Category: System Pragmatist

Should We Listen to all the High Tech Talk?

January 22nd, 2020

Client Question
Should we pay attention to all this high tech talk? Certainly it seems like everyone and their brother is talking about artificial intelligence, the internet of things, and even the use of technologies such as virtual reality and autonomous vehicles. And this is aside from mundane topics such as ERP systems. And,  we need to function on a daily basis. We need to serve customers and deliver value to the bottom line.  And, we prefer to only get distracted when necessary.

The Answer
We have seen clients get carried away with the latest and greatest technology fads. Although it was an interesting personal education, it typically didn’t result in a return on investment. On the other hand, we have also seen clients ignoring technology that becomes vital to survival in their industry. After all, it is easy to do. When Sears used to be the Amazon of the age, no one thought they would be going out of business.

So, as usual, the answer is “it depends”. You must pay attention, learn about and invest in technology so that you can make a good decision on which to pursue and which to ignore for your go-forward business strategy. If it were easy, we would all be successful for 100 years running.  There are VERY few companies in this position. Do you have a position or a person who is dedicated or allocates part of his/her responsibilities to this role? If you don’t call it out, it will fall by the wayside. This should be similar in concept to an R&D/new product focus. Why should we focus only on new products and not new technologies?

Food For Thought
No two clients are alike. Some ask us this question and it is an obvious,: YES, you must invest to stay relevant and increase business value. For others, it is an emphatic, NO. Why waste resources on additional technology when we haven’t implemented or used the available systems capabilities that will move the business forward? As it seems to go in business, it is usually the best executives and CIOs who are on top of their technology road map who ask these questions. The rest won’t even invest enough to find out where they should prioritize limited funds so they don’t become the next Sears!

At a minimum, once you get to a certain size or complexity, the minimum you should do is upgrade your ERP system so that you have a modern technological backbone and can scale up quickly as needed. With that said, it is rarely enough if your goal is profitable growth.

If you’d like a technology and ERP systems assessment, please contact us. At a minimum, read our numerous articles and get started in evaluating your situation!

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Is Your ERP System Scalable?

Should I Upgrade Now or Later?

Systems Pragmatist



Have You Thought About Whether You are Maximizing the Use of Your ERP System?

December 19th, 2019

Before jumping to conclusions and pursuing a system upgrade, should we explore whether we are maximizing the use of our current system? Or, is it just not modern enough to support our growth in a scalable, profitable way?

This is often the subject of a client call. After all, no one in their right mind would want to embark on an ERP upgrade unless absolutely necessary. The issue is that the situation can be quite complex. How do we separate what’s important vs. what’s not? In this case study, a client knew they had to upgrade because their system was long out of maintenance. The only question was how compelling was the upgrade to support their customers’ requirements and an efficient operation?

The Answer
Although they clearly required an upgrade to get into the current century, the question we explored is whether they could continue to improve performance using their current system to a degree large enough to delay the upgrade until they were better prepared. Unfortunately, since they had let their current system go for ‘too long’, it was highly dependent on current technical resources, partly tailored to their business processes and customized to their needs. At first glance, that doesn’t sound bad! However, the issue was that it was by no means scalable, would require significant education on concepts so that folks started thinking instead of following the process designed into the current system and they were highly dependent on resources that could leave or “get hit by a bus”. Doesn’t that sound like something you say but it doesn’t happen? Not so> One of my clients had that exact situation occur, even though it is just a phrase for a myriad of issues that could arise.

After digging into their business requirements (current as well as a few years into the future), we found ample opportunity to further leverage already existing functionality to meet customer requirements and delay the upgrade for several months. However, that still wasn’t enough. We also had to take actions to secure at-risk critical resources to the degree feasible (since we clearly cannot plan 100% for the ‘hit by the bus’ scenario). We were successful in proactively addressing the situation so that we didn’t have to leap before we knew if we had a net. Yet, we weren’t 100% comfortable, so we also put together an aggressive plan for ERP selection to find the best fit system to meet their needs (without customizing) and equally important a best fit partner that could proactively understand and think through their education needs (which were VERY different from training needs).

