1 Reply Latest reply on Apr 13, 2010 6:04 PM by RDCushing

    A small start on a list for decision makers on ERP / supply chain design

    jkirk225 Newbie

      Now that your brilliant humor brings real thinkers / decision makers to your discussion it might be productive to list or link to real challenges to complete business failures caused by this phenomena of group think ERP

       

      We at DCRA can start the discussion or refer to www.Texaslcc.org as some good material

       

      Here are a few examples in a "bespoke" list

       

      • Most business use other business for key parts of mfgr or fulfillment.   All ERP requires all activities to be done to capture activity.  When you outsource a process it generally is just a request and promise then fulfilment... no ERP handles this process and measures results
      • A large company is generally a combination of many small activities that function well because they operate effectively to accomplish their goals.  Forcing to act the same, use the same is a less then brilliant CFO trick to grab control but often kill off competitiveness.    Good engineering can identify some key shared services to be deplyed using the ERP but the balance of key activities need to latitude to operate without restrictions... rarely is this engineering done in an ERP deployment
      • Supply chain is actually quite simple linking a few important metrics in a syncronized consistent manner of which the minority of data comes from within an organization... forcing the data to be put into ERP and ERP transactions to measure and net supply and demand is death to many business or is why most big ERP implementations really run off spreadsheets.    To be clear nothing wrong with spreadsheets as long as their inputs and outputs can be syncronized across the organization.    A good S&OP process often works this way
      • How many successful value add distributors or light manufacturers have been choked by poorly selected ERP ?   These business succeed by exploiting arbitrage and inefficient pockets of the value chain... forcing them to behave like some engineer in Deutschland believe they should is silly.  Do some research on the failure of Foxmeyer Drug in Dallas and what killed them.   Do some research on why Dell through out that 3 letter ERP product in 1988 to focus on key operations... dig below the surface and you will probably find the best 10% of companies in every industry have found a way dispite the hype to automate their process with leverage from a few key tools not deploy ERP sameness.
      • So go try to deploy an ERP system where you don't take position of accounting inventory.   This would be complete build to order type of process that is the best for cashflow and working capital.   Go try to do this using an ERP order mgmt, manufacturing integrated accounting system.... won't be possible.   Before you get it installed will have to kill an great business model to make it fit a sameness ERP approach wrapped around GAAP accounting.
      • In generally GAAP accounting is what kills many business' when they attempt to measure operations using GAAP vs. measure operations from a cashflow, customer service approach.   In reality a proper supply chain model provides a great alternative measurement system for cashflow and working capital performance and planning that looks forward not backwards.   This should be the "ERP" model with then mutual exclusive, asyncronous web servicest that plug in for needs and unplugs to eliminate complexity

       

      OK, we started with a few items....   We think this is a big list that has common issues for all busienss, common issues by industry, common issues by size but a list that would make buyers smarter if compiled

       

      Our hypothesis is 90% of the market -" does not know what they don't know".    What they need is some humor and other techniques to get them to think about how their busienss creates value through operating with cashflow and working capital efficiency .  Most we believe with learn the answer is less is more and good engineering around what create value will work and blind use of ERP transaction systems is not an equivalent.

       

       

      Cheers

       

      Jon Kirkegaard

      President

      DCRA Inc.

        • Re: A small start on a list for decision makers on ERP / supply chain design
          RDCushing Master

          jkirk225 wrote:

           

          • A large company is generally a combination of many small activities that function well because they operate effectively to accomplish their goals.  Forcing to act the same, use the same is a less then brilliant CFO trick to grab control but often kill off competitiveness.    Good engineering can identify some key shared services to be deplyed using the ERP but the balance of key activities need to latitude to operate without restrictions... rarely is this engineering done in an ERP deployment

          Jon:

           

          You have, in your second bullet point, struck upon a key matter that makes, as Eliyahu Goldratt put it, ERP technologies "necessary but not sufficient." Virtually all companies -- not just large companies -- are a collection of many small activities that form a dependent chain of events flowing from customer acquisition through cash collection. This is the real "system," not the underlying technologies, which are supposed to be there to support this chain of dependent events or activities.

           

          Unfortunately, most executives and managers "see" their organization in precisely the same fashion and with the same comprehension as they view their organization chart -- they see a heirarchy of functional silos. But, their organization does NOT function like they view it. It functions as a "chain" that remains almost invisible to these executives and managers due to their predisposition of mind to manage by function and heirarchy.

           

          Interestingly, entrepreneurs almost instinctively understand this "chain." It is only when the entrepreneurial organization starts growing and layers of middle management are added that these same folks who once instinctively understood their organization lose touch with what is really happening. Once they stop managing the organization as a "chain" or a unified "system" and start trying to optimize functions and silos, the organization's effectiveness starts to decline and overhead grows -- crushing profits.

           

          There are tools to help executives and managers caught in this mindset escape it -- hopefully, forever. But they must be willing to open their eyes. I write quite a bit about this under keyword "system thinking" at GeeWhiz To R.O.I.  You might find it worthwhile to read.

           

          Let me know what you think.  Thanks.