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2014

In a recent interview, I was asked:

 

How do you go about investigating and finding the “weakest link in the chain” with your clients? What specific processes of evaluation would you recommend to businesses looking to self-assess?


We really disagree with technology vendors and VARs who come into organizations, do some kind of minimal evaluation of the environment, toss out some rule-of-thumb values or percentages that companies “might benefit” from implementing the technologies they're trying to sell, and close the deal. It is even worse if, after making the sale, they come back to the organization saying, “The first thing we need to do now is a ‘requirements analysis’ so we know how we are going to implement” the technologies.

 

No vendor or VAR—and that includes my firm—knows (or will ever know) as much about how the client’s enterprise works—or fails to work—in the process of turning products and services into Throughput. Equally as important, most executives and managers do not know about how their organization works—or fails to work—in their customer-to-cash streams either. They think they know; but, in the final analysis, they generally do not know.

 

Like Toyota’s executives and managers wisely assert, we, too, believe that “no one knows more about running the machine than the man who runs the machine.” If you want to understand how something works—or is failing to work effectively—you must ask the people who are involved in the daily nitty-gritty activities of your customer-to-cash streams.

 

In order to facilitate this, we use the ToC Thinking Processes—a set of tools specifically designed to help unlock “tribal knowledge” and help get the corporate politics out of the way of real and ongoing improvement.

 

After getting a little background about our client’s (or prospect’s) business and its situation in its industry, the first question we typically ask the executive and management team is this: “What are the top five or six things that you think are keeping your company from making more money tomorrow than it is making today.” Actually, we like to do this with their team assembled, but we hand out 3x5 index cards and ask them not to consult one another. Rather, each individual writes their top issues down—each on a separate 3x5 card.BATCH PROD CRT2 PartA.jpg

 

We also ask them to tell us only the issue on the card. We don’t want what they think might be the cause.

 

For example, we want to see “Our prices are too high to be competitive.” We do not want, “Our prices are too high to be competitive because our manufacturing equipment is outdated and inefficient.”

 

We tell them, if the “because” factor they feel tempted to put on the same card with another issue is, in their mind, a top factor in keeping the firm from making more money tomorrow than today, then put it on a separate card.

 

When we get done collecting the cards, the next step is to get clarifications from the authors—sometimes a statement may be perfectly clear to the writer, but needs to be clarified further for a larger audience (or, perhaps, especially for us as outsiders). We also weed out duplicates, since there are typically duplicate or very similar responses when the process involves ten or 15 participants.

 

Once we are at this point, we take the team through the process of using these UDEs (Un-Desirable Effects) that they have written down for us to build a Current Reality Tree or CRT. This is one of the Thinking Processes that helps the organization begin to see their customer-to-cash stream as a unified cause-and-effect “system,” instead of thinking about what happens in this department or that department in relative isolation. You can read a simple explanation regarding Current Reality Trees here.

 

“Root causes” are the underived UDEs at the bottom of the CRT. Since they have no predecessors—they are identified as “roots” and are targeted for exploitation, following the Five Focusing Steps approach. 

 

By the time we are done, we are generally getting comments like: “We’ve never seen our organization like this before.” Light bulbs are coming on all over the room and a clearer view of the very small handful of things that are actually keeping the company from making more money tomorrow than they are making today is beginning to emerge. In short, they are beginning to see—clearer than ever—their system’s constraint or constraints.

 

Notice, we are not asking them “What needs to be made more efficient?”, or “Where do you see the greatest opportunity for savings?” We are asking them what’s keeping them from making more money. Those are entirely different questions coming from two different realms—the former questions from cost-world thinking and the latter from Throughput-world thinking.

 

In answer to your question, the very best toolset for “self-assessment” is the ToC Thinking Processes. Anyone can learn to use them—and we encourage our clients to learn to use them without our assistance. But having someone with knowledge and skill in their application when the firm is getting started on a process of ongoing improvement (POOGI) can certainly give the company a kick-start toward improved profitability.

 

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We would be delighted to hear your thoughts on this matter. Please leave your comments here, or feel free to contact us directly.

 

Thank you.

A recent survey* conducted by Redshift Research for a major player in the ERP industry reveals that ERP users aren't happy with what they're getting. While the article appearing at Information Week talks a lot about mobile access to ERP systems, the ranked response put that issue at number four—when considered by direct mention.

 

Here is the list of "most important consideration[s] for future ERP implementations" from the more than 1,500 respondents:

  1. Fast time to value
  2. Simplicity for all users
  3. Easy collaboration with customers, suppliers, and employees
  4. Mobile access for all employees
  5. A choice of on-premises, cloud, or hybrid deployment approaches

 

I find it fascinating—but not surprising—that "fast time to value" (read: return on investment) ranks number one in the list. Here's why: I think all of the remaining items are directly linked to number one—return on investment.

