Last month's column focused on a group of customers getting shortchanged: people who work in manufacturing companies in departments like sales and marketing, operations, etc. They're getting a bad deal because most new enterprisewide resource planning (ERP) systems aren't giving them better information with which to run the business. This isn't because the software is inadequate; rather, the implementations are flawed. They over-focus on the software and neglect more important issues like data integrity and user understanding. I offer four suggestions to people who find themselves in this situation:
1. Play the hand you're dealt. Recognize that these are software-centered projects. There's not a lot you can do to change that, especially if your company has already started down this path.

2. Recognize the difference between installing software and implementing superior business processes. Most companies have their hands full installing the new software and cutting over onto it. Implementing better business processes at the same time is more than they can deal with.

3. When installing the software, make as few modifications as possible. This approach will cost you less and, more importantly, results in cleaner software for the next step.

4. After the software is installed and operational, go to work on implementing better business processes. Look upon the software installation — building the framework for the better processes — as Phase I, and the implementation of the superior ways of doing business as Phase II. So let's focus on Phase II, because at the end of the day, it's better business processes that provide much of a company's competitive advantage.

The Northern Bleen Swivel Company — a hypothetical producer of bleen swivels for home and industry — found itself in the situation described above: It spent a ton of money on a new enterprisewide system and chewed up enormous amounts of staff time getting it on the air.

After the company had cut over to the new system, the employees breathed a collective sigh of relief: "Thank goodness that's over." But it wasn't. There were the inevitable bugs, glitches, disconnects and so forth. Six months later, they had most of those fixed; but by that time, it had dawned on them that they were doing business pretty much the same as before the new software. They hadn't taken advantage of hardly any of the powerful capabilities within the new system; they were still promising customer orders the same inadequate way, using standard lead times. Their master production schedule was unstable and not well managed; their MRP processes hadn't improved because the data was still inaccurate; and they hadn't followed through on plans to start using kanbans on the plant floor and with suppliers. The situation was summed up succinctly by one Northern manager: "It's like we bought a great set of golf clubs, but we don't know much about how to play golf."

What to do? One faction at Northern argued for a full-blown re-implementation: "Let's activate a major project; get lots of people educated; identify the high-payback areas of opportunity; get all the inventory records and bills of material cleaned up; and really do this thing right." That was met, as you might imagine, with less than total enthusiasm by most of the people. They were burned out. They had spent enormous amounts of time sitting in meetings, getting trained on the details of the new software, and then fixing all the problems after the system went live. The idea of another big implementation project just wouldn't fly — and rightly so. Instead, the Northern folks opted for an approach called "quick slice," which means to:
1. Select a very important slice of the business; for example, a high-impact product line — one with very good Pareto numbers. It may contain only 5 percent of the products and components, but account for 40 percent of the dollar impact.

2. Implement superior business processes into that slice. Many of these processes will be software-based, but others — sales and operations planning and kanban come to mind — will not be computer intensive and hence, probably got neglected during the software installation phase.

3. Do this in a short period of time — roughly two to four months.

OK, so after this is finished, what do you do? First, check the results. Early in the slice, you should have set some measurement criteria, for example, on-time and complete shipments, inventory turns, material shortages, production efficiencies, master schedule stability, data integrity and others. When the slice is near completion, start measuring. If it's not working well, fix what's wrong before going ahead. If it is working well, you'll probably know it without these numbers. But the numbers are important all the same, to serve as quantitative proof for the skeptics and naysayers.

Next, implement another slice. Pick another high-impact part of the business and do a quick slice implementation on that. And then do another. And another. After a year or so, you'll have a very high percentage (maybe 100 percent) of the business operating with the new, superior processes that ERP/MRP II provides.

At Northern Bleen Swivel, they pretty much followed this pattern. The first quick slice got off to a slow start, since they had a lot of resistance to overcome. The people were, as we said, burned out and wanted to be left alone. The good news is that there weren't a lot of people on the project. The nature of the quick slice approach is to involve only those people who are hands-on with the slice. In Northern's case, this meant a few folks from the sales order department, some planning and purchasing people, several dozen plant production associates and team leaders, a few engineers, the cost accounting manager, and some folks from receiving, shipping and the warehouse. Except for the project leader, none of them were full-time on the project.

They worked very hard at identifying where their business needed the most help, and then matched up those opportunities with basic ERP processes. This step led them to check their ERP software to ensure that it contained the necessary tools to support what they were trying to do and — guess what? — in almost every case it did. The right stuff was in the software all along. The problem was they hadn't learned to identify the right stuff and how to use it.

The third area they concentrated on was data integrity. Through their education, they had become convinced that none of this was going to work with bad data, so they made it a high priority to get the inventory records, bills of material, routings, etc., highly accurate. Also, the planning people changed many of the lot sizes, lead times, time fences and other planning factors they had originally put into the system during the Phase I software installation. One of them was heard saying, "This stuff makes sense now."

In last month's column, we spelled out the ABCs of implementing superior processes: The A item is people, the B item is data, and the C item is the computer software and hardware. In their first quick slice, Northern spent almost all of its time on the A item (how people will run this business) and the B item (getting the numbers right). Very little time was spent on the C item because the software had already been installed. The software became a non-issue, and this helped Northern to make progress quickly. The first slice was followed by a second and a third.

Success became visible, not only in the numbers, but in the quality of work life throughout the company. Shortages dropped, as did expediting, finger-pointing and the number of shortage meetings. Delivery promises to customers were routinely met. Inventories went down, as did the severity of the cash flow problems. There were fewer material outages on the plant floor, and the number of close-in schedule changes — to both the plant and the suppliers — went to near zero. At that point, the ERP/MRP II software investment started to pay real dividends.

Has your company put loads of money, time and effort into a new a system — with not much to show for it? Are your people frustrated and burned out? Is the corporate office and/or board of directors getting impatient? If so, consider the quick slice approach to get better tools with which to run the business.

Copyright © 2020 by APICS — The Educational Society for Resource Management. All rights reserved.

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