This is Part 2 of my comments regarding an article originally posted by Curt Finch under the same title. You will find Finch’s article posted here. In the article, he covers the following aspects as “factors” for consideration in the purchase or upgrade of an ERP [Enterprise Resource Planning] system for a business enterprise:
- Local or cloud
- Vendor analysis
We covered the first three factors in Part 1. In this article we would like to take a look at factors four, five and six from a different point of view.
Finch’s questions, in our opinion, barely scratch the surface: “What information do you need to retrieve? What analytics do you need to access? What trends will you need to monitor over the next five years?”
Underlying these questions are more fundamental questions to ask, we believe:
- In what ways will the data captured and made available to you through your ERP system help management attention focus on those very few factors that lead to increasing Throughput, reducing Investment requirements—now and in the future, or slash Operating Expenses—while continuing to support significant increases in Throughput?
- In what very practical ways will our analytics help our management team improve our market segmentation, or help drive more, better and faster product development with the goal of increasing Throughput?
One of the huge mistakes we see business executives and managers making over and over is to hold the fantasy in their heads that “more data means better management” and that “if we just had all the data perfectly available to us, we could manage perfectly.” The result of this widely held belief leads all too frequently to “data overload.” Enterprises are so swamped with data that management focus is entirely diffused. No one is certain where they should focus their management attentions.
Management attention is every firm’s most valuable asset. Do not squander it my thinking that better—or, more—reporting capabilities will lead to better management. Instead, focusing management’s attention on the very small number of factors in your organization where change will truly lead to a process of ongoing improvement (POOGI) will lead to discovery of the right things to capture, report on, and measure.
Mister Finch properly assess that “[a]n ERP solution is only a solution if it helps ease workflow issues, not compound them.” This is true, and I would add that, not infrequently, the best software to attack a specific issue is seldom to be found in any ERP solution—anymore than the best camera you can buy would be found in a smartphone or other multi-function device.
Best of breed solutions for supply chain management, banking, treasury management, or vertical industry requirements (like, say, the concrete and aggregate industry) are not to be found built-in to any ERP systems. These best of class solutions must be integrated into your business and integrated into your ERP system. So, looking for an ERP system that makes high quality integrations easy, simple and affordable can be a smart move.
If you are going to be doing a fair number of integrations, then consider investing in an integration engine of some kind. Frequently these have graphical user interfaces and many built-in tools to make creating, changing and managing multiple integrations much less time-consuming and costly.
To tell you the truth, I found this sixth factor from Finch to be a bit baffling. Off all the possible factors for consideration in the purchase or upgrade of an ERP system, why focus on the niche of “vendor analysis”? I think he might be a bit off the mark on this one (with all due respect).
Now, if Finch had, instead, list “Vendor collaboration,” I would have agreed with him wholeheartedly.
In today’s economy, the real competition is between supply chains, and not so much between specific companies. This is especially true when the outside-in supply chain is considered and the supply chain is not narrowly defined as buying, transporting, and selling products.
For very successful companies like Toyota, the supply chain covers everything from product design all the way through to after-market service. Toyota’s key suppliers are tightly integrated into the whole design-develop-manufacture-deliver process. This requires high levels of vendor collaboration.
In my view, anything a company can do in term of improving and facilitating vendor collaboration is a positive step. If the firm’s ERP system can make taking those positive steps forward easier and less costly, then the firm is another step ahead of its competitors who must struggle to make it happen.
Please leave your comments and questions below. We look forward to hearing from you.