Making the Most of ERP with Aligned Business Processes
How Manufacturing & Distribution Companies Can Find Value at the Intersection of Technology, Innovation, and Process
Creating synergy between business processes and modern ERP is the key to maximizing effectiveness, efficiency, and opportunity. Here, we explore practical ways to leverage technology, innovation, and process optimization to accelerate the achievement of current business goals while creating new possibilities for the future.
Digital Transformation Is Within Reach for SMBs
Over the last 20 years, businesses have been forced to fit their processes into what software allows. With the introduction of newer ERP platforms and a wealth of modular extensions/integrations, it is possible to configure and modify systems to dovetail with and even improve existing processes.
Larger organizations have been making significant strides in digital transformation and smart manufacturing with this latest revolution in ERP. They are better equipped than ever to profoundly improve workflow efficiency, supply chain management, customer satisfaction, and more. Prices for software have now become more affordable for SMBs. However, even with modern ERP available, most SMBs have not taken advantage of technology that seems to require an army of business analysts for implementation. The perception is that it takes too much time, costs too much money, and requires too much effort.
Fortunately, this is changing and smaller organizations are now successfully implementing tools and seeing the results. This is more important than ever at a time when companies need to respond rapidly to variability in the supply chain and the shortage of skilled labor.
What Opportunities Are Created at the Intersection of Technology, Innovation, and Process?
The key areas of opportunity for manufacturing and distribution companies are around Price, Delivery, and Quality.
Price: Supply chain collaboration through a digital portal is a highly effective way to bring costs down. Systemization and automation also frees up time to identify alternative suppliers who can deliver faster or at a better price point instead of spending time placing and following up on POs. Manufacturers can also automate and simplify collecting cost on the shop floor for greater accuracy and insight into profit margins. This, in turn, impacts sales efforts by making it easier to focus on the right deal opportunities.
Delivery: Software that enables real-time prioritization of production activities identifies items at risk for being late, reduces WIP to remove bottlenecks, and accelerates fulfillment for on-time-delivery. It reduces guessing and variability in estimating due dates and improves customer satisfaction by helping organizations keep their lead time promises.
Quality: Devices are now available to perform highly accurate laser measurements that can take hundreds of measurements of each component. Integration software tools automatically upload this data for all stakeholders to view. This is a huge savings in time and an increase in accuracy compared to using a micrometer and manually inputting measurements in a database.
Other Popular Areas of Innovation Using Technology to Augment Business Processes
- IoT and machine connectivity reduce downtime by capturing the reasons for downtime (such as materials shortage or machine failure) and supporting continuous improvement. By tracking real uptime, optimization becomes much simpler.
- RF tags using beacon technology can now be printed on stickers and tracked using a smartphone. Unlike the expensive RFID tags and tracking towers of the past, this new approach really does make inventory more accurate with less time spent on scanning.
- Chatbots are making an impact across organizations from ERP chatbots that remind users about POs or WOs that need to be placed or canceled. Quality chatbots pull temperature readings off machines to pop up warnings directly to a user device (such as a smartphone or an Apple watch). Customer facing CRM chatbots can guide customers through their buying experience.
Meeting the Technology Needs of Today’s Manufacturing and Distribution Companies
Understandably, these organizations don’t want another “ERP Package.” They have bought relatively fixed/static ERPs for the last two decades and often struggled to find value. These traditional systems tend to offer a limited number of defined capabilities and little opportunity to tailor the functionality or workflow in the package. In contrast, today’s solutions can be configured to align with an organization’s own well-developed business processes. This includes chatbots, RPA (Robotic Process Automation), workflow & exception handling, machine learning, and more.
What Do They Want?
- A solution that dramatically reduces the use of paper, manual interventions, and repetitive acts from their processes
- The ability to work within same worksurface withut having to minimize a window, open a new program, go through a menu structure, and find the related info
- The ability to manage by exception outside of email and have chatbots help as well as provide timely info so things don’t fall through the cracks
- A cloud-based system where everything works for users whether they are remote or at the office/plant
- Solutions that offer competitive advantages in their market, not just “keeping up with the competition.”