Food For Thought
Although we found a solution, the CEO was on pins and needles once he realized the extent of the situation. Don’t leave your infrastructure to chance. Even though all can seem quite fine at the high level, it is important to know whether you are being held up by a solid foundation or a nice-looking pile of straw. That is before considering what you’ll need at least 18 months into the future. You will not select the best system to support your plans or you’ll skimp on implementation. Every client that cut corners overspent by 20-100% and that is before considering the impact on customer service. Do you have a scalable ERP system to support your business growth and profitability? If not, start there!

 

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Is Your ERP System Scalable?

Do You Need An ERP Upgrade?

Systems Pragmatist



Blockchain, IoT, AI, Big Data. Will Anything Stick?

November 11th, 2019

Client Question
Should I really invest time and resources into technologies I don’t know will pay back?

For example, there is a lot of conversation about the value (or lack thereof) of blockchain, IoT, AI and more. This concern continues to arise and is on every executive’s mind. They do not want to be left in the dust “holding the bag” (old and slow) while their competitors race by. On the other hand, they do not want to dump all sorts of money into technology that might not prove effective in their industry. And, in some cases, what they could invest would be a drop in the bucket. It would be like trying to refill the Pacific Ocean with a pail. Remember that fabulous song by Harry Belafonte “There’s a Hole in the Bucket“?

My colleague Diane Garcia and I set out to find the latest answer to this question at the Association for Supply Chain Management International Conference. There were several panels and presentations on each of these topics, along with several exhibitors talking about the latest and greatest technology integrations.

The Answer
Undoubtedly, there is a lot of noise about these technologies. According to Gartner, AI augmentation will generate $2.9 trillion in business value and recover $6.2 billion hours of work productivity. So, it is easy to see why AI is gaining investment with the large companies and with leaders of large organizations.

I love this quote from Harvard Business Review, “Over the next decade, AI won’t replace managers, but managers who use AI will replace those who don’t.” That about sums it up! We need to at least be aware so that we can make good decisions when it comes to these technologies.

As it relates to AI, according to McKinsey Quarterly, across all functions, respondents report that the most significant benefits come from adopting AI in manufacturing! Coming in second is risk with supply chain management just behind in third place. So, if you are in manufacturing, you cannot afford not to at least consider the opportunities. Do you need to do this on your own? NO! We are seeing small companies come together to share resources and invest jointly to drive scale with results (and so they can compete with the large companies). There are also groups that facilitate this type of collaboration. At the most digitized companies, the adoption of AI capabilities is greater including machine learning, virtual agents, robotic process automation, computer vision and more.

According to Forrester, 90% plan greater investments in data and according to MIT Sloan, 85% view AI as a strategic priority. These two technologies cross over and seem to have the upper hand with the most immediately applicable technology.

With that said, there were even more sessions about blockchain and whether it was hype or hope. The bottom line on blockchain is that it is a real opportunity for certain industries such as the food industry (related to food safety).  It is still in early stages and will require a consortium of companies to come together to bring to reality.

According to a leader from FedEx, whether big or small, no one company will be successful on its own. Yet all the “big guys” are interested and participating. Stay tuned to see where it goes. Last but not least, IoT is integrated into many conversations about big data, AI, autonomous vehicles and more because it connects technologies. In manufacturing, IoT is connecting machines and data for predictive maintenance and the possibilities abound.

The bottom line: pay attention but resist exploring technology in isolation. Learn to collaborate.

Food For Thought
As much as these technologies should be on your radar, don’t get carried away and forget your fundamentals.

Do you have a scalable ERP system to support your business growth and profitability? If not, start there!

Do you have reporting and business intelligence systems so that you can slice and dice information to make instantaneous, informed decisions as key customer questions or business opportunities arise? If not, start there!

How about a simple CRM solution? Certainly in the Amazon Effect era, we must pay attention to customers.

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What is Ahead for Technology?
AI, Robots, IoT, Blockchain, Hike!
Systems Pragmatist



Should I Upgrade Now or Later?

October 10th, 2019

A Client Question
Since we have a simple reorder point system largely in place and we plan to focus on an ERP upgrade in the coming year, should we continue to roll out MRP (material requirements planning) and DRP (distribution requirements planning) or should we just put our efforts into the new ERP system?

In this case, there is still much of the planning process that is done manually. However, a manual process could be good or bad. Employees forced to perform manual processes learn the process in detail yet they might not understand why they are doing what they are doing. Would there be a larger benefit in learning the process in the current system and then re-learning in the new one or vice-versa? After all, resources are limited and the people performing these roles understand key customer requirements in detail. How should we best utilize their time for maximum benefit?

The Answer
In this case, resources are limited. So, the key question becomes how to best leverage the planners to meet customer expectations while getting ready to support the future. Since the simple reorder point works but only to a degree (since they cannot see their bill of materials explosion) in this case, the rest has to be manually calculated. When looking at a configure-to-order situation across multiple sites not connected by DRP, inventory disappears and the complexity of planning materials increases. Also, unfortunately, the only resource that gains an understanding of MRP / DRP concepts is the material planner. The production planners remain unclear as to how these concepts apply. So, it makes sense to roll out the concepts in the current system so that the team gains exposure to how it works. This understanding will prove valuable in implementing the new system, and most importantly, if the material planners do not have to spend countless hours manually calculating numbers, they can provide better service to customers, as well as contribute valuable input in setting up the new system for success.

Food For Thought
Although the MPS/ MRP module of ERP systems can be valuable in improving service and reducing inventory, they do not always make sense. Take a step back to look at the complexities in your planning process. Have you overbuilt the process? We also find that simplifying creates substantial improvement for almost every client. Perhaps you should simplify rather than add complexity, even if you already own the system or your key resources think complexity is needed. At least 80% of the time, we simplify to some degree.  We might take what seems like a step back to simplify in order to take a giant leap forward.

If you are interested in running your situation by us, contact us.

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Which Inventory Planning Method is Best?
Systems Pragmatist



Is there an ROI on a Forecasting System?

September 12th, 2019

A Client Question
Since forecasting can deliver significant benefits with increased levels of service, inventory turnover and margin improvement, the question that inevitably arises is whether it makes sense to purchase a forecasting or demand planning system. Of course, the answer is: “It depends”.

In one client situation, goods were manufactured in Mexico and purchased from Asia. Key customers were large retail outlets. Demand seemed to change daily.  Yet, lead times were in the months if the ‘right’ stock wasn’t in the ‘right’ place at the ‘right’ time. Of course, they could cover some small changes by adding freight costs but that isn’t a recipe for profit. Improving the forecast would improve their success. So, the question turned to whether a system would have a ROI.

The Answer
In their case, they could achieve a rapid return on investment by using a forecasting system. However, let me say upfront that more often than not, I do not recommend a system. It completely depends on whether it will drive the appropriate level of improvement and associated results or not. In this case, we could easily drive dramatic forecast accuracy improvement since we started out at such a low level of accuracy due to the business environment, industry and key customers. The people understood the importance of the providing forecast feedback and although the key customers didn’t have “good” forecasts to provide, they could provide data we could analyze. In these types of situations, we are able to reduce inventory by a minimum of 20%.  It should be noted, though, that results can be far greater.

Food For Thought
Although forecasting systems can be a great idea to drive service, inventory and margin improvement, they do not always provide a return. Take a step back to understand your industry from a forecasting point-of-view:

  • Is demand constantly changing?
  • Are you supporting small numbers of customer/location points with less than 25 items or is it 100 fold?
  • Are you able to gain key customer input and/or point-of-sale data?
  • Do you have anyone familiar with demand planning and forecasting to be able to make sense of what a system is telling you?
  • And, last but definitely not least, have you found the appropriate scale for your forecasting system?

Trying to kill a fly with an assault rifle is overkill. If you are interested in running your situation by us, contact us.

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Systems Pragmatist