Why Everything You Know About ERP is Wrong

ERP has been the backbone of manufacturing IT for so long that it has taken on its own myths. The trouble is that these myths are now ‘accepted wisdom’, despite being anything but acceptable or wise. Destruction of these misconceptions is long overdue.

Misconception 1: ERP is costly
“For manufacturers with multiple sites, subsidiary companies, international facilities and specialized production processes, connecting systems into an ERP framework soon builds to the point where rip and replace seems the easier option. For those looking to invest first time around, the costs of an ERP expert to analyse and align business processes to match the ERP system and train employees is prohibitive.”

This is simply not true. The technology to connect disparate systems and deliver the information in a clear, meaningful manner is already available. It does not matter if these are cloud, hybrid or on premise so the lower upfront investment options of cloud computing are there for manufacturers looking to expand or invest for the first time. Expensive ERP expertise is a thing of the past. Dashboards and analytics based on familiar, industry standard platforms have replaced complex proprietary options.

Misconception 2: ERP is complex and always results in projects running over time
Manufacturing is a complex industry. Research shows this will only increase. Analyzing business processes and developing software to automate them should eliminate complexity but when it doesn’t, we have to throw time and resource at the project and use brute force to crack the nut.

Now we know better. Firstly complexity is no bad thing – it is a mirror of the business. It enables operational precision and commercial opportunity. But complexity can inhibit innovation so focus on making processes tight and lean before they are automated. As a result, an ERP implementation delivers value earlier and is completed quicker.

Misconception 3: ERP implementations are invasive and disruptive
Connecting the mass of data and information to deliver a working ERP system is a huge task. It is dwarfed only by the ongoing use of ERP that demands software upgrades, training, security patches and a lot more besides. This is a huge drain on the resources of the company.

Wrong again. Intelligent deployment delivers consistent, meaningful information to the end user regardless of the deployment method, so a business can be up and running with ERP in days. A modular, event driven approach means manufacturers can get the capabilities needed in the order they want without disrupting other areas of the business.

Misconception 4: ERP vendors are inflexible and notorious for their lack of support
Some software vendors can disregard the pains of manufacturers, ignoring the realities of budget and IT resource limitations as well. Believing that the software is always right, business processes have to be changed and people retrained.

Well I cannot speak for others but not at Infor. We spend thousands every year researching the issues and challenges facing manufacturers. We spend millions developing solutions to help solve these problems and we are in this for the long haul. That goes for both the software and services.

So why have these myths never been slain before? There are many possible reasons but I believe it is because manufacturing has rarely dared to think differently. Thankfully, this is now changing. Operational directors are not just accepting what the software industry tells them they can have.

Savvy manufacturing leaders now start with an outcome – for example a 20% cost decrease – and ask software vendors what they can do to make it happen. Thinking differently, daring to push manufacturing technology beyond current limits should be encouraged. Destroying myths and accepted wisdom will be a hallmark of those manufacturers set to succeed.

More on Selecting ERP

Why Are A Handful of Leaders Better At Performance Improvements?

Assuming you have effectively answered the 4 questions that every business must continuously ask themselves during and after setting the company’s strategic plan and objectives:

  • “Why” is it important to change now?
  • “What” must improve & what will it mean to our business?
  • “Who” will need to be involved in the execution?
  • “How” will we achieve the stated objectives & how will we measure success?

Then the answer to your question is somewhat simple: You should focus on alignment and visibility.

From the high level strategic plan, a strategic plan must formed for each department and it must align with the company’s overall vision and objectives. Failure to align these plans to the overall vision and objectives of the company will stall or halt progress, Then the management tools must provide visibility of how day-to-day activities support the each department strategic plan and contribute to the company’s overall goals and objectives. Finally, there must be a concentrated effort by management to constantly monitor at both the strategic and operational level to ensure that decisions being made and projects being executed are aligned with the strategy.

What must be overcome is that many companies today are very reactive and focus on the next week, month or quarter. This causes them to lose sight of the long-term strategy. As a result, the strategic plan is no longer practical as progress will be obstructed. The most important part of a strategic plan is alignment and visibility. When the day-to-day management systems are not linked to the strategy then managers (and employees) are not considering strategy when they make decisions. In this case we cannot expect to see progress.

