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Leverage Your ERP System for Bottom Line Business Results

June 27th, 2013
LMA Consulting Group elevates business performance.

Unfortunately, in the vast majority of my client projects and business experience, when a business problem or need arises, the immediate thought is, “If only we had XYZ ERP system, everything would be fine.” In my experience, in 80%+ of the cases (with the 20% typically being merger and acquisition scenarios), not only would a new ERP system not resolve the business problem or address the need but it also typically results in significant added cost and anguish without a commensurate benefit. Thus, instead of throwing out your flat screen TV because the remote is not functioning as you desired, consider adjusting the remote.

In my experience across multiple industries and globally, companies typically are utilizing 20% of their ERP systems capabilities. Thus a better option, which doesn’t require capital investment or major disruption, is to leverage your ERP system. I’ve found three keys to success in leveraging ERP systems: 1) Begin with a focus on data integrity. 2) Develop reports and metrics for effective decision-making. 3) Focus on leveraging your ERP system with your key business drivers.

Begin with a focus on data integrity: Interestingly, I find that the majority of business problems which result in thoughts of dumping the ERP system have nothing to do with the ERP system; instead, their root cause is in a lack of data integrity and process discipline. Garbage in. Garbage out. Improve data integrity and process discipline and there will be a direct, immediate impact on results.

For example, in one client project, we had an inventory accuracy issue. Although leveraging the ERP system (by implementing cycle counting and bar coding) was part of the optimal solution, the main cause of inventory inaccuracy was a lack of process discipline. In this case, there were physical inventory movements (such as warehouse transfers) without completing the system transactions in a timely manner. Thus, no matter how expensive and fancy the system, it would have no idea where the inventory was located.

Develop reports & metrics for effective decision-making: One of the easiest and quickest solutions is often overlooked. Yet, once process disciplines are in place, any ERP system will contain base data (shipments, receipts, inventory etc). As I said in a quote in December’s Industry Week magazine in an article on optimizing supply chain systems, the key is to leverage the system by utilizing system data in the format of reports and metrics. This provides information for effective decision-making.

For example, there are several critical reports that are key to any business such as the following: booking report (measures orders booked), shipment report (measures shipping performance and trends), inventory report (shows inventory quantities and dollars), cash report (shows changes in cash position), etc.

Focus on leveraging your system with key business drivers: Instead of trying to utilize the 80% of the system you typically are not using, FOCUS your efforts on your key business drivers. In other words, if revenue growth is critical in your business, focus on understanding and leveraging the functionality associated with sales. Or, if your #1 cost driver is materials, research how to utilize your ERP system to better track waste/scrap levels. In essence, this prioritizes your attention on those areas that will have the most significant impact on your bottom line. Put together a team focused on these areas, bring in system experts, involve IT (consider IT as a business partner), and put together a plan to leverage your system.

Those companies and people who thrive during the “new normal” will be those who figure out how to combine their people, processes, and systems in the optimal way to achieve results. Why not get ahead of the crowd and think about how you can leverage your system to derive a competitive advantage?



5 ERP Selection Pitfalls

June 25th, 2013

Don’t get lost in the functionality; Follow these five selection tips.

I get “too many” calls to help resolve problems associated with system upgrades and/or new system implementations. How can some of these be avoided during the selection process?

1. The good salesman – ERP software suppliers have to be some of the best salespeople I’ve seen. Even when you are careful, they’ll likely focus more on the bells & whistles of their system than is desirable.

2. Standard functionality – Standard functionality is the downfall of ERP selection projects. In my experience, 20% of the time should be spent on standard functionality as almost every core supplier will have it. Reverse the order and spend 80% on unique functionality.

3. Lopsided team – Although there will be some functions more interested than others in the selection project, if they decided for everyone, you shouldn’t be surprised if you end up with a great system in that particular area with the rest left to luck.

4. Immediate feedback – Although it seems as though it’s obvious while sitting in the demo, it becomes amazingly difficult to figure out which feature went with which software a few days later. Talk immediately following the demo.

5. Focusing solely on functionality – Don’t get lost in functionality and forget that the software supplier will be your business partner. Do they conduct themselves as you’d expect for a long-term partner?

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Lisa’s Tips: Software Selection



What’s the Secret Ingredient to Project Success?

June 20th, 2013

Turn your thinking upside down and unlock the secret ingredient to success.

