The Great Search for the Right Integrated ERP

The Great Search for the Right Integrated ERP
The Great Search for the Right Integrated ERP

Like every other year for the past 15 or so, I will speak with many organizations that plan to acquire manufacturing software or expand the capability of their existing solutions with functionality like quality management. These organizations will take similar but not identical routes in their investigation and evaluation of proposed solutions. A high number will find themselves facing the end of 2016 still not having made a final selection; they will be strongly concerned about how to balance their team’s ability to digest such a project and its perceived benefits.

Delivering “Two for One”

To a manufacturer, the most important characteristic of an ERP solution is integration. I call it the “two for the price of one” behavior. This is most evident when we see how every inventory transaction carries a complimentary transaction through to the general ledger, facilitating timelier financial reporting. It is also evident when the sales or customer service team can peer into shop floor records and see what production has scheduled. It is no longer necessary to get up and run around the facilities to identify the status of a customer order. A most significant aspect of this behavior is demonstrated when the system processes inventory records and presents a view of the use-up and replenishment plan.

Most any product that calls itself a manufacturing solution will deliver this core “two for the price of one” benefit, which means that such performance is no longer a core differentiator when selecting a solution. So what features and capabilities should the buyer be considering when weighing his options?

We think it comes down to three fundamental questions. Will the solution:

  1. Overwhelm the resources I bring to the project and to daily activities?
  2. Deliver expandable functionality easily when and if I need it?
  3. Provide a wide enough range of manufacturing transactions so that it can efficiently mirror how I make my products?

Will this solution overwhelm my organization?

There are really two aspects to this first question:

First, bear in mind that an integrated solution may render obsolete certain resources that are presently performing critical tasks. So, the first indication of overwhelm you may face is getting staff to give up their islands of data in favor of shared data. Only you know if you can overcome that obstacle.

Second, not all solutions are created with the same processing and setup architecture. Some solutions require more time up-front to evaluate setup selections and can be less forgiving if the evaluations are incorrect. Some solutions have more rigorous processing controls, which can be very important for some industries but unnecessarily constraining for other industries.

Will it “go” where I grow?

Integration challenges between what used to be non-compatible operating systems (think Apple and Windows) are clearly a thing of the past. But don’t be so sure that such standards apply equally with all ERP solutions. It is certainly reassuring during the purchasing cycle to hear that everything is made to be functional with everything else. But businesses have a life of their own, their models and markets evolve, sometimes in not predicable ways. No one can guaranteed that your future needs will be ideally met so you must select solutions that will allow you to easily integrate unexpected solutions. Buy with an eye towards best flexibility.

Does it really mirror what I do?

I like to think that manufacturing is the same everywhere, in that it takes raw material and transforms it into something else. But in practice, each manufacturer has specific needs for how to value and count that transformation process. In the article titled “Selecting Solutions for Manufacturing – What is Changing?” in the Winter 2016 edition of GPOptimizer, we point out that today’s manufacturers are less likely to fall into the old classifications of being either discrete or process. Instead, more of them are what we call Mixed Mode – meaning they need some degree of both process and discrete capability to easily reflect the details of their manufacturing processes. Technology changes in the form of new materials, production methods and equipment has shifted activities, particularly for the traditional discrete manufacturer, from lot sizing based on economic order quantities to lean-and-pull principles that encourage economic quantities of one. These shifts can increase transaction overhead significantly if the manufacturing solution lacks the flexibility to keep up.

Rating the Benefits

All of these points of evaluation don’t really matter if the team does not understand and agree upon the desired benefits and recognize the potential sacrifices required to achieve them. All too often there is no rating system that defines what is most important to achieve and what is least important to give up. A solution that is one-size-fits-all or -fits-many is a very large, unwieldy solution. If the organization has not determined early on what they are willing to do without or what is less important, you can find yourself operating in an unsuccessful fairy tale; think Prince Charming with a glass slipper but no Cinderella.

If your organization is just beginning to consider a manufacturing or quality management solution search, we’d be delighted to help. Drop us a line at sales@hzs.com and we will be happy to send you a questionnaire that can help you better understand your needs.