Monday, August 18, 2014

ERP Life Cycle

Enterprise Resource Planning solutions have life cycles, just as plants and humans have.  They differ in many ways and also have many similarities.

Sunflower plants follow the pattern of:

  1. Existing mature flowers make seeds.
  2. Seeds find fertile ground.
  3. Seeds grow into new plants.
  4. A young plant is a seedling and grows bigger.
  5. The fully grown plant flowers.
  6. The cycle repeats.
ERP software function as a business management solution and usually consist of a suite of integrated applications that a business uses to collect, store, manage and interpret data from many business activities, including: product planning, cost and development, Manufacturing or service delivery, marketing and sales, inventory management and shipping and payment.

ERP cycles through:

  1. A business operates and spurs new growth.
  2. New modules or third party solutions are added to address growth and the need to capture and manage additional streams of information.
  3. Inefficiencies increase as growth outpaces capacity.
  4. Separate systems are implemented to address growth.
  5. A new solution or upgrade is implemented to address the new scope of business.
  6. The cycle repeats.

There are a lot of definitions of ERP cycles. 

Most start with planning and package selection, then move on to implementation and then operation.  While these stages are true most companies are already in the middle step of operation mode.  The existing solutions can be a full ERP solution or a mish-mash mix of manual, spread sheet, or older solutions.  One of the biggest challenges are determining if the current growth is temporary or a sign of future activity.

What has changed?  What is driving the need to change?

Many factors stimulate change.  Growth, Mergers and Acquisitions are common sources as well as a new product or service lines or a myriad of other economic influences.  What becomes a driving factor is the incumbent solution worked at one level of business and was not able to scale up or down to address the new level of need.  The need could be to handle additional or a drop in transactions, new or a loss of business units. 

The need could be up or down, growth or decay.

Increased activity without a corresponding increase in revenue is a sign of inefficiency.  The higher overhead drains an organization’s resources.  In today’s business world automation is the key to sustained growth. 

When selecting a new ERP solution it needs to address the current needs, pains and anticipated growth.  Many organizations concentrate on the current needs and how the proposed solution addresses their pain.  This is certainly a good starting point.  However, a good solution should also address future growth.  A great solution takes into account business cycles and can address both future growth and downturns.

There are seasons to business cycles just like plant life.  There is a nurturing point in time, growth, maturity and then the cycle inevitably repeats.  A lot of businesses forget this point.  What goes up comes down and with proper planning business goes up again.  Your solution must scale in the same way. 

  • How is your solution designed to address future business cycles?  
  • What downturns have your business triumphed through with your ERP solution?  
  • What key components are you considering in your next solution or upgrade?  
  • What cycles does your solution need to address?

Dolvin Consulting works with businesses in Manufacturing, Distribution and Specialty Retail to help them identify and address their growth pains.  Take a minute to post and share your successes and failures here with our readers.  Contact us to discuss your challenges.  We are your trusted advisor and want to help.

Monday, August 11, 2014

Will Analytics help Forecasting?

One definition of Analytics is “Information resulting from the systematic analysis of data or statistics”.

In a recent conversation I had with a contact he said his inventory was 99.8% accurate and that his firm used cycle counting to ensure accuracy.  He shared information with me about the business he obviously cares very much about and has invested a good portion of his life to as we talked about his operations, inventory and growth projections.

We discussed his Enterprise Resource Planning (ERP) solution and he is satisfied with it, in fact his company is planning on an upgrade.  I mentioned that I worked with another company and they asked if bin locations worked.  And I said, yes, if you let the system do what it is designed to do. He agreed that ERP systems can be rigid, but they do work if you let them do what they are designed to do.

I then asked him based on what he shared where his bottleneck was.  Every business has a bottleneck.  They occur at different points at different times.  If a company is growing, then bottlenecks are enviable.  What works at one level of business often does not at a higher level.

He said Forecasting was his biggest challenge at this point in time.  I asked if he meant receiving forecasts from his suppliers.  He said, no, it was sales forecasting.  This company has been growing steadily for some time and one of their product lines is really moving. 

Inventory is key and managing it is much like a dominos effect and is why companies invest in ERP solutions. 

How much raw inventory and finished goods you keep on hand is dependent on your sales projections.  Too little and you may become late, too much and you end up wasting space and paying taxes on what is left hanging around.  You need to fulfill customer orders in a timely manner and you also need to plan. 

In addition to the accuracy level, an indicator many firms use to judge their inventory level is called Inventory Turns or Turnover.  It is a measure of number of times inventory is sold or used in a given time period.  It is usually calculated as a ratio of the cost of goods sold divided by the average inventory.

Back to point.  Would a robust analytics solution that was used to analyze past and current sales to identify trends, be helpful in forecasting future sales and thus predict better inventory levels?

At its core Analytics is used to provide insight into customers and products.

Speed and efficiency are critical in businesses that operate at high volume.  These businesses have a need for real-time visibility into sales and inventories.  Their management has needs for ad-hoc as well as standardized reporting and analytics helps fill that need.