 

Simplicity for all users

 

I have frequently told my clients two things:

  1. Inherent simplicity should rule the day: the more complex a problem appears to be, the simpler the effective solution must be
  2. The most powerful computer is not the computer with the most RAM, the fastest CPUs, or the most elegant software; the most powerful computer is the one that gets used—and complex, hard-to-use systems are simply avoided by users

 

There are times when I come into a situation at companies with which I work and find that their technologies are not serving them in portions of their enterprise. Well-intentioned automation has become the "master" and the workers are serving the technology—instead of the other way around.

 

In such cases, it is high time to seek an inherently simple solution to solving the problem the technology was supposed to solve. Sometimes, pulling the plug on some technologies is the best thing you can do to create real and effective improvement.

 

Taking the inherent simplicity approach almost always leads to rapid R.O.I. (return on investment) or "time to value."

 

Recently, I attended the Supply Chain Insights Global Summit 2014 in Phoenix, AZ. There, Lora Cecere, an thought-leader in supply chain management, said, "Simplicity can be the ultimate sophistication."

 

Easy collaboration with customers, suppliers, and employees

 

This matter of "collaboration" has always been a tough one. Maybe it is just a matter of our sense of independence as "the American way," but I have found that a great many mid-market enterprises have real difficulty in thinking about their supply chain beyond the four walls of their enterprise.

 

Of course, I really cannot blame them. After all, at a major ERP software conference I attended a few months ago, the ERP vendor was promoting sessions dealing solely with warehouse automation as "supply chain automation" sessions. Apparently, the ERP vendors are having trouble thinking about the supply chain extending beyond the four walls of the enterprise in which the software is installed, too.

 

I think most small to mid-sized business enterprises today have not really figured out what "collaboration" should look like. They have lots of unanswered questions about…

  • With whom should we collaborate?
  • What kinds of data should we share in our collaboration?
  • When is collaboration beneficial—or essential?
  • Where should collaboration take place—do we meet "in the cloud" or in someone's office?
  • What are the real benefits of collaboration? What are the risks?

 

But, I have a strong sense that the first solution provider that truly makes "easy collaboration" across the supply chain a reality—and provides the supporting change management and guidance to make it effective—will have a huge success on its hands. Mid-market supply chain participants—and there are hundreds of thousands of them—will beat a path to the company's door.

 

Why?

 

Because making supply chain collaboration "easy" will, for certain, make number one in the list a reality, too. The firms will get their "rapid time to value."

 

Mobile access for all employees

 

To tell you the truth, I think this statement may be a bit of an exaggeration. I do not know of many enterprises that really want to give mobile access to ERP data to "all" employees.

 

Nevertheless, the concept fits nicely into "rapid time to value." There we are, back at number one on the list again.

 

Since mobility accelerates the flow of information, it automatically brings in efficiencies that cannot be gained in any other way. And, accelerating the flow of information will also automatically accelerate the flow goods and services all across the supply chain.

 

Increase the flow of goods and services while also increasing efficiencies and what do you get? Rapid time to value—fast R.O.I.

 

A choice of on-premises, cloud, or hybrid deployment approaches

 

The whole world is moving coming to understand a new rule: "Use it; Don't Own It."

 

Two decades ago, I was trying to get my clients to see this vision. I was just trying to get them to understand the rapid time to value that leasing—versus owning—hardware and software in an ERP environment could bring to them.

 

Sometimes I would approach them in this way: I would toss a handful of CD/DVDs on the table. The discs would be labeled "Very Expensive Software." Then, I would ask this: "Are those disks I just put on the table worth the $75,000 or $100,000 you are about to spend on your new ERP software?"

 

Of course, this demonstration got them to immediately recognize that the value in the purchase they were contemplating was in using the technology effectively and not in the ownership of the software. Today's movement to the cloud is just a further evolution of the same concept. While pricing models still need to honed, it is indisputable that "rapid time to value"—number one on the list—is found in effectively implementing and using the appropriate technologies, and not in owning hardware and software.

 

That is precisely why the team and partners selected to decide on the ERP system's components and howthey will be implemented and used is so very vital to achieving rapid ROI.

 

Summary

 

It seems to me that the real, underlying unhappiness of users with their ERP systems all revolve around ROI. However, ROI does not come primarily from the software; it comes from the use of the software.

 

Implementations, and the decisions preceding and surrounding the implementations, are everything. Effective use comes from effective management of choices surrounding technologies more than from the technologies themselves. This is true all across the supply chain.

 

We would like to hear your thoughts on this matter. Please leave your comments here.

 

* http://www.informationweek.com/software/enterprise-applications/erp-survey-users-arent-happy/d/d-id/1307035?