Monday, January 21, 2013

Competition Drives Need for a New ERP System

If you are content running as-is and enjoy a shrinking market share from overseas competitors that do not have your overhead or constraints, then you probably are already doing everything you need to do.  If on the other hand you would like to remain in business, chances are you will have to reinvent what you do and how you do it.  “It” being whatever it is that makes you unique among your competitors.

Global Trade Magazine has an article from a colleague of mine, Dani Kaplan, who has enough years experience to understand the impact that automation has on operations in efforts to drive efficiency versus Big-Company sales goals, where the only goal is profits and not necessarily customer success.  Unfortunately, even today, many software suppliers are only concerned with their next sale.  Perhaps they think that once the customer has committed, purchased the solution and struggled with the implementation that they are essentially stuck and will eventually come around.  Eventually they will make the system work.




“Having accurate machine production and forecasting systems improved productivity and eliminated inventory shortages,” he continued. “With the new system we were able to open additional markets in Europe and make plans to sell our audio products in the Far and Middle East. Opening the new markets in Europe enabled us to increase our market share beyond everybody’s expectations.”

What value does the relationship between a company and its software provider have?

One year after going live with the new ERP system, the company’s VP of operations reflected on overcoming the challenges. “We took our time searching for the right ERP system,” he said. “We looked for a vendor who would not only provide us with excellent support but would also be our business partner for years to come. The new ERP System enabled us to achieve just in time inventory with 99 percent inventory accuracy. Our manufacturing plant was able to keep track of the multi-bill-of-material usage.”


The company profiled in the article is not unique.  Many company struggle with the same issues.  They have been in business for many years.  We see this same issue with family run businesses as well.  We have always done business this way.  The overhead and inefficiencies are like a pulled muscle or constant ache in your body.  You have lived with it for so long that you have given up trying to deal with solutions, that you just learn to live with the problem.  You erroneously make the assumption that there is nothing you can do to effectively make positive changes.  Perhaps the fear of taking that step one more time is more fearful that dealing with the current issues.  After all, you have dealt with it for so long it has to get better some time.  Maybe it is the economy’s fault.  It is hard everywhere.

A key foundation for this solution and any other is finding the right partner. 

The company in this article invested time to look at what they were doing and identified manual processing that could take advantage of automation and an integrated system.  The next step was finding a trusted advisor to help them find a partner and solution to address the challenges. 

There are many software solutions that will work for any given situation.  It is critically important to find one that matches your company’s culture.  The right tool for the right job.  Spread sheets are not effective for a larger organization and a full scale tier 1 global solution is overkill for a regional business. 

Pricing a solution is important too.  There needs to be a good Return on Investment (ROI) that takes into account the Total Cost of Ownership (TCO).  It is important to look past the upfront costs to see what return can be reasonably be expected. 

After all, if you felt 100% confident that any and all monies invested would be returned in a year, why would you not make the change?

The only reason would be an uncomfortable relationship with the supplier or lack of confidence in either the solution provider or your company’s ability to make the necessary changes.

Change is the only constant.  As a friend of mine often says- “Change is inevitable, Growth is optional”.

So what are your next steps?  First and foremost, count up the number of hours of missed sleep. You know, the extra hours you work each day.  The hours you spend awake at night staring at the ceiling.  The time away from home.  How often do you go back to the office or remotely sign-in after dinner so that you can just try to keep up?

There has to be a return just in the number of hours gained from a new solution that is fully integrated.  Most organizations that pick the right solution with the right partner (notice I say “partner” and not “supplier” – partner implies a vested interest) will achieve a complete return on investment in a relatively short period of time.  Anything after that is profit.  It is the empowering option to reinvest in your business and drive profits (and get some sleep).

Dolvin Consulting works with manufacturers, distributors and specialty retailers to help them streamline their computer operations with ERP solutions so that they increase their operational efficiencies through automation, reduce costs, and ultimately increase profits.  We have a mutually vested interest in your success.  Contact us today to see how we can help.  We help or do our best to refer you to a resource that can help.  Really.

No comments:

Post a Comment