Volatility is the new norm.  Results must be an assumption as companies struggle for high growth rates, fight to find and retain top talent and find that execution alone is no longer enough to succeed in the new normal business environment.   In order to stand out in the crowd and succeed, we must think differently.

Instead of looking at the latest and greatest fads and expensive programs, why not turn your thinking upside down and consider a simple yet effective approach to success?  The power of focus!  What could focus do for your projects?

In my experience, regardless of company type, size, industry, and reach (local, national, global), the 80/20 of client project success – improved bottom line results – relates directly to focus. Undoubtedly, when we start the client project, it seems much more complex; however, I’ve yet to find an example where a key driver to success doesn’t substantially fall into the category of focus. So, why does focus matter? The main reasons include: 1) Strategic clarity. 2) Practical application. 3) Motivation.

  1. Strategic clarity. First, a baseline tenet – the most successful companies understand where they are going. Thus, it is vital to consider the top priorities to ensure progress towards that vision. The best companies not only understand where they are going but they also achieve a strategic clarity throughout the organization by aligning focus with the direction.

    Ideally, the Executives have a solid handle on the key aspects of the long-term roadmap to achieve the vision. Although that used to be a 3-5 year plan, long-term has become 12-24 months in the new normal business environment.  Then, on a yearly or every 6 month basis, the top priorities should emerge. I’ve noticed that this topic can become a circular conversation, as strategic clarity leads to the top priorities – and focus on the top priorities leads to strategic clarity throughout the organization. However, the key point is that the organization will excel through the power of focus which typically manifests itself in clearly communicated key priorities.

    In the words of one of the best financial leaders I’ve worked with throughout the years when asked her opinion of the key to success of the CEO who not only turned around the company while valuing people but also completed a successful sale of the company, she said, “he refused to veer off the strategy and kept the organization focused”.

  1. Practical application. No company can be successful when it divides its resources (people, capital/ cash, etc.) among too many initiatives. Focusing on the right critical issues – no more than 3 to 5 in most cases – is vital to achieving success.

    How many times has it felt as though you have 100 priorities (and directions) to achieve at the same time? In today’s business environment, 100 priorities could be a good day! As tempting as it is to try to achieve what all seem like important priorities, stop. Instead, take a step back and go through a rigorous prioritization process.

    Which of the priorities are most important and will have the greatest impact on achieving the strategy during the next year? Consider breaking it into quarters. A steadfast focus on a select few priorities will move the organization forward at a much quicker pace than working twice as hard on a hundred priorities.

  1. Motivation. Help your organization translate the top priorities into succinct goals. Do not get sidetracked with those which you know how to achieve, those which are easy to achieve or those which are more interesting to achieve at the expense of those which will accelerate progress towards the strategy. In a word, “focus”.

    Make sure everyone understands the value to the organization of achieving their goals. Make sure the goals are achievable yet require a stretch for the employee. Accelerate the pace of progress with an unrelenting focus. There is nothing that motivates an employee more than clear goals, which are not only valued by the leaders but will also contribute to the company’s strategy and success. A leader’s focus and appreciation translate into happy employees and bottom line results.

I’ve seen projects ranging from a 50% reduction in inventory levels to a launch of a new product line achieve the intended results largely through focus. In today’s too much cash with the concern of what tomorrow might bring, finding a recipe for success that doesn’t require a capital or cash investment is undoubtedly worth pursuing. Which projects can you successfully achieve through focus alone?

 

This article also published on Project Times.



Profit through People: It Begins & Ends with Leadership

June 18th, 2013

Leadership is at the center of business success.

As my HR mentor used to say, “It begins and ends with leadership”. I’ve found this to be true across the board – my clients provide me with countless examples to prove her correct!

For example, in one client, we struggled for months in making progress as the leader in charge of the affected areas made poor decisions – some even directly un-did prior strategic decisions. It’s interesting how impactful leaders are in an organization whether or not people agree with them. In this case, a year of progress was lost within 3 months. Thank goodness, it turned again as a new leader took over.

In another situation, a super team was formed to address a priority project; however, a weak leader was put in charge of the team. The super team managed to make progress in spite of the project leader; however, there was vast frustration and wasted time and energy. I have to admit that I was surprised at how much of an impact the project leader had on the pace of progress vs. the super team.

Lastly, in another client project, we were not only able to get previously disparate groups in the organization to work together but we also got warring divisions to cooperate and communicate on a project – success stemmed from clear expectations of the leader. Focus and communication was able to achieve what had never been done before!

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Leadership Essentials