The key to Analytics and ERP in general is data integrity.  The old saying in computer technology is “Garbage In, Garbage Out”.  It means that the value of the information the system generates is only as good as the quality of the information taken in.  One of the goals of implementing these types of solutions is for people to concentrate on the results of the information analyzed and not worry about how they were achieved.

New data engines and tools speed up reporting that once took hours to produce and distribute to just minutes.  Dashboards, once built, provide management with top level overview and drill-down capability that business need to make better decisions more quickly.

Management can determine when they see customer sales dropping off if the problem is related to inventory, usage or a period of inactivity.  Increased awareness allows insight into greater margin awareness.

Greater awareness allows for more accurate forecasting and the ability to identify variances and make adjustments as demands change.  Reacting quickly to issues can make the difference in customer retention.  Knowing why a customer is purchasing less is important so that corrective action can be taken.

Forecasting not only allows users to spot global trends, but also identify specific issues that might otherwise have been missed.  Today’s systems generate and collect a large amount of information.  Tools like Analytics applications give insight.

What are your systems designed to do?  Do you use Analytics to forecast sales and inventory levels?  What successes and pitfalls have you encountered implementing your systems?  How long did it take?  How much did you budget?  Was the Analytics solution part of your ERP solution or was it a third party solution?

Dolvin Consulting works with industry experts to help your organization identify bottlenecks and streamline operations.  Contact us to learn how we can help your business.

Monday, August 4, 2014

Customer Service Matters

Through hardware, software and service offerings, Enterprise Resource Planning (ERP) systems can provide a portfolio of solutions to help manufacturers and distributors streamline production, operate more efficiently, improve planning and scheduling and implement more fine-grained and flexible decision-making processes.  Solution providers are helping businesses optimize their technology and make the most of their ERP and supply chain applications by extending analytic capabilities, making better decisions, improving order management and purchasing, plus many other capabilities.

The driving factor for many organizations often starts with “there ought to be a better way”, “our overhead is too high”, “we have too many errors”, “there is no observability”, “it takes too long” to name but a few.  There are also some that rationalize not addressing the issues by saying “that’s the way we have always done ‘it’”.  Find any challenge and add “too much” or “too little” to it and it will become the seed to change when someone tacks a price tag on it.

What type of benefits should a solution have?

Ultimately manufacturers, distributors, retailers and others need to make better, quicker decisions and act faster in complex markets. They need solutions that deliver powerful advantages which includes the ability to find the right information, from the right place, at the right time.  This includes workflow tools and notifications. 

Higher productivity. 

When you can help your employees avoid the clutter and overload of increasingly complex solutions to be able to focus on the information they need to make decisions and move their workload forward.  You empower your employees to attend to more important tasks first.

Easy Access to systems.

The definition of mobility has evolved in recent years to mean any device, any time, any where.  While this is the evolving definition for the mobile sales force, many companies are single location based and their devices are desktop computers.  What they find with newer solutions is that they can take advantage of mobile solutions at client meetings or when they count, receive, or pick-pack-ship inventory.  The theme of the ivory tower and dished-out information no longer works in competitive industries.  Businesses must improve the efficiency of the way they collect and deliver information to their employees, suppliers and customers.


Newer solutions must increasingly bridge the gap between the traditional ERP solution and other web based solutions such as social media.  This integration creates new opportunities for employees to collaborate in real time with colleagues, suppliers, and most importantly customers.  Empowering employees to answer questions more quickly is a key component in customer service.  Meetings can be planned and coordinated more quickly.  Complex tasks can be divided and delegated with greater efficiency.

Customer Service.
Overall we should be investing a lot more time and energy in solutions that drive customer service.  Whether that is an updated ERP solution, integration with social media, contact management, or other solution.   It does not matter if the solutions are on premise or hosted in the cloud as long as the integration is tight and does not increase errors.  ERP Vendor integrated solutions potentially have the greatest Return on Investment (ROI).  Sometimes the upfront costs seem higher, but when you look at the Total Cost of Ownership (TCO) fully integrated solutions, that you did not have to integrate, are the best buy.

Your organization needs the tools and applications that empower them.  Solutions that give them access to the information that your customers need, like how long until I receive my order, or being confident when you tell them what they want is in stock and doubly sure they will actually receive what they ordered.

Your customers have questions.  They want to know you care. 

Your suppliers need information.  They want to serve you better.

Your employees need to bridge the gap between the internal and external worlds.

What is your organization doing to empower your employees?  Our readers would like to know.  Please share your ideas and what changes you have or are in the process of implementing.  Are you considering a new or upgrade to your ERP solution?  What new modules are you considering?  What third party solutions would you like to integrate and why?  Are you planning on small incremental steps or a major overhaul?

At Dolvin Consulting we work with industry experts to find the right solutions that will fulfill your goals to drive your efficiency in your operations.  Share your ideas here with our readers and then contact us to see how we can help you serve your customers better.