a need to track inventory more closely); 2) poor customer service levels (which led to a need to implement inventory management process improvements); 3) A need to free up cash (which led to a need for inventory and distribution collaboration improvements).

Inventory management could be the subject of my next 100 articles as there are many ingredients to an effective inventory system; however, I’ve boiled it down to a few questions: 1) Do you have the right talent? 2) Is your system working? 3) Have you eliminated complexity?

1. Do you have the right talent? – It is surprising how often this question is overlooked yet it is #1 to achieving bottom line results. Although inventory could be considered a “basic” fundamental skill and is often on the resume of every supply chain and operations job applicant, all talent is not created equal.
There is vast confusion surrounding inventory skills and which skills are needed for which job functions. For example, do you need inventory control? Inventory accuracy? Inventory planning? Supply chain planning? Inventory tracking? In addition, most of these roles require far more than inventory expertise; they require the right combination of analytical skills and communication skills. It’s one of the only roles outside of a CEO/ COO that often times puts you in the middle of multiple, competing functions……. got communication skills?

If there is one consistency, it is that if you find the right fit, you can develop the rest. More often than not, I find that the person already exists within the organization and is often underappreciated. Thus, secret to success #1 is to identify the person (or, in the rare case, find the person), give them the responsibility, communicate the new responsibilities to the organization and back it up with training and support.

2. Is your system working? – First, to clarify, when I refer to system, I mean the combination of the process and system. The second most common mistake is to try to put a square peg in a round hole. Instead of dictating the process or system based on whatever worked in a previous life or what your ERP system says is “best practice”, I’ve found the key to success is to understand what works for each particular situation (unique combination of people, processes and systems).
If you utilize a configured product, why are you adding enormous complexity adding 1,000’s of part numbers to address configurable elements? For example, if you produce doors, there is a standard door type (the base product), and then there will be thousands of iterations based on the dimensions, material type, color etc. The same can be true in aerospace for specs and characteristics associated with types of metal. Set inventory up to support your business.

If you have a complex, multi-level bill of material, are you lost in complexity? How can you simplify? If you are dealing with a product with lots or expiration dates, can you track it easily? No matter your product, can you get closer to your customer and find out what they are selling? What’s most important to your inventory? Focus on that!

3. Have you eliminated complexity? – Last but not least, I gain tremendous traction in delivering bottom line results solely from eliminating complexity. I find that complexity is enticing – the more complexity, the more people feel valued and indispensable. So, instead of getting lost in complexity, encourage and reward simplicity.
Get the team together and brainstorm ways to unscramble the complexity. Can you focus on just A items? What are other ways you can categorize your inventory in order to prioritize so that you focus on what will achieve the majority of your results? Can you start with one machine? One commodity? One location? One customer? One supplier?

If you improve inventory accuracy by 10%, you will end up with 10-100+% improvement in on-time delivery and/or efficiency. If you improve inventory turns by 10%, you’ll end up with MORE CASH and increased efficiency. Why not spend a few minutes to think about the question: Is my inventory system working?

And the list goes on. Undoubtedly, focusing attention on existing customers is not just a good idea, it is essential. Brainstorm the ways you can provide value to existing customers, and stay tuned for future newsletters as we delve further into this key to success. You don’t have to start with a complex plan – what is one action item you can do to improve current relationships?