In conclusion, if the long-term strategy begins at the corporate level and if each department contributes their own long-term strategy which supports the overall business strategy and our daily activities are aligned and visible then it is likely an organization will see rapid change that is stainable over time.

More info: http://synergyresources.net/consulting/strategic-business-services/

SBS – Business Revolution Through Evolution

In a time where manufacturing companies in America are struggling to survive, Synergy Resources Strategic Business Planning Program has provided our company with a roadmap to achieve World-Class performance. This program has re-energized our employees and our management team and focused our company on growth and efficiency through operational excellence. Through the execution of this program we now understand the opportunities we have for improvement and we are excited about our future and the prospect of continuing our partnership with Synergy’s Strategic Business Services team.

– Richard Meisenheimer
President & Second Generation Owner, Spectrum Associates

Continuous improvement amounts to an ongoing effort to improve products, services, or processes. Incremental improvements over time coupled with “breakthrough” improvement all at once. Delivery focused– customer-centric– processes are constantly evaluated and improved. Internally, this can be seen as more efficiency and flexibility. Externally, customers will appreciated shorter lead times and better products.
SBS is the purpose of strategic planning is to determine where an organization is going over the next three to five years (vision) and to ensure the goals and objectives of the current year are driving the company forward in this direction (mission). The focus of a strategic plan is on the entire organization, its people, its process and its products. This is different than a business plan where the focus is usually on a particular product, service or program. The way that a strategic plan is developed often depends on the nature of the organization’s leadership, culture of the organization, complexity of the organization’s environment, size of the organization and expertise of the facilitator.
Synergy’s 4-Steps to Success strategic planning program forms the foundation on which visions can be realized. We apply emphasis on building a
culture focused on a mutually supportive, highly visible, result oriented, employee driven system of continuous improvement.

Throughput Accounting

Welcome to Synergy Resources’ Continual Improvement in Manufacturing (CIM) Journal. Over the next several months, we will be exploring here a variety of techniques that can be used to continually improve manufacturing operations. We strongly encourage you to post questions and leave feedback.

The greatest benefits come from addressing problems in fundamental areas. An important element in continually improving is the ability to accurately predict the benefits that an improvement will bring to the company. To accomplish this, we recommend a school of thought known as Throughput Accounting.
Managerial accounting is the process of gathering and analyzing data for the use of managers in making decisions. Throughput accounting is a school of thought put forth by Dr Eli Goldratt (1948-2011), author of “The Goal” and several other excellent books. Dr. Goldratt invented Throughput Accounting to replace the more traditional Cost Accounting approach that had been in use since the early part of the 20th century and which had begun to fail managers. The purpose of the measurements called for in Throughput Accounting is to give managers clarity: to predict the effect of proposed actions on the profitability and health of the company.
A primary measurement in Throughput Accounting is called “Throughput (T)”. If we think of the company as a money generating machine, T measures the amount of money that the company generates through sales. It is not the same as the sales of the company. The throughput value of what is sold is the selling price less the “Truly Variable Cost (TVC)” that was incurred in order to make what was sold. TVC includes costs of materials, purchased components, sub-contracted services and sales commissions paid for what was sold. TVC does not include any labor that was paid for by the hour or salary nor does it include any costs associated with running the company that cost accounting typically call “overhead”.
In essence then, T measures the value that was added to the elements needed to accomplish the sales that were paid for with a unit price.
Here is some data about Alpha Bravo Manufacturing Company (ABM):

Sales value of orders to be shipped this month $33,000.00
TVC for orders to be shipped this month $10,000.00
Expected Throughput this month $23,000.00
Cost to operate plant each month $21,500.00
Expected pre-tax profit $1,500.00
Capacity hours per month $688.00
Cost per capacity hour $31.25

Let’s suppose that we are managers at ABM and we are in a meeting on the first day of our month. We are being asked to decide whether or not we should take an order. This order will increase our monthly sales by $3,500. The material will cost $1,600. Manufacturing the order will take 68 hours of capacity which will not cause any of our resources to be overloaded.
Traditional managerial accounting would look at the cost to make the order and compare the cost to the sales value. In this case, 68 hours of capacity would equal $2,125 in manufacturing cost. Add to this the $1,600 in TVC (material) and the total cost of manufacturing would be $3,725. Comparing this number to the sales value of $3,500 would lead us to decide to not accept the order since accepting the order would cause us to lose $225. Better to leave the resources idle than to lose money!
But wait: it costs us $21,500 to operate the plant whether it produces or not. We do not expect to have our workers to take unpaid time off on days there is not a full day of work for them to do. Let us look at this question through the lens of Throughput.
An order bring $3,500 in sales that uses $1,600 material would generate $1,900 in Throughput. Our new expected T number for the month becomes $24,900. Manufacturing this order does not increase our cost of operation. We will only use capacity that otherwise would have been idle. Therefore our expected pre-tax profit would increase be $3,400, an increase of $1,900. The entire increase in T brought on by this order would be profit! By accepting this order, we would not lose money; rather we would more than double our profit!
This example is only a brief glimpse into the power of Throughput Accounting. Please come back for next week’s blog post to learn more.

Sherwood Turns Up The Heat With VISUAL ERP

With Integrated Financials, KPI Dashboards and streamlined Material Planning and Operations, Sherwood will really be turning up the heat with VISUAL ERP.

Sherwood IndustriesSynergy Resources today announced that Sherwood Ind., a Victoria, BC-based manufacturer and distributor of wood pellet stoves and barbeques has selected VISUAL for their ERP initiatives. With plans to streamline operations, and enhance customer service, Sherwood becomes another of the hundreds of Canadian manufacturers securing their future with VISUAL.
During their extensive 12 month ERP evaluation, Sherwood reviewed many popular offerings including SAP, MS Dynamics NAV, Industrios, Job Shop and Epicor. VISUAL was the only system that combined all the integrated manufacturing and operational functionality needed, without the risks of an untested, ‘bleeding edge’ ERP.

About Sherwood Industries
Sherwood Industries Ltd. is the manufacturer of the ‘Enviro’ brand of heating products. We are located in Saanichton (approximately 16km north of Victoria) on Vancouver Island in British Columbia. Sherwood Industries has an extensive manufacturing facility where we employ cutting edge technologies such as CAD (computer aided design) and a state of the art steel cutting laser, all designed to give you the best design for your home with the highest standards of engineering.Since 1988, Sherwood Industries has been a leader in its field producing high quality gas, wood, and pellet appliances.
More on Sherwood Industries

“As Sherwood continued to grow, legacy systems were not meeting our information needs. We needed a system that supported our current growth, as well as optimize our business improvement changes,” said Steve Davis, Sherwood’s Production Planning Mgr. “We selected VISUAL because it includes more ‘out of the box’ functionality than any other system we reviewed. VISUAL was the only system that all our key players agreed upon.” “Advanced tools such as EPAK (automated SOP/user documentation creation and training tools) will help us keep up with our ever evolving processes.” As Sherwood’s products are distributed worldwide, they needed a financial solution that accommodated multiple currencies at both ends of the supply chain. VISUAL’s Financials module is completely integrated with operations and meets their accounting needs today and into the foreseeable future.

At the click of a button, real-time data will not only assist customer service with VISUAL’s user-friendly CRM, the Advanced Material Planning system will also help Sherwood ensure they are carrying the right inventory mix at the right time. And VISUAL’s real-time material planning tools will help reduce both raw and finished goods inventory.

VISUAL ERP quickly converts customer requirements into manufacturing requirements and then executes them efficiently. Lean concepts eliminate redundant or wasteful steps that users may be forced to go through with other manufacturing software.

It provides a compelling visual presentation that shows how each part of the manufacturing process relates to the other parts-helping to resolve bottlenecks, schedule effectively, and price jobs accurately.

It supports manufacturers mixed-mode production strategies, including engineer-to-order, make-to-order, assemble-to-order, and make-to-stock; and it displays all key statistics on a single screen, helping ensure that schedules are met, materials arrive on time, and costs are in line with estimates.
Targeted at small to midsized manufacturers, VISUAL includes core capabilities that will optimize Sherwood’s organizational resources, strengthening its competitive positioning. VISUAL supports Sherwood’s entire business lifecycle, from planning to producing and shipping. With the use of VISUAL’s intuitive user interface, it handles all operations including, CRM, material requirements planning, scheduling, costing and manufacturing execution.

Biomedical Firm Chooses Visual ERP To Spear Head Business Process Improvements And Quality

As the essential element towards process improvement initiatives, Bomimed is launching VISUAL ERP.

Bomimed manufactures respiratory consumables and breathing system assemblies specifically for hospitals. As their success began to outpace their legacy system Business Visions (specifically with labour and material planning), Bomimed had to improve ergo streamline manufacturing processes. With medical regulatory certifications and compliance (ISO 13485, CE, FDA and GGMP), Bomimed is obligated to maximize only the best in QA tools and cradle to grave lot traceability.

After a detailed examination of leading ERP offerings, including SAP Business One, Syspro, Microsoft Dynamics’ AX, NAV and GP, Bomimed chose VISUAL. VISUAL stood out as the one fully integrated solution that included all requirements (material resource planning, QA management, document control and customer management capabilities), and designed specifically for small to mid-sized manufacturers.

“VISUAL’s graphical display is so intuitive and follows our planned processes perfectly. It’s not complicated at all and meets our needs right out of the box. VISUAL’s Configurator will be great for sales configurations of our high end capital equipment.” says Justin Olivier (Product Manager).

Bomimed anticipates within 8 months, cutting lead times and improving on-time deliveries by fifty percent.

“We plan to leverage the software to its fullest potential,” said Olivier, “and we look forward to all of the benefits VISUAL has to offer. I know our ISO re-certifications will be an absolute piece of cake with Visual Quality, EPAK and VISUAL Workflow.”

VISUAL Builds Race Cars

Bay Shore, New York—

Synergy Resources, a leading provider of enterprise resource planning (ERP) software solutions and services, and Infor, one of the largest global providers of business software, recently announced a gift of software and services to Farmingdale State College for its business and computer systems classes. The gift, which has a commercial value of close to $200,000, includes Infor ERP VISUAL software from Infor and implementation and training services from Synergy Resources. Through this gift, students will learn how to apply technology to manage a company’s integrated supply chain from manufacturing and purchasing to warehousing and distribution. Synergy Resources has been selling, implementing, and supporting the Infor ERP VISUAL product line since it was first introduced in 1992.

“Our customers, who operate small and midsize manufacturing companies, tell us that they struggle to find qualified people who are experienced in supply chain management technology,” explains Gene Caiola of Synergy Resources. “We recognize the growing need for management students to gain a working knowledge of ERP systems and we see this as an opportunity to give back to the community. The program will help to fill the demand for these skills in local manufacturing companies.”

Dr. W. Hubert Keen, President of Farmingdale State College, believes that providing hands-on experience with ERP technology will be extremely beneficial to the school’s curriculum. “Farmingdale students will have a competitive advantage when they graduate and are seeking employment since they will have experience with an ERP application that is much in demand by industry,” said Dr. Keen. Synergy is key to executing the lean best practices. “Thousands of manufacturers globally depend on Infor ERP VISUAL to gain insight into their supply chain, improve compliance management and support lean manufacturing initiatives,” said Kevin Piotrowski, director, industry & product marketing, at Infor. “Through this joint gift, the students at Farmingdale State College gain a technology platform on which to learn the principles of manufacturing and supply chain management. This experience can translate into a valuable asset as they embark on their future careers.”

Gene Caiola is an alumnus of the State University of New York (SUNY) system and sees Synergy Resources as a logical partner for the program. “As a community business leader, I value my relationship with Farmingdale State College. At Synergy Resources, our goal is to help manufacturers stay competitive in the global economy by giving them the tools to run more efficiently and ultimately improve their profitability. What we bring to the table, along with Infor, is leading edge technology and best business practices. Giving students the opportunity to learn VISUAL in the classroom will give those students a competitive edge in the job market. In turn, the Farmingdale program will help to strengthen the manufacturing and supply chain skills base in the local area.”

Professors in the business management and computer systems departments plan to run two pilot courses this summer with official implementation in fall 2008. “We look forward to preparing our students for entry into the workforce by utilizing this software application within our course materials,” says Farmingdale Professor Jill O’Sullivan. “Learning how to use enterprise resource planning software will enable our students to better position themselves for success. With Synergy and Infor we are bridging the gap between the business world and academia in an effort to increase our students’ opportunities in the future.”

Wire Belt Company Uses VISUAL Software from Synergy Resources for Production Transformation

Synergy Resources is proud to announce that Wire Belt Company of America has been named New Hampshire’s 2009 #1 Best Small Company to work by Business NH Magazine and NH Businesses for Social Responsibility. The Londonderry, NH company, a long-time VISUAL Enterprise user, prides itself on never laying off New Hampshire workers.

The company used the economic downturn to redeploy workers idled by a drop off in orders to reconfigure its 33,000 sq. ft. production facility. The goal was to keep workers fully employed streamlining process workflows and creating flexible manufacturing cells to support Lean production. Infor VISUAL Enterprise ERP’s strong functional support of Lean and electronic Kanban is viewed as essential to transforming the production of hygienic, stainless steel conveyor belt systems used in food processing and other industries.

“At a time when the economy is testing the most solid company cultures, this year’s Best Companies to Work For competition demonstrates how making employees partners in a company’s success is not only good for morale, but also good for the bottom line,” runs the lead in the December issue cover story in Business NH Magazine. “Respect for employees, no layoff policies and creative strategies to keep everyone employed have earned Wire Belt Company of America in Londonderry the title of Best Small Company to Work For in NH…”

“A key company goal is to keep manufacturing in New Hampshire,” says Bruce Nixon, materials manager at the 4th-generation, family-owned company. “To do that you have to be extremely cost competitive. Scott Monk, our director of operations, saw Lean as the way to streamline operations, reduce costs, increase productivity, and be more competitive.”

VISUAL greatly simplifies material management. Electronic Kanban and strong support for managing critical item replenishment are also key. “The way VISUAL processes orders and handles scheduling also makes a difficult task a whole lot easier,” Nixon states.

Though representing a variety of industries, Wire Belt Company and the others on the select top 10 list all share one thing in common. “While not immune to recessions, the Best Companies to Work For have a strategic advantage – motivated, loyal employees.” Making them full partners and giving them the right tools to perform their jobs are critical elements in sustaining that advantage.

ThermoFab Uses VISUAL Easy Lean to Hit 100% On-time Performance

Synergy Resources, www.synergyresources.net, an Infor channel partner, is proud to announce that ThermoFab, of Shirley, MA hit 100% on-time performance for the entire first quarter of its 2010 fiscal year. ThermoFab President Tom King says that VISUAL Easy Lean was essential to the transformation the company has undergone over the last five years.

“What we’re selling is service, quality and speed” King says. “When we started with VISUAL Easy Lean five years ago, our on-time performance was a challenge – averaging below 50%. VISUAL Easy lean makes us focus on what we’re selling – not on parts inventory. Not a single order was late in the entire first quarter.”

VISUAL Easy Lean is part of the Infor VISUAL ERP suite. VISUAL Easy Lean helps companies focus on the critical constrained resource (CCR) for managing production, rather than on traditional work-in-process (WIP) focused systems. ThermoFab’s lean journey resulted in pushing the CCR outside the plant – making boosting customer sales the constraint that was holding the business back.

ThermoFab specializes in the thermoforming of high-quality plastic enclosures for a wide range of medical, industrial and computer products. As performance of the economy plummeted, its customers responded by cutting in-stock inventory and delaying orders. ThermoFab was able to drive its business
to greater performance using the VISUAL solution, offering shorter delivery lead times while simultaneously continuing to improve on-time performance.

“We constantly focus on improving on-time performance. We used to track what was late – but now our weekly production meetings focus on what’s shipping on or ahead of schedule. We have a ‘no excuses’ policy when we commit to a customer’s order,” King states. “Our performance helps our customers to perform better.”

Achieving 100% on-time performance seemed an unobtainable dream when the company first implemented VISUAL Easy Lean. “I didn’t believe it was possible,” King says. “I thought we were doing great when we hit 95% percent on-time performance. Then we hit 99.46% for 2009.” Making improvements gets harder as you drive performance higher, King says, requiring continual focus and effort. “We have to work at it. But now we know it’s possible.”

About ThermoFab
ThermoFab specializes in the thermoforming of custom plastic enclosures for a wide range of medical, industrial, and computer products. It excels at innovative, award-winning design coupled with a deep commitment to manufacturing performance to meet and exceed its customers’ requirements and expectations. ThermoFab is headquartered in Shirley, Massachusetts. For additional information on ThermoFab and their transformation to lean manufacturing please visit www.thermofab.com.