All of these outcomes are well within reach with the right help in selecting which tools are realistic to deploy based on price, effort, and expertise required for implementation.
Tools Alone Don’t Create Impact
Modern digital tools are necessary for transforming operations. Success also requires innovation around best practices for business processes, a solid grasp of change management for user adoption, and industry-specific knowledge to understand where technology fits in the value stream map. Organizations that implement tech without these supporting elements face the common scenario of realizing far less value than was promised by the software sales rep.
Example: The impact of best practices for integration (technology implementation) and user adoption (business process)
Two machine shops implemented the same machine monitoring system.
- One shop followed best practices for implementation and integration for a smooth rollout and saved $2m in one year.
The other skipped integration and ended up tearing out the new software because users wouldn’t use 2 separate systems for clocking in/out and entering downtime reasons for equipment.
Where to Begin with Digital Transformation
An assessment of company goals is the first step. In the “new economy”, this often means looking at quarterly goals in addition to longer term goals. An assessment spans the value stream from Estimating to Sales, Production, Engineering, Quality, and more. It identifies areas where there are roadblocks, the root cause of these challenges, and how processes currently flow.
This approach enables an initial set of suggestions based on industry-specific best practices. Some low hanging fruit can often be identified (including quick wins that organizations can self-implement). This might be making simple tweaks on the shop floor to add visual Kanbans or lean processes. It might be identifying capabilities in currently deployed software that can be activated to capture immediate efficiency or gain more data insight for accurate and granular analysis of costs.
The full breadth of an assessment highlights many potential areas for improvement that can be addressed by technology, innovation, and process optimization. It also allows for prioritization along a timeline to ensure rapid time to value. A smart approach is to take a phased implementation approach to any ERP upgrade to get the core functionality running smoothly, providing strong training support for adoption, and rolling out more advanced features and multi-location capabilities over time as wins are solidified.
Early Digital Transformation Decisions to “Future Proof” Technology Investments
Tech platforms and software changes (and improves) over time. Organizations that choose a modern ERP solution with a true LCAP (Low Code Application Platform) find it much easier to add on new technologies as they are introduced. Low code design also means the platform is designed for business users to leverage and maximize with little support required from IT development teams (whether internal or external). LCAP ERP is a key first step since the platform serves as the hub of the digital evolution.
Cloud is another forward-focused ERP characteristic to strongly consider. Today’s cloud architecture is more stable and reliable than ever and inherits the strong security capabilities of the world’s most trusted cloud providers (who spend exponentially more money on security than any end user organization can afford to invest in on-premise security). Cloud is naturally geared toward scalability, availability, and extensibility, helping create a more robust and flexible foundation for companies that intend to grow.
Selecting and Implementing Modern ERP and Integrated Technologies
Choosing an experienced implementation partner is the best path to making the right technology selection, ensuring a successful rollout, realizing rapid value from the technology investment, and ensuring continued value over time.
Here are some of the partner characteristics that indicate the required expertise:
- Accurately identifies business needs, challenges, and goals
- Knows the specific industry well and has an existing library of proven best practices for both business processes and tech implementation
- Understands the capabilities, potential, and limitations of new and innovative technologies
- Includes organizational change management to address user adoption and the impact on the behavioral side of digital transformation
- Incorporates a data strategy and an integration strategy to ensure all systems play well together
- Can prescribe the right blend of process and technology for the challenge at hand
- Focuses on innovation strategies and ideas for moving the organization forward, not just applying a standard process based on the typical use case for the software
In conclusion, businesses can find exponential value where Technology, Innovation, and Process meet. Modern ERP, along with the many modular integrations and extensions now available, are more than ready to help manufacturers and distributors meet and beat today’s challenges and amplify growth even more in the future. Organizations that take the time to understand the opportunity at hand and make smart investments in platforms and expertise stand to gain the most from digital